Price Index – PI

To sample your existing and potential customers’ views on the VFM you offer, first define what is meant by ‘Value for Money’:

The following grid can then be used to determine how your customers assess the VFM you offer

Clearly, your aim should be for responses to lie in any of the green shaded boxes, whereupon you might expect much ‘repeat custom’ – otherwise customers might think your offerings were no better than ‘total crap’ as Gerald Ratner once unwisely described the jewellery he sold

However, it’s interesting to note how some price levels influence customers’ opinions about the quality on offer to them viz:

• A customer is given a glass of wine to taste and told it costs £10 per bottle

• He’s then given another and told the second glass costs £90 per bottle

• Tests show most people say the second glass tastes at least twice as good as the first – but both glasses are exactly the same wine

• People can be that easily misled by price