The "peace of mind" market segment

I heard this amazing interview of Marc Fleury, CEO of JBoss Inc., an open source software company that produces a product called JBoss. The interview on ITconversations.com discusses open source software, where the market is heading, who they serve, and the value they deliver. I'd strongly suggest that you listen to it. It illuminates a lot of areas not just on software but on business as well. But there was a curious phrase that caught my interest - "selling peace of mind".. and it made me wonder:

Is there such a market segment or is this just another gimmicky phrase?

How do you price a product or service to this segment?

I feel there's some truth to this.. Customers (especially belonging to the Baby Boomer/Geezer age-groups) do want peace of mind from their suppliers, including B2B suppliers Here's a two step approach to be followed to determine the value of your customer's "peace of mind". The FIRST step: Take a look at your product from the point of view of a customer. How much does it cost her to deal with your company, get information, buy from you, install/implement in her company, follow up and fix quality problems, get service from you and so on.. you've probably done such calculations when you tried selling solutions. You could get this information from the client herself. Some of these are quite tangible - like the cost of post sales service; but some are very diffuse - such as the sales cycle, information gathering and so on. Use hard financial numbers where possible, and make educated estimates where no numbers are available. This total sum is the cost of doing business with you. Now pick out those cost headers that could be avoided and/or are a nuisance. The sum of these costs is the premium above the "base price" that a customer would "willingly" pay your competitor to get peace of mind ~ simply because the customer is already paying this to you! This premium needs to be reduced of course but to what level? Here's how - The SECOND step: Look at sectors that are highly efficient - computer hardware, supply chain logistics for food etc. These sectors used to be highly prone to glitches and other quality problems. Look at profit margins in this business. They're razor thin. But there are some companies even in this business who take on more of the "customer's share of wallet". These companies also price sharply, but they enjoy a little premium.. Calculate this from their financial statements. US companies typically give details of their gross margins. This premium can be described in terms of percentage of price. You should aim to reduce your own "peace of mind premium" to this level. That's all! Naturally, you would not need to reduce your price drastically, but you could reduce your costs?? Eventually price erosion will hit your business as well; it makes sense to redesign processes that give your customer her "peace of mind" at an affordable price..? If you are selling bare bones products, you could create embedded services around your product and price them to the value of the customer's "peace of mind" premium!