It was one of those seminars i was asked to speak at, in Hyderabad, and it was Q&A time. A hand goes up. A gentleman says he works with a company that's developed a complex software product better than the world's best-IBM in this case. And he was having a hellish time marketing it internationally.

I'd just finished droning on about my pet theme-why we need to build world-class software products and not commodity software services. Anyway, the gentleman goes on to ask what might he be doing wrong?

World's best? I asked. Yes, I was told. Good, I nodded, and asked how much IBM charged for it, and how much he did. Oh, I got a proud answer-we're priced at one-fifth their levels. So I countered, you must really have a shoddy product, right?

That there was shock in the house is putting it mildly. Amidst the sputtering, I continued. If I'm a buyer, and you say your product is one-fifth the price of a renowned market leader, would it not be fair for me to think that you've cut corners, that your product's just not good enough?

I believe that price is a key component in building perceived brand value. It wouldn't be Nike if they sold their shoes at Rs 400, even though they buy them from South East Asian factories for much less. It wouldn't be Microsoft if they sold a legal copy of Office for $20, like they surely could. Price builds brand, price builds respect, price builds credibility. And price builds muscle to the bottomline that helps you market more aggressively, support your customers better, and live a more comfortable life yourself.

What of affordability? Aren't customers supposed to buy cheaper? Well, I'll let you in on a dirty little secret. The answer is, whether you're a business buyer or a househusband, you really don't buy the cheapest. You buy the best brand you can afford. If you can afford a Rs 4,000 shoe-or a $150,000 software package, you're not even going to consider alternatives that are a fraction of that price. If you pay Rs 300 for a doctor's consultation, you'll never go to one that charges Rs 3, or Rs 30, even if that person's just as qualified. Price builds credibility, price builds respect.

Look at yourself. Is the sari, the shoe, the watch, the shirt, the vehicle you have, the cheapest you could get in the market? Or the best you could afford? So why don't we take these learnings to heart and charge what we're actually worth? Look at it another way-think of any product category, anywhere in the world-and tell me where the lowest priced product is the leader. You'll come up as empty-handed as I did.

I really define brand as ''what you pay more for''. My challenge back to the gentleman was simple-if you're the world's best, prove it by asking more for your product than IBM does. My prediction then, and I stand by it today, was that he'd double his sales if he quadrupled his price.

While I'm not sure they've followed through on my suggestion, this wasn't the first time I'd come across resistance to charging top-rung rates. This 'we're-notworthy' mentality is deep-rooted in our lives. When I was an employee, I pushed to be paid top-dollar, not because I needed the money-I didn't-but because it firmly 'positioned' me in the eyes of senior management. As a solo marketing and business advisor, I charge more than many MNC consultants-as I believe I offer better results. Bollywood stars know exactly how their prices position their 'brands'.

I push the companies I work with to build the best products they can, and then charge as much as the market can bear. One Indian firm I work with has sold its software product to customers at Rs 1 crore-plus per installation; competition was at Rs 3 lakh. People eventually pay up for what they believe to be good products. As my mentor Kanwal Rekhi says, how buyers think is summed up nicely: ''Mehenga roye ek baar, sasta roye baar baar.'' And in the Lalitaji conundrum-do you want to be the sasta cheez, or the achchi cheez?

Mahesh Murthy, an angel investor, heads Passionfund. He earlier ran Channel V and, before that, helped launch Yahoo and Amazon at a Valley-based interactive marketing firm. Reach him at Mahesh@passionfund.com.