I was reading a post from a few months back at Firepole Marketing about challenging conventional wisdom with pricing in your business. In a nutshell the idea is that you should list your prices publicly, even on your website. (For service industries, not retail.) I was drawn in.
The traditional rule of thumb is that you never do this, as it encourages people to comparison shop and potentially go with a cheaper competitor. A popular sales tactic is to pitch your product and wait until you have them on the hook, once they have to have it, to give the price.
The article’s author, Sophie Lizard, points out that this can create high pressure sales situations where they’re afraid to ask for the price and you’re afraid to volunteer it. The old approach of asking them how much they can spend and quoting around that numbers is, well, old. Instead, if you’re upfront about the price (or they’ve already seen it on your website) they are theoretically already okay with what you’re charging if they are sitting down to meet with you.
This saves time, as you meet with far less people with no budget hoping for free advice or to get something for nothing.
It struck me suddenly in considering this. Popular marketing wisdom holds that you identify the characteristics of your ideal customer and seek them out, spending less time pursuing those who are not your target. Business coaches say that you should avoid attracting coupon customers or those that only buy when it’s the lowest price, as there is no customer loyalty. With this in mind, it seems to render the concern about people viewing your online prices and going to a cheaper competitor less of a detriment. Did you really want that client anyway?
If we say that ideally a customer does business with you because they know you, like you, and trust you (that they see why you’re different) and not because you’re cheapest, they would still do business with you even if the other guy up the road is a few bucks cheaper. Aren’t you potentially saving yourself some time by weeding them out before you even meet with them? Sure, if times are tight you may take any business you can get, but a solid growth model does not include bending your prices for customers that are not really your target.
For me, I’m a comparison shopper. Once I’ve decided to buy something, I’ll shop around for the best deal. But that is not the same as shopping for work to be done. When that is the case, Price is part of the consideration, but I also want to make sure I’m going to get the work done and done to my satisfaction.
the old adage “you get what you paid for” holds true, to some degree. I think it’s up to the person to research things through until they are confident they’ve made a good decision. It’s all up to the individual. But I think impulse shoppers are mostly what sellers go after. The young people who see something and just buy it, no matter what the price is.
Absolutely. In retail catching people by impulse is important, and for the most part 3 sellers all carrying the same retail product will deliver, of course, the same retail product. The main differentiators left are “How good is the service?” and “How clean and easy to navigate is the store?” If you’re dealing with a person who still doesn’t care, then they’ll shop anywhere the price is lowest.
With service industries it’s different because even if they use exactly the same equipment the human element is going to be different. For a lot of those types of businesses, a coupon shopper is not going to be as valuable a customer because price is the primary motivator. This person is more likely to haggle over the existing price (even if it’s already reduced), nitpick, or experience buyer’s remorse. This is a negative experience for everyone involved.
As was pointed out in the article I referenced, the customer is making more of an investment paying more than rock bottom prices, and that changes the dynamic of their emotional investment in a positive way. As long as you can deliver results, everybody wins.