Keep Your Pricing Competitive and Timely
By Ian Altman | Forbes
Are you charging too much, not enough, or just the right amount? What impacts the buyer’s decision? Developing a cohesive pricing strategy is one of the biggest challenges a business can face. Sure, you know your product or service adds extra value compared to your competitors’, but does the potential customer really care, or do they just want a better deal? These problems have only become more common in the Information Age, where technology can give clients a wealth of information on which to base their decisions.
I had a detailed discussion on a recent podcast episode with Craig Zawada, Chief Visionary Officer of PROS, a company that helps other organizations use the latest technology to drive incremental sales growth and profit. We covered the biggest problems people face with pricing, the importance of timing and responsiveness, and winning with value instead of price.
Houston, We Have a (Pricing) Problem
Perhaps the biggest problem that companies run into comes down to a lack of innovation. They simply use old, outdated methods, that are one step above a Ouji board, to determine pricing. This just doesn’t work. In contrast, successful companies adapt their online pricing regimen to fit modern Internet culture. Your clients are used to knowing exactly when a vehicle will arrive and what the trip will cost with services like Uber and Lyft. So, they might not be willing to wait days (or even hours) for a quote from your company. Keep things simple. If you need a Venn diagram and an abacus to explain your pricing, you’ve lost the point.
“When you don’t share anything about pricing, your client gets frustrated. They know that you could explain what could cause your price to grow or shrink. When you don’t share that insight, you erode trust,” says Marcus Sheridan, keynote speaker and partner at Impact.
This doesn’t mean that you need to share an itemized price list. Rather, you might simply have a piece of content on your site that helps clients understand the factors that impact cost.
For example, we recently had a large tree fall on our property (it also fell on our vehicle). A tree service company might explain on their website that their fees depend on the height of the tree, diameter, type of tree, proximity to other pieces of property, risk, and other factors. By openly helping to explain what impacts pricing, your clients will see that you are not hiding anything.
Be Responsive
Remember in high school when you used to wait 3 days to call someone back after you went out with them? Seemed like a great way to build the suspense, right? Yeah, that’s not going to fly with your customer base. In fact, Craig Zawada says that “it’s important to be smart about pricing and apply the science to it, but what’s driving it in a lot of cases is meeting this new expectation of speed and intelligence that customers expect.”
Many businesses make the mistake of keeping their customers waiting while they’re being meticulous in their price calculations. While I would never suggest being anything but accurate and precise, this doesn’t mean that radio silence is acceptable while you’re coming up with a quote. To keep your customer on board, frequent communication is key. In fact, by sharing your process, they’ll see that you are being thoughtful.
Price First or Price Last?
There are people who claim you should be the last bid. Others feel you should give your price first. According to Craig, “Buyers purchase more than 50% of the time from the company that quotes first.” As hard as it may be to believe, not everyone goes off of price alone so it’s important to keep that in mind when getting back with customers. In addition, it’s crucial to remember the importance of timeliness and open communication.
Win With Value, Not Price
Let’s face it: no matter when you quote or how high-tech your website is, if you can only sell because you have the lowest price in the industry, your product isn’t worth selling. You know you’re capable of selling something that goes above and beyond — so go for it!
Shopping is about value more so than price. I’m sure you’ve seen something expensive but extremely valuable (like a medical treatment) or something cheap but useless in its value (like a broken rubber band). Find the right people who value what your company does, and make it worth it for them as you work together.
It’s always worth it to differentiate yourself. Take a look at your competition, see what you can provide to customers that they don’t, and set your fees accordingly. As Craig says, “A lot of companies have this idea that everyone wants to shop and get the lowest price, but in most cases they’re not… people are willing to pay for speed and quality.”
It’s Your Turn
Today’s changing culture presents new challenges for businesses as they develop pricing strategies. To maintain your success, it’s important to recognize the problems you might be running into, stay responsive to your clients, and provide unique value.
What about you? Have you ever noticed a new technology or behavior that drastically changed how you price your products or services?
Bestselling co-author of Same Side Selling, Ian Altman is a popular keynote speaker, and host of the Grow My Revenue Business Cast.