Welcome to Biz Book Fridays! I’ve got a whopper of a biz book habit and I’ll read ‘em so you don’t have to. I bring the juiciest morsels straight to you.
Sooooo, you’ve got a product. You priced it. You’re marketing it. You’re making sales… or you’re trying to.
But you keep getting push-back on the price. Maybe people are writing in to tell you you’re “fuckin’ crazy.” (This has happened to me!) Or maybe people are telling you politely that your product costs too much. Maybe they’re begging for discounts.
That’s what today’s Biz Book Friday is all about.
Today’s source is very excellent (if dry) Pricing with Confidence. (Yup, the same book I used last time, about cake-and-icing pricing.)
Talk, Talk, Talk About Money…
How much of your time & marketing copy do you spend talking about price?
If all you talk about with customers is price, there is no price that is going to be low enough.
And it’s true, too. You know it, if you’ve ever gone to Target (or Amazon) to buy a toaster, a blender, a vacuum, or a digital camera… and found yourself comparing the individual products based a bunch of specs you never even knew about or cared about before.
Just because those specs were there, they became a data point. An important data point.
Price is like that. In our fear, we tend to think it is the data point. But, in fact, it’s simply a data point.
By making price front & center, we give it more power, and we lead customers to shop on price instead of a million other specs they could shop on: design, customer service, value, reliability, performance, enjoyment, clarity, time saved…
Takeaway: don’t fuel your customers’ tendency to obsess over the cost of your products. Encourage them to obsess over its value, instead.
Customers Can Smell Your Fear
Feeling totally wobbly over your price? You better get that fixed ASAP.
The best companies know they have to display a little arrogance about the value they offer in order to send an important signal to potential buyers. That signal is: We are confident in the value we provide and, therefore, the prices we charge.
Customers are like sharks: they can scent fear and weakness from miles away. And when they do, can you blame them for pushing on you for discounts and deals?
If lots of folks are asking you for discounts, this could be why. It may not be that your customers think your prices are too high. It may just be that they scent your blood in the water and can’t help themselves.
That’s just human nature, red in tooth and claw… and in pricing, too.
Takeaway: Confidence in your pricing is something that comes from within. Figure out why you’re feeling shaky, and remedy it. Then go and look for low-confidence signaling in your product, its copy, the way you talk to customers, etc., and root it out.
George Lakoff says “Change the Frame”
Remember the first bit from, oh, a minute ago? “If all you talk about is price…” — this here is the corollary.
When your salespeople get asked for a lower price, what is their response? We suggest it should be some variation of “What do you know about us and how confident are you that we can solve your business problem?” … How does the business pain impact the customer’s financial goals? How does it threaten relationships with their own customers? How does it limit the customer’s opportunities?
When customers start talking to you about price, your first and last reaction is to talk about price right back.
But this is wrong. More importantly, it’s ineffective.
The right way to respond to price concerns is to figure out if the customer: has the pain your product soothes or solves, has it in the degree that they are a good customer for you, has confidence that your product can soothe or solve it, etc.
If they are the right customer for you & your product, this line of questioning will get them thinking about just how valuable your product could be, instead of how much it costs.
If they are not the right customer, this will bring that to light… so you can ignore their opinions about price, since it’s not a good fit anyway.
Takeaway: Don’t get snared into a price conversation. Turn it into a value investigation, instead. Change the frame.
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Good post – I recently found your blog, nice to see someone who seems to think about products and business in a similar way to me. Thought I was the crazy one for a while amidst all the “getting investment” talk out there.
My company has a CMS product called Perch. For which we charge a license fee. So we get some people complaining about how there are lots of free things out there and they want to use our CMS because it looks good, will save them time and so on, but it isn’t free.
As you advise we don’t start haggling abut the price, we just point out that the license fee is less than the hourly rate for most designers – if it saves an hour of time they are in profit. In addition many of those free things charge for tech support or just have community forums – not the unlimited support they get with us. If they still grumble I figure they aren’t a potential customer so I wish them well with their quest to find the perfect free thing!
You’re spot on with figuring out what the real issue is behind objections.
In general, objections that customers bring up are the customer saying, “please help me figure out a way around this” or “please help me understand ‘x’” because they really want to buy the product. They want the person selling the product to help them overcome the objection and then they will buy.
We teach sales rainmakers to get excited about objections to sales because it shows interest and a willing to commit more time to buy.
I like the frame of the value investigation because it’s also a spot where you could provide value to the customer to build trust and rapport.
A really dumb situation I used to see in large enterprise software deals where the customer had decided to buy but then handed negotiations over to purchasing.
Purchasing had objectives based on discounts. They didn’t care about value or even the final price. So the sales team started with a high price, purchasing negotiated a large discount.
End result: - purchasing is a hero for getting 50% discount - sales is a hero for selling an enterprise license and meeting quota - customer spends far more than needed and ends up with a whole lot of shelfware, will never buy again or be a reference
Dumb all-round