Question: We don”™t know if our price is too high or too low. How do we figure out what is the sweet spot for the customer? I”™m always wondering, “Are we leaving money on the table?”
Thoughts of the day: Figure out how well your product or service fills a need versus the competition. Make sure more people become aware of how well your product or service fills that need. Just because it”™s hard to close a sale doesn”™t mean the pricing is wrong. Have a backup option that looks different. Pricing needs to be evaluated regularly.
It”™s not about how much it costs your company to make a product or service; it”™s about how much the market will pay and how your company”™s product or service stands out.
Do homework on the marketplace. What other options does the customer have? Why do they choose those options? What would make your option more attractive and more unique? What do customers need that they haven”™t even thought of yet? How can you add value? Set your company”™s product or service apart from everything else available in order to boost the premium you can command.
Make sure customers know what you have available and how to find your company when they want it. Help eager customers comparison shop by having a list of evaluation points that differentiate your company and its offerings. Home in on separation points that meet needs customers have already cited.
Gather testimonials from satisfied customers. Help customers get publicity and ask them to cite your company as part of what has contributed to their success. Circulate publication reprints that reference your company”™s contributions to new prospects as proof sources.
Use social media. Spread the word about how your company has helped its clients solve their needs. Put out suggestions that lead prospects to make inquiries.
Pay it forward by helping people get to know each other. Connect successful clients with prospects through referrals, networking sessions and specific, targeted introductions referencing how they can be useful to each other. They”™ll have your company in common and can talk about how you”™re helping them each to succeed.
Hold demonstrations. Carefully set up trials, ensuring that you don”™t give the product away for free. Give prospects enough of a taste to have them wanting more. An eager prospect will be more likely to purchase at a higher price.
If a prospect balks at a price, it doesn”™t necessarily mean it”™s priced wrong. Many times people will value something that seems just out of their reach because it is out of their reach. They see affording the prize as moving into another stratum.
If the product or service is priced too low and is too easy to afford, it may be assumed to have limited value. It”™s not unusual to overlook a perfectly good solution, figuring something that good couldn”™t possibly be available at that price.
Be prepared to wait it out when a customer negotiates by asking if you can lower your price. A smart customer will always ask that. It doesn”™t mean you need to give. Instead, reply that your price is your price and look them in the eye when you say it.
If you do feel the need to drop price in order to secure a particular order, make the discounted product or service look measurably different. Take something away. The last thing you want is customers comparing notes and asking why one paid half what the other one did, with no appreciable difference.
Even at the top of the market, prices eventually need to be raised to keep ahead of inflation. Set up a schedule to regularly review your company”™s prices versus the market. Reintroduce an old product with new bells and whistles. Think about raising prices in off seasons, the end of summer and year”™s end, when customers are busy looking at their own businesses and less likely to inspect what you”™re doing. Scatter price increases rather than raising prices on all of your products at once.
Looking for a good book? Try “Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table” by Reed Holden and Mark Burton.
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at 877-238-3535. Do you have a question for Andi? Send it via email to AskAndi@strategyleaders. Visit AskAndi.com for an entire library of Ask Andi articles.
