The most common mistakes when discussing price
Two recent experiences highlighted common mistakes businesses make when it comes to their price. Be sure to avoid these critical errors.
I was recently flying across country. I had an opportunity to purchase Wi-Fi for my flight. I saw that there was an option to purchase a monthly subscription. Figuring that I would be making several trips that month, I opted for the monthly program for about $50 instead of the $15 flight charge. Of course, only two of the other flights that month had the service. But, I knew I was taking that risk. I still felt good about the service and the purchase.
Surprise – the buy that keeps on buying
What was surprising was not the $50 charge on my bill, but it was the charge a month later for $50. The day I saw the charge, I visited the website. I logged in to my account, but saw no mention of a recurring subscription. I used their online chat, and the representative said “When you signed up, it was for a recurring service. If you don’t want it, you have to contact us. Otherwise, it continues.” There was no way to unsubscribe via the website.
When I signed up for the service, it required an email address. They could easily (and at no expense) notify customers that they will be billed the next day unless they take action. Instead, they decided to bill customers in stealth.
Why is this stupid?
Why would you charge someone without informing them? The only possible reason is that you know they would cancel the service if they knew a charge was coming. Though this might help a company’s short-term revenue, it will turn those customers into detractors who will resent the vendor and seek “revenge.” Fear not, the revenge will generally not result in a violent rage. Rather, they’ll just tell everyone they know how slimy you are as a company. Look out for your customer’s best interest, and you’ll earn their trust, loyalty, and repeat and referral business.
Keeping price a secret
A salesperson called the house and described their natural, organic food products delivered to our door. It sounded like good stuff. After some discussion, I asked the salesperson if he could share the price list so I could determine if the premium they charged for their product would be something we would be willing to pay – I didn’t want to waste either of our time. I assumed that their product would cost more than other options.
The salesperson said “We will only discuss price in person.” Their unwillingness to share any pricing information raised a red flag. Was there pricing so offensive that they could not share it? Did they not have consistent pricing? Did they not price their meats by the pound?
Share the price
We are probably their ideal demographic. Not sharing their prices made me uncomfortable, and we decided not to meet with them.
I advise clients not to share price too early (before you know what the client needs) or too late (after you have invested too much time). The old-school notion of withholding information from your potential clients just doesn’t work anymore. If your price is higher than the market, explain why. If you are the low cost leader, tell me that. If you fear that clients will not meet with you if they know the costs, then you are likely wasting your time.
Your Turn
How do you feel about discussing price? When is the right time to discuss price?
About Ian AltmanIan is the author of Upside Down Selling, an Amazon #1 Best Seller. CEO’s partners and executives call on Ian as a trusted author, strategic advisor, and speaker on sales and business development (some people even think he’s a good guy!). Every day, he helps his clients discover how to flip the buyer-seller dynamic on its head, regain control of the sales process, and earn the role of trusted advisor to dramatically grow revenue.
Category: Consultative selling, Grow Revenue, Sales Eduction, Sales Tip, Upside-Down Selling
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
Ian, several months back when I began my inbound marketing initiative, “we” were all “coached” to publish our fees on our website which I did – No secrets and as a result, my site traffic has gone up substantially. However I found that this “full discloser” approach was not as effective as I had hoped. Since I also publish a lot of details about my services and value propositions, prospects had NO need to talk with me unless they were actually ready to buy. Based on this, I adjusted my website to include our fee “structures” and how they are different than my competition and this approach has resulted in more conversations and subsequent sales.
Mike,
Thanks for sharing your views. I am always an advocate of sharing your fees as soon as the client appreciates the value of the challenge you help them solve. We don’t want to do it sooner. We also don’t want to wait too long – they might forget. I think the idea of “how you price” on your site is entirely appropriate. Each situation is different, and you don’t want to provide misinformation.
Consider this: A prospect calls and says “Mike, I read some content on your site, and after our brief discussion I can see where you would add tremendous value. How much do we need to invest?” You could either give them a range of investment, or say “I’ll tell you only when we get together.” The latter approach would probably piss them off.
I think you are taking the right approach.
The best time to discuss price is when the client is clear about the value your service would provide for them or their organization, and when they are also clear about what it would cost them to not solve whatever challenge they are facing that you can help them solve. I had a sales guy call me this morning saying he was looking for a small business coach in the DC area and wanted to find out more about my services. Turns out, he was actually calling to sell me ad space in a magazine he publishes, and 5 minutes into the call he’s telling me the prices for three options of ad space. Unbelievable! That is an example of the wrong time to tell someone the pricing! Not only did I not ask for it, he cold-called me under a pretense of seeking my services. There’s a blog topic for you, Ian!
Suzi – great insight. Here is the blog you suggested: http://www.growmyrevenue.com/2070/why-the-gatekeeper-hates-you/