Last Friday on our Sales Forum we spoke about pricing and the many intricacies associated with it!
Pricing negotiation was compared to a “poker” game, where you “don’t show your hand” too early!
Pricing can often be the default objection of a customer. When you investigate further its rarely the root cause of the buyer’s reluctance.
For this reason, its good practice to not discount your pricing until all other objections have truly been addressed and there is a genuine pricing obstacle.
Discounting too early and too often will erode the perceived value of your product / service. You also run the risk of potential new clients expecting the same discount they heard about!
Continuing the Kenny Rogers theme, we spoke about “knowing when to walk away….”!!
Whatever you set your price at, knowing your walking away point and sticking to it comes from being confident in your pricing and knowing your value.
Several sources can inform your decision on pricing.
- Competition: What is the pricing structure of your competition in your target market.
- Stage of the business: How well established is your product / service. Having an established reputation provides more confidence in your pricing.
- USP: Does your product / service have a unique selling point which differentiates you from the competition in pricing?
Pricing models also vary.
Some clients prefer to pay an upfront investment while others are more risk averse and would prefer what is called a SaaS model, (software as a service) e.g., paying for Spotify or Netflix or paying a monthly subscription to a cloud based invoicing service.
If you’re providing a service, do you charge your client:
- Project Completion?
For professional services, hourly charging does not work easily – the customer wants to pay for the face time and not the research time. Your hourly price needs to cover your admin and background work.
Charging by the day or by the whole project can be effective if both parties are clear on the deliverable outcomes. Clear objectives, success milestones and weekly check ins are critical.
There could also be specific pricing for different cohorts of your target market e.g. Business Coaching, a few full priced sessions may be appropriate for some clients while a more long term relationship may require more nuanced pricing.
Finally, we discussed how Zero can be a very good price if you are very clear what the value is to you.
If you are:
- Starting out,
- Want good testimonials,
- Want good referrals,
- You know the client will buy more,
- You know the client will lead you to another bigger client,
all of these are good reasons, but make sure the client knows why they are getting this gift and that it is not open to others.
If you want to dig deeper into these issues or any other Sales challenges, why not join us for our Sales Forum on Fridays at 2pm on the Ireland Together Platform or contact me directly to see if ActOnSales can be a fit for your business.