Top tips for price communication
Wednesday, February 20, 2019
It’s a common theme. Many of us can bang on for ages about our products and services. But when it comes to price, we clam up.
Everything must have a price in business. We all know that. Prospective customers know that. So why get all nervous and tongue-tied when it comes to talking or writing about it.
Whatever the reason, let’s look at some ways you can do a better job of telling them how much it is.
Known your comparisons
In terms of price, everything is compared to something. For a restaurant to be considered expensive, another must be cheaper. If one television is a bargain, there must be another model or brand with a higher price ticket.
Understanding your competitive set is important. And in many instances, we can manipulate it to help our cause. For example, if you want to be in the luxury car market, don’t compare yourself to a mainstream brand. Your cars might seem expensive alongside Ford’s specification. But if you try and compare your brand to BMW and Audio, perhaps you’re better value?
You can also change your competitive set by changing the category that you’re seen in. For example, you might run a hotel and offer luxury spa weekends. If you simply remain in the “weekend breaks” category, your pricing might seem high. But if you communicate around pampering packages, or health and well-being detox stays, it might be a different case. Alternatively, you could go down the gift route for yet another competitive set?
The options depend on your product or service. The point remains the same. Know what you’re being compared to and make sure it’s what you want. And look to change it, if need be.
Different ways to state the price
You might offer an annual subscription for £250 a year. Do people see that as expensive? £20.83 a month seem better? Or £4.80 a week? Look for alternative ways to communicate the figures and find the least painful route.
Printers can price per brochure, per thousand or per job. A hire charge could be quoted per hour, per half-day, per week. You always have many options when it comes to quoting your prices. Work them all out, test them on some friendly customers and work out which method sits best.
And when your pricing is complex, know the worth of the word “from”. At least by stating your prices start from £100, prospective customers have an immediate idea of the ballpark. Just don’t shock them further down the line with a £5,000 price-tag!
Let your customers decide
Many customers use a tiered system for pricing. Psychology backs this up. You’ll have heard people say “good, better and best” or “gold, silver and bronze”. Whatever you call it, the principle remains the same:
Create an entry-level option at the lowest price
Create a mid-level option with more value
Create a top-level option with maximum value
Research consistently shows that when confronted with three options, most people will pick the middle one. They feel the entry-level price is too basic and the top-level option is over specified. So, the best value is thought to be in the middle. Flag it up as your best value option for even better results.
By pricing in this way, you’re letting the customer decide, and giving them a way to pay less if they want to. Or more!
Interestingly, if you provide two pricing tiers, people will invariably choose the lower one, assuming the higher option is just expensive. Three is always the magic number.
Customers want value
Among all your pricing deliberations, remember one thing. Customers simply want value. They don’t care how much it cost you, or how much your time is worth. They want to know what value your product or service will deliver to them. And with this information, they can determine how much it’s worth to them.
If the likely outcome of your services is £10,000 of new business, or 100 new leads, the value to the customer is far greater than a £1,000 return. So, they’ll be prepared to pay more.
It’s up to you to communicate this value, so that your pricing makes sense.
There are complications of course, when the recipient’s value is emotional and not quantifiable. If your service will boost their confidence, support their lifestyle aspirations or make them feel more fulfilled.
The important thing is to recognise this difference and still work to communicate the right values. It's just, you cannot put a price on that value. But they can. And it’s often higher than you think. Consider luxury fashion brands, for example.
You must also ensure that your pricing aligns with your communication of value and market positioning. So, if you’re offering a top-of-the-range product, don’t then communicate a rock bottom price. Or vice versa.
Keep it simple
It’s all too easy to make things more complicated than they need to be. Don’t. Because it will confuse your customer and send them off to your competitor faster than you think.
I know not everything is easy to pin a price on. You need to understand the requirements first. It depends on the specification that’s finalised. There’s a premium if they need it in a hurry.
But you can always provide a fair indication in a simple way. And by doing so, your customer talks to you with more clarity. And you know that they have a price indication already. It’s a better scenario all round.
Whether verbally or non-verbally, you’ll stick out like a sore thumb if you’re not confident with your pricing message. Know the worth of your products and services. And stick to it.
If your customer perceives that you’re not comfortable with the price, they’ll wonder if they ought to question it too: “Perhaps you know it’s too high? Perhaps you’re going to make too much out of me?”
Deliver your pricing with confidence, clarity and a clear explanation of the value you’ll deliver.
And when a price must go up…
We all have to do it sometimes. Prices must increase. So, do it the right way from the start.
Be up-front. Don’t hide it or try and sneak it in. That’s a fast way to lose a customer. Use the opportunity to thank your customer for their business, before clearly explaining why you need to increase your prices. If you can add more value at this point, do. Give them notice of the actual price rise and if you can, retain a more basic, lower-priced option for those that prefer to stick.
Don’t ask customers for permission to increase prices (unless they are a huge part of your business when you might instead ask for a conversation about pricing), don’t get barked down by your customers and don’t tell them it’s because you need to increase your profitability!
Small, regular price increases are far easier to agree than less frequent, large ones. So, have a system in place and work to it.
I hope you feel more inspired to communicate your pricing now? If I can help you with any copywriting around it, please get in touch.