Have you noticed how petrol pumps are priced to the third decimal place?
If petrol goes from $1.999 to $2 per litre that extra .001 cents means that if you purchased 100 litres, it would cost you ten cents more. A mere ten cents!
So why bother pricing to the third decimal place?
Psychology.
Studies have shown that consumers perceive prices to be cheaper if they end in odd numbers such as 95 or 99 cents.
One reason suggested is that we have learned to associate ’99 cents’ with sale prices. Another is that, at a glance, a price that ends in a few cents creates the impression that every last effort has been taken to ensure the product is being offered at its skinniest price.
There is also a theory that, as the eye reads from left to right, we pay more attention to the digits on the left. We know that the whole numbers on the left are the ‘important’ ones so, in our haste, we dismiss those on the right—creating a rounding down effect.
To make a distinction, many high-status brands make a point of using even numbers and display round ‘00’s to differentiate themselves from their more desperate cousins.
When it comes to price, perception is reality.
Price creates expectancy. The same way there is a placebo effect in medicine there can be a placebo effect in pricing. Consumers buying an anti-wrinkle serum for $99 may well expect that cream to be much more effective than the $18 lotion purchased in the aisle of supermarket, even if there is no real scientific evidence to back it up.
Our perception of a product or service creates ‘price points’. Price points are the points at which demand changes. For example, demand for a bulk standard, no lettuce, hamburger may drop off when it passes the $3 mark. However, demand for a ‘gourmet’ burger may have a price point somewhere between $7.95 and $12.95 depending on the institution that serves it, and its relative merits compared to the rest of the burgers or meals on the menu board.
Price points
Different price points create different perceptions.
There are psychological price points e.g. $9,999 looks a lot less to the purchaser than $10,000.00. As a general rule when you are the vendor, and you want to make the cost look minimal, you compress the number of numbers to as few as possible e.g. $195.
Conversely, when you have a promotion and you are adding in extra bonuses you will want to advertise $100.00’s and $1,000.00’s of dollars extra value—you make the deal look as big as possible by adding in lots of zeroes.
Different price points attract different types of customers. For example, when listing your house for sale online the difference between $499,000 and $500,000 will put your house into two different price bands exposing you to different customers.
Price points occur within industry categories e.g. Used cars $2,000 and under, Cars under $10,000 (often phrased as cars under $9,999). At the top end there are cars ‘$250,000 and above’ which often slip into an elitist category of their own ‘POA’—Price on Asking.
Conveniently, price points may be used to separate customers into categories. Online electronic stores allow you to search for TVs by price bands e.g. TVs $400—$500, $500—$600 etc
In addition, price points can be used as part of a customer acquisition programme. For example, ‘free’ might be the price point that entices the customer into reading a chapter of your book. They later buy the $9.95 book and then attend the $499 training course.
For existing customers, price points can be aspirational. Pandora™ bead lovers well know the different price points for glass beads versus silver or gold beads.
Similarly, once you’ve bought an entry-level Porsche Boxster™ and you have adjusted your price radar to Porsche’s price points, it might lead you on to total commitment in the form of a 911 Speedster™—POA of course! The law of relativity comes into effect, by their standards, an extra couple of hundred grand starts to seem like real value for money.
Flat rates
In some instances, price points can be a marketing point of difference in their own right e.g. the $2 shop or the ‘all you can eat buffet for $14.95’. Prepaid holidays, such as those offered on a cruise or at Club Med, provide consumers with the security, convenience and peace of mind knowing that they have paid for all the food up front and that they are not going to have a budget blow-out later.
In general you can count on two things: People prefer a flat rate, and people don’t like to think too hard. Phone companies know this when they package 60 minute plans, text 2000, anytime minutes, free neighbourhood call plans and the like. Banks, gym memberships, infomercials and insurance companies leverage this when they divide the total owed into repayment plans of ‘just $xx per week or month’.
You can take this a step further and show your customer how minimal the pain will be e.g. ‘Buy this credit card insurance plan for less than $3.00 per week—less than a cup of coffee’.
Studies done in the car industry have shown that consumers are more sensitive to the size of the repayment rather than the duration. Hence, you may find consumers respond more positively to a repayment plan of $99 per month over 48 months ($4752) rather than $129 per month over 24 months ($3096)—the appeal of the lower monthly repayment (and instant gratification) over-ride the better option for the bank balance.
Likewise, in the consumer packaged goods world we have seen manufacturers avoid price hikes, instead reducing the size or volume metrics. Have you noticed how much smaller your favorite candy bar and biscuits have become lately?
Versioning and Bundling
Whenever a new version of software comes out it creates the opportunity to change the price. Not so long ago, you had to pay more for a mobile phone in pink—another example of versioning whereby you provide the ‘same but different’ product and charge a different price.
Bundling is a price strategy that plays to the consumers’ desire to ‘get a deal’. It also makes it hard for consumers to make ‘apples with apples’ price comparisons as the components vary in each package. Computer companies especially like to bundle software, games, printers, modems, headphones and scanners into packages at various price points. Typically: $999, $1,299, $1,599, $1,999 and so on.
Ultimately bundling serves to sort consumers into groups either by price or product.
Your Pricing Strategy
The strategy you adopt when pricing your product or service begins with how well you understand your customer. Is your customer a bargain-hunter or a seeker of ‘the best quality money can buy?’ Will your customer object more to an increase in price or a decrease in quantity?
Psychology does comes into play with respect to how you price your products and services but it is important to remember that putting ‘99’ at the end of your price will not change your business a great deal if you fail to offer your customers good value.
You may choose to offer customers a price ending in an even or odd number, a bundled package, a different version, a flat rate plan or let them pick a plan that suits them, but in the end it is wise to remember the words of the late, great, advertising guru, David Ogilvy when he said: ‘The consumer is not a moron. She is your wife’ [or best friend].
© Jane Francis is the author of 'Price Yourself Right: A guide to charging what you are worth' and 'Price Talks: The Little Book of Price Psychology'. Jane has over 25 years’ sales and marketing experience, including winning awards for creating successful direct marketing campaigns. Jane is available as a Speaker at your next conference or sales meeting, go to www.priceyourselfright.com
Thursday, February 10, 2011
Tuesday, April 06, 2010
Price Yourself Right and Dynamic Pricing
Have you segmented your client base into A, B, C, D clients? On what basis are they segmented – contribution to revenue, profit, good looks, clever wit, political influence, or the kind of car they drive?
In a free market you can charge what you like, to whom you like and when you like so long as you stay within the law and remain solvent.
The thing is though citizens of our democracy have some notion of ‘fair’. People don’t like it when you play favorites – if they are not considered one of your favorites, that is.
People don’t like sitting on a plane knowing that their fare was $500 dearer than the person beside them. Similarly, if I knew my dentist charged you less than me I would no doubt get huffy.
How you present your price is important. Did the person on the plane leave it to the last minute to book? Is my dentist rewarding you for more dental work over the last year?
It’s not always what you charge that’s important – it’s how you charge. You need a credible reason for charging people differently.
Take a look at this interesting blog post by J.C. Bradbury, author of ‘The Baseball Economist’.
©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Jane Francis is available as a coach, speaker and workshop leader to help sales teams and companies pitch and present their price with creativity and confidence.
In a free market you can charge what you like, to whom you like and when you like so long as you stay within the law and remain solvent.
The thing is though citizens of our democracy have some notion of ‘fair’. People don’t like it when you play favorites – if they are not considered one of your favorites, that is.
People don’t like sitting on a plane knowing that their fare was $500 dearer than the person beside them. Similarly, if I knew my dentist charged you less than me I would no doubt get huffy.
How you present your price is important. Did the person on the plane leave it to the last minute to book? Is my dentist rewarding you for more dental work over the last year?
It’s not always what you charge that’s important – it’s how you charge. You need a credible reason for charging people differently.
Take a look at this interesting blog post by J.C. Bradbury, author of ‘The Baseball Economist’.
©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Jane Francis is available as a coach, speaker and workshop leader to help sales teams and companies pitch and present their price with creativity and confidence.
Sunday, March 21, 2010
Price Yourself Right and Freelancing
Following on from my last post about being a commodity, here is a nice article by marketing guru, Seth Godin, on why a freelancer should aim to be more than a commodity in the eyes of their clients.
Tuesday, March 16, 2010
Price Yourself Right: Are you a commodity?
"There will never be another YOU. Be you!"
"You are unique", is the message of many self-help books BUT in the marketplace you are a tool, a solution, a product, call yourself what you will but rarely are you eligible to be paid for your uniqueness.
There will nearly always be another plumber, accountant, doctor or fitness trainer you can go to. She may not be your preferred supplier, Deirdre Dare To Be Different Dumbell, but that other person can still fix your problem.
How special are you really?
The only time you are not a commodity is when it is only you who can do what you do, and will be valued for that uniqueness. (Like in your role as a mother, brother, husband, daughter, friend etc).
Unless you wield the brand franchise power of J K Rowling, Miley Cyrus, Venus and Serena Williams, Hugh Grant (who according to the May 2003 issue of Vanity Fair commanded a $3 million fee for a ‘barely’ 20 minute speech to a conference meeting of thoracic surgeons) you are, in the marketplace of life, a solution-provider. You are in other words, a commodity... humbling, isn’t it?
©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
"You are unique", is the message of many self-help books BUT in the marketplace you are a tool, a solution, a product, call yourself what you will but rarely are you eligible to be paid for your uniqueness.
There will nearly always be another plumber, accountant, doctor or fitness trainer you can go to. She may not be your preferred supplier, Deirdre Dare To Be Different Dumbell, but that other person can still fix your problem.
How special are you really?
The only time you are not a commodity is when it is only you who can do what you do, and will be valued for that uniqueness. (Like in your role as a mother, brother, husband, daughter, friend etc).
Unless you wield the brand franchise power of J K Rowling, Miley Cyrus, Venus and Serena Williams, Hugh Grant (who according to the May 2003 issue of Vanity Fair commanded a $3 million fee for a ‘barely’ 20 minute speech to a conference meeting of thoracic surgeons) you are, in the marketplace of life, a solution-provider. You are in other words, a commodity... humbling, isn’t it?
©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Tuesday, March 09, 2010
Price Yourself Right and desperation
What is the best advice you have received from a book?
I read a lot, and always have, but just the other day I was thinking about which books have actually changed my life?
One book in particular stood out. I read it when I was in my early twenties when I was working for a pharmaceutical company where I (along with the rest of the all female sales team) was being harassed by a male sales manager who offered to share expenses by sharing the same room. It was my first ‘real job’ and I got a company car (yeeha!) But I was vulnerable, I didn’t want to quit but I hated the impossible situation of going on away trips with that creep…. Anyway, back to the book: What they don’t teach you at Harvard Business School by Mark McCormack. The single most major piece of advice I took from that book was start saving some ‘Go Jump’ money so that you don’t need to worry about staying on in order to get a good reference and so you can quit any time you like.
In business and in life you never want to be desperate for the money. There have been many times in my life when I have been grateful for the ‘Go Jump’ advice.
Not many books inspire people to take action but this was one that did it for me. Of all the books you have read which ones introduced you to an idea that was so profound that it changed your life in some way?
Life changing books are a good investment, ne c’est pas?
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
I read a lot, and always have, but just the other day I was thinking about which books have actually changed my life?
One book in particular stood out. I read it when I was in my early twenties when I was working for a pharmaceutical company where I (along with the rest of the all female sales team) was being harassed by a male sales manager who offered to share expenses by sharing the same room. It was my first ‘real job’ and I got a company car (yeeha!) But I was vulnerable, I didn’t want to quit but I hated the impossible situation of going on away trips with that creep…. Anyway, back to the book: What they don’t teach you at Harvard Business School by Mark McCormack. The single most major piece of advice I took from that book was start saving some ‘Go Jump’ money so that you don’t need to worry about staying on in order to get a good reference and so you can quit any time you like.
In business and in life you never want to be desperate for the money. There have been many times in my life when I have been grateful for the ‘Go Jump’ advice.
Not many books inspire people to take action but this was one that did it for me. Of all the books you have read which ones introduced you to an idea that was so profound that it changed your life in some way?
Life changing books are a good investment, ne c’est pas?
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Wednesday, February 10, 2010
A short story with a moral
We bought some outdoor timber and canvas chairs several years ago. They came with a lifelong guarantee – a very generous guarantee and not very practical too, we thought, wondering how this would work out.
A few years went by and we took the occasional broken limbed chair in to be repaired – each time at no charge. Wonderful! Until January this year when, even before I got the chair out of the car, I could tell the business had changed ownership.
I was left in no doubt when, hands on hips, I was greeted by stony-faced Viking Matriarch, Olga. ‘That vil cost $60’, she said, ‘Ve will ving ven it is done’. ‘Ok,’ I said, leaving the chair with them.
Although I wasn’t bothered about the $60, and had tacitly agreed to pay by virtue of leaving the chair there under those terms, I decided that when I returned to pick up the chair I would mention the lifetime guarantee – just out of curiosity. (Research purposes, you understand!).
‘You know when we bought these chairs we were promised a lifetime warranty.’ I handed her my credit card.
‘You can’t have veen,’ she barked, stiffening her shoulders and snarling like a Doberman snapping at the end of a steel chain leash.
I stood stock still just in case she leapt for my throat!‘Don’t worry,’ I replied, ‘I said I would pay... How long have you owned the business?’
‘A few months,’ she sawed my card though the machine, ‘PIN or signature? The chairs only had a 5 year varranty. Those chairs are at least 10 years old.’
…. It was a beautiful summer’s day. I couldn’t have cared less about the $60, I just wanted my chair repaired. A person has got to earn a living, I get that. But talk about sensitive! I’d lay a bet I’m not the first person who’s gone in there with a broken chair and a ‘lifetime’ warranty.
I doubt this business will survive under its new owners. Who wants to do business with Olga? Not me. No thanks!
Faults in body language aside, Olga was unable to open a discussion about price, and unable to soften the news that now I would have to pay. Olga feared her customer was going to get something for nothing and leapt to the defensive... Her attitude towards the customer was as foe rather than friend, and she was unable to calm her instincts from that of going into battle to one of colluding with a satisfied customer.
The moral of the story: 1) Don’t promise things your business can’t honor and 2) don’t be defensive about the way you do business. Learn how to be confident and relaxed when discussing your price.
P.S. Actually our chairs are seven years old. But who am I, the customer, to know that?
P.P.S. If you would like some coaching around handling your price discussions please refer to www.priceyourselfright.com
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
A few years went by and we took the occasional broken limbed chair in to be repaired – each time at no charge. Wonderful! Until January this year when, even before I got the chair out of the car, I could tell the business had changed ownership.
I was left in no doubt when, hands on hips, I was greeted by stony-faced Viking Matriarch, Olga. ‘That vil cost $60’, she said, ‘Ve will ving ven it is done’. ‘Ok,’ I said, leaving the chair with them.
Although I wasn’t bothered about the $60, and had tacitly agreed to pay by virtue of leaving the chair there under those terms, I decided that when I returned to pick up the chair I would mention the lifetime guarantee – just out of curiosity. (Research purposes, you understand!).
‘You know when we bought these chairs we were promised a lifetime warranty.’ I handed her my credit card.
‘You can’t have veen,’ she barked, stiffening her shoulders and snarling like a Doberman snapping at the end of a steel chain leash.
I stood stock still just in case she leapt for my throat!‘Don’t worry,’ I replied, ‘I said I would pay... How long have you owned the business?’
‘A few months,’ she sawed my card though the machine, ‘PIN or signature? The chairs only had a 5 year varranty. Those chairs are at least 10 years old.’
…. It was a beautiful summer’s day. I couldn’t have cared less about the $60, I just wanted my chair repaired. A person has got to earn a living, I get that. But talk about sensitive! I’d lay a bet I’m not the first person who’s gone in there with a broken chair and a ‘lifetime’ warranty.
I doubt this business will survive under its new owners. Who wants to do business with Olga? Not me. No thanks!
Faults in body language aside, Olga was unable to open a discussion about price, and unable to soften the news that now I would have to pay. Olga feared her customer was going to get something for nothing and leapt to the defensive... Her attitude towards the customer was as foe rather than friend, and she was unable to calm her instincts from that of going into battle to one of colluding with a satisfied customer.
The moral of the story: 1) Don’t promise things your business can’t honor and 2) don’t be defensive about the way you do business. Learn how to be confident and relaxed when discussing your price.
P.S. Actually our chairs are seven years old. But who am I, the customer, to know that?
P.P.S. If you would like some coaching around handling your price discussions please refer to www.priceyourselfright.com
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Thursday, January 28, 2010
Is it really your price customers are not buying in 2010?
Many a sales manager or business owner has been frustrated by how their own sales people have difficulty selling the 'listed' price. The weak sales person often attributes price as the number one reason why a customer doesn't buy. And why is that?
Often it's because the price was the last thing mentioned, after which the customer simply says "it's too dear", "I can't afford it", "I have to check my bank balance"... whatever. To that sales person it looks like cause and effect - mention price and the customer does a runner but in actual fact the REAL reason the customer is now beating a path to the door is because:
* They want to check out the marketplace (Now they've heard your spiel and got the low-down on price they want to see how it compares with others)
* They already know about a competitive product or service and believe it is better suited to them
* They were only toying with the idea of purchasing anyway
Whatever... To the amateur sales person it may seem as though it was all smiles until the price was mentioned, leading the unfortunate sales person to think that it all boils down to price - but it ain't necessarily so.
The real reason the customer doesn't buy is because he/she is not convinced you have the right product/service for them at this time... You have failed to convince them that what you offer is perfectly suited to them... You have failed to convince them that what you are selling is a 'must-have'... You have failed to convince them that your gadget/service will solve all their problems in the best way possible AND you have failed to convince them of the value your product/service represents to them.
In other words your sales spiel missed the mark. Did you customise your spiel to the customer you have in front of you? Did you find out what was important to them, and the context of their enquiry i.e. how long had they been looking, what else had they considered, what kind of budget did they have in mind, when were they planning on making a purchase, and why was that time important to them?
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Often it's because the price was the last thing mentioned, after which the customer simply says "it's too dear", "I can't afford it", "I have to check my bank balance"... whatever. To that sales person it looks like cause and effect - mention price and the customer does a runner but in actual fact the REAL reason the customer is now beating a path to the door is because:
* They want to check out the marketplace (Now they've heard your spiel and got the low-down on price they want to see how it compares with others)
* They already know about a competitive product or service and believe it is better suited to them
* They were only toying with the idea of purchasing anyway
Whatever... To the amateur sales person it may seem as though it was all smiles until the price was mentioned, leading the unfortunate sales person to think that it all boils down to price - but it ain't necessarily so.
The real reason the customer doesn't buy is because he/she is not convinced you have the right product/service for them at this time... You have failed to convince them that what you offer is perfectly suited to them... You have failed to convince them that what you are selling is a 'must-have'... You have failed to convince them that your gadget/service will solve all their problems in the best way possible AND you have failed to convince them of the value your product/service represents to them.
In other words your sales spiel missed the mark. Did you customise your spiel to the customer you have in front of you? Did you find out what was important to them, and the context of their enquiry i.e. how long had they been looking, what else had they considered, what kind of budget did they have in mind, when were they planning on making a purchase, and why was that time important to them?
If you wish to copy this article please include this acknowledgement: ©2010 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or amazon.co.uk
Saturday, January 03, 2009
Seth Godin & Change Your Pricing
If you are looking for new ways to get ahead in 2009 check out these ideas on Pricing from Seth Godin at his blog.
Go here:
http://sethgodin.typepad.com/seths_blog/2009/01/change-your-pri.html
Happy New Year!
Go here:
http://sethgodin.typepad.com/seths_blog/2009/01/change-your-pri.html
Happy New Year!
Saturday, May 17, 2008
Are you firm about your price?
Many sales people don’t like to talk about price – they skirt around it, write it down and point to it, but don’t answer the question directly.
The same way sellers do trial closes, the buyer tests the price proposal by staking out the price early on. They get a ‘reading’ of how comfortable you are about price, and how negotiable.
If you look like you lack confidence in your price your customer may doubt the value of what you have to offer. Confidence sells!
Here are some telltale signs that indicate you feel awkward about talking about price:
- You precede your answer with: Are you sitting down? Or: Are you ready for this? How do you feel about $100? What do you think about that?
- Or worse still you ask: What do we need to do to get your business?
- You avoid answering the question.
- You change the subject.
- You don’t answer the question with words, you point to a number.
- You direct their attention to another product.
- You mention price too late – the customer has already starting showing doubt about something else you mentioned; she is on the way out the door.
- You tell the customer your price is today’s price … or the normal price is … or the list price is …
- You avoid eye contact; rub your neck, nose, ear; jiggle your pen; rush to answer the phone – do anything other than give your customer your full attention!
Think about your own mannerisms: How do you betray your confidence in yourself when it comes to discussing price?
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com or at amazon.co.uk
Tuesday, March 11, 2008
3 price questions for the self-employed
1) Is your price congruent with the quality of the product or service you sell?
2) Does your price reflect your self esteem?
3) What does your client think of your price?
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
2) Does your price reflect your self esteem?
3) What does your client think of your price?
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Tuesday, January 29, 2008
Price is a metaphor for trust
Chances are, the higher the price, the more expectations you have regarding variables like quality, status, workmanship, reliability …and the more you spend the higher your expectations.
If you spend $2 on a rope ladder you may not be too surprised when it breaks. If you spend $2,000 you are boiling hot angry if it breaks!
Price is a metaphor for trust. Price reflects how much you expect a product or company to deliver on quality issues. Price reflects how much you trust them to keep their word. Price is a metaphor for trust when it comes to service contracts, up grades, follow-up and guarantees.
Here’s an example: The other day I set off to buy THE BEST IRON MONEY CAN BUY. The iron we were currently using had just peed water all over the place. Its predecessor was chucked in the rubbish when it developed a leak and the one before that was replaced because it didn’t press creases firmly enough.
We’ve had a succession of irons that have each lasted around two years and then for one reason or another given up the ghost.I stood before a shelf of irons that ranged in price from $29.95 to $149.95 and to be honest there was little to tell them apart. To simplify the choice I chose only the biggest, heaviest models that looked like they could iron a decent crease. Then, deciding to eliminate a few more, I compared only the range of Teflon coated irons. This left me 9 irons from which to choose. Needing help I called the sales woman over and asked her which iron was THE BEST IRON MONEY COULD BUY. And guess what -- she didn’t know.
She couldn’t give me a single good reason for buying the most expensive iron; in fact, she told me they all would do the same job so I opted for a $49.95 iron.
Why waste $100 when you don’t need to?
If she could have given me a single reason to believe the most expensive iron would do a better job, or last longer, I would have bought it – but no! I didn’t trust the $149.95 iron to be any better. Price is a metaphor for trust.
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Jane Francis is available as a Professional Speaker, Coach and Workshop Leader to help sales teams and companies pitch and present their price with creativity and confidence. More info available at www.pricetalks.co.nz
If you spend $2 on a rope ladder you may not be too surprised when it breaks. If you spend $2,000 you are boiling hot angry if it breaks!
Price is a metaphor for trust. Price reflects how much you expect a product or company to deliver on quality issues. Price reflects how much you trust them to keep their word. Price is a metaphor for trust when it comes to service contracts, up grades, follow-up and guarantees.
Here’s an example: The other day I set off to buy THE BEST IRON MONEY CAN BUY. The iron we were currently using had just peed water all over the place. Its predecessor was chucked in the rubbish when it developed a leak and the one before that was replaced because it didn’t press creases firmly enough.
We’ve had a succession of irons that have each lasted around two years and then for one reason or another given up the ghost.I stood before a shelf of irons that ranged in price from $29.95 to $149.95 and to be honest there was little to tell them apart. To simplify the choice I chose only the biggest, heaviest models that looked like they could iron a decent crease. Then, deciding to eliminate a few more, I compared only the range of Teflon coated irons. This left me 9 irons from which to choose. Needing help I called the sales woman over and asked her which iron was THE BEST IRON MONEY COULD BUY. And guess what -- she didn’t know.
She couldn’t give me a single good reason for buying the most expensive iron; in fact, she told me they all would do the same job so I opted for a $49.95 iron.
Why waste $100 when you don’t need to?
If she could have given me a single reason to believe the most expensive iron would do a better job, or last longer, I would have bought it – but no! I didn’t trust the $149.95 iron to be any better. Price is a metaphor for trust.
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Jane Francis is available as a Professional Speaker, Coach and Workshop Leader to help sales teams and companies pitch and present their price with creativity and confidence. More info available at www.pricetalks.co.nz
Sunday, January 06, 2008
A New Year's Resolution?
There's a joke going around the internet that goes like this:
A printer says to his client, ‘Thank you, Mr Brown, for your business. I wish I had twenty customers like you.’
'Gosh, it's nice to hear you say that, but I'm kind of surprised,’ says Mr Brown, ‘because I argue over every bill and I always pay late.’
The printer replies, ‘That’s true. But I'd still like twenty customers like you. My problem is: I have two hundred.’
How well are you monitoring your customers’ impact on profitability? How well are you tracking the time spent on each customer and the return you get from that? Is it possible you have customers you would be better off without? Why not dump them? Or at the very least give them one last chance to shape up or ship out. It's the New Year after all, and it could be the best resolution you ever made!
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
A printer says to his client, ‘Thank you, Mr Brown, for your business. I wish I had twenty customers like you.’
'Gosh, it's nice to hear you say that, but I'm kind of surprised,’ says Mr Brown, ‘because I argue over every bill and I always pay late.’
The printer replies, ‘That’s true. But I'd still like twenty customers like you. My problem is: I have two hundred.’
How well are you monitoring your customers’ impact on profitability? How well are you tracking the time spent on each customer and the return you get from that? Is it possible you have customers you would be better off without? Why not dump them? Or at the very least give them one last chance to shape up or ship out. It's the New Year after all, and it could be the best resolution you ever made!
©2008 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Thursday, December 20, 2007
Understanding price, interruptions and efficiency in your home-based business
Emails, mobile phones, texts have shortened our attention span and people expect responses pretty near immediately. Companies with global call centers offering service 24-7 have trained customers to become really impatient if they have to wait for an answer. If you aim to offer good customer service and take pride in efficiency it becomes a matter of principle to respond as quickly as possible.
Yet, the less people in an organization, and the more important a customer is, the more difficult it is to deny access.
So how do you charge for interruptions? Or don’t you?
First, here’s some perspective: If you weren’t in a home-based office but working in a corporate office in town your company would be charging out your interruptions. They would, for example, have made allowance for meeting times and budgeted for them so that somewhere along the line the client pays. If the client wasn’t paying the costs of internal staff meetings the company would soon stop being viable and you would ultimately find yourself looking for a job. So you be like the company and do the same and make allowance for a reasonable number of interruptions in your day - just think of them as unscheduled meetings!
If you work on your own you may well be taking on many roles – for example, secretary, treasurer, operations manager, credit manager, sales person, cleaner and production worker.
Don’t make the common mistake of thinking you are just a production worker, make sure you charge for all those other roles you do.
No matter where you work, life crops up, interrupting the flow. Minimize interruptions as far as humanly possible but factor in a percentage as part of your working day – just make sure there are not so many you become uneconomic. Build enough fat into your prices so you can take the occasional interruptive phone call, demand from a child, request from a friend and knock at the door.
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
Yet, the less people in an organization, and the more important a customer is, the more difficult it is to deny access.
So how do you charge for interruptions? Or don’t you?
First, here’s some perspective: If you weren’t in a home-based office but working in a corporate office in town your company would be charging out your interruptions. They would, for example, have made allowance for meeting times and budgeted for them so that somewhere along the line the client pays. If the client wasn’t paying the costs of internal staff meetings the company would soon stop being viable and you would ultimately find yourself looking for a job. So you be like the company and do the same and make allowance for a reasonable number of interruptions in your day - just think of them as unscheduled meetings!
If you work on your own you may well be taking on many roles – for example, secretary, treasurer, operations manager, credit manager, sales person, cleaner and production worker.
Don’t make the common mistake of thinking you are just a production worker, make sure you charge for all those other roles you do.
No matter where you work, life crops up, interrupting the flow. Minimize interruptions as far as humanly possible but factor in a percentage as part of your working day – just make sure there are not so many you become uneconomic. Build enough fat into your prices so you can take the occasional interruptive phone call, demand from a child, request from a friend and knock at the door.
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
Tuesday, December 18, 2007
The best way to win new business
In order to make a sale your customer needs to believe you are the person with the product or service who will solve their problem. They need to get to the point where they trust that you will make things better for them.
Just because you know all about your products and services, your client will not. There may be huge gaps in their understanding of what you do and how long it takes. They may be ignorant of the knowledge and skill required to do what you do and what’s more: they do not know what they do not know. They may not see the value in what you provide so it is your job to educate them. Can you demonstrate your product? How many of the senses can you involve? Can you prove your cost-effectiveness? Do you have a graph to show savings? What about case studies, before and after pictures, or testimonials from happy customers?
Teachers of fiction writers repeatedly tell their students: ‘Show, don’t tell’. In other words, don’t tell the reader the soldier went to war and felt miserable. Show the reader his misery – the rats in the trench, the incessant rain, his cold hands against the steely bayonet and the mud that made the flesh around his finger nails rot like … you get the picture!
Show your clients the advantages of your product or service. Show them what it means to them – how it will save them time, make them more money, make them thinner, younger, more gorgeous. For example, if you are selling tax advice show your customer a testimonial from a happy client that saved $5,000 in taxes last year after spending just $400 with you.
Imagine you’re selling a pre-cracked fresh egg mix to a meringue company; work out the savings in breakages, transportation and packing costs of a liquid delivered in a bucket rather than eggs in cartons. Work out the labour savings in egg-cracking time and add up all these savings in a week, a month or a year. Now show your client a picture of the increase in meringue sales and a graph of the extra profits, and how one cent more per meringue converts to $100,000 in extra sales per annum. Whip up a batch of fresh meringues and let them taste the difference. The best way to win new business is show – not tell - your customer how much of a difference your product or service will make to them.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Just because you know all about your products and services, your client will not. There may be huge gaps in their understanding of what you do and how long it takes. They may be ignorant of the knowledge and skill required to do what you do and what’s more: they do not know what they do not know. They may not see the value in what you provide so it is your job to educate them. Can you demonstrate your product? How many of the senses can you involve? Can you prove your cost-effectiveness? Do you have a graph to show savings? What about case studies, before and after pictures, or testimonials from happy customers?
Teachers of fiction writers repeatedly tell their students: ‘Show, don’t tell’. In other words, don’t tell the reader the soldier went to war and felt miserable. Show the reader his misery – the rats in the trench, the incessant rain, his cold hands against the steely bayonet and the mud that made the flesh around his finger nails rot like … you get the picture!
Show your clients the advantages of your product or service. Show them what it means to them – how it will save them time, make them more money, make them thinner, younger, more gorgeous. For example, if you are selling tax advice show your customer a testimonial from a happy client that saved $5,000 in taxes last year after spending just $400 with you.
Imagine you’re selling a pre-cracked fresh egg mix to a meringue company; work out the savings in breakages, transportation and packing costs of a liquid delivered in a bucket rather than eggs in cartons. Work out the labour savings in egg-cracking time and add up all these savings in a week, a month or a year. Now show your client a picture of the increase in meringue sales and a graph of the extra profits, and how one cent more per meringue converts to $100,000 in extra sales per annum. Whip up a batch of fresh meringues and let them taste the difference. The best way to win new business is show – not tell - your customer how much of a difference your product or service will make to them.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Sunday, December 09, 2007
Consulting fees - you get what you ask for
You've probably heard the saying 'You get what you pay for' but had you thought about its corollary: 'You get what you ask for'? When you ask for your fees are you asking for what you really want-and I am not talking just about the money?
I know a business analyst who was being contracted out at $65 per hour when the market was paying other people of his caliber (if they could find them) $150-$200 per hour. He wasn't especially motivated by money because he was content with what he had; his problem was that the work simply was not challenging enough. In his business, you don't get the best projects to work on if you are only charging $65 an hour.
He eventually solved his dilemma with just one short conversation. He told his client he was not happy with the rate they were paying him, 'Come back with something more competitive.' They did-twice his current rate and an infinitely more interesting project.
In another example, a friend was telling me about her partner who loved the type of work he did, but resigned from his job out of desperation because of the internal politics in the office. For a while, Gavin got seriously glum as he considered other options before being wooed back to his original employer as a consultant. Though he was doing the same work, he was on a six-month contract, at an hourly rate that was twice his previous salary. When that contract expired, it was renewed at almost double the rate again! My friend was laughing as she told me how Gavin was a changed man. The job was the same, and the politics remained; the only difference was that he was now being paid more than a hundred and fifty dollars an hour.
According to my friend, it was because Gavin was paid more that he felt more valued, which raised his self-esteem. External events changed his internal experience. Other people might work in reverse: they may need to raise their self-esteem first before they are able to receive more money.
If you are a contractor does your fee schedule reflect your abilities and skills? Ask yourself: Do your prices place you in the market for the type of client and work that you want to do?
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
I know a business analyst who was being contracted out at $65 per hour when the market was paying other people of his caliber (if they could find them) $150-$200 per hour. He wasn't especially motivated by money because he was content with what he had; his problem was that the work simply was not challenging enough. In his business, you don't get the best projects to work on if you are only charging $65 an hour.
He eventually solved his dilemma with just one short conversation. He told his client he was not happy with the rate they were paying him, 'Come back with something more competitive.' They did-twice his current rate and an infinitely more interesting project.
In another example, a friend was telling me about her partner who loved the type of work he did, but resigned from his job out of desperation because of the internal politics in the office. For a while, Gavin got seriously glum as he considered other options before being wooed back to his original employer as a consultant. Though he was doing the same work, he was on a six-month contract, at an hourly rate that was twice his previous salary. When that contract expired, it was renewed at almost double the rate again! My friend was laughing as she told me how Gavin was a changed man. The job was the same, and the politics remained; the only difference was that he was now being paid more than a hundred and fifty dollars an hour.
According to my friend, it was because Gavin was paid more that he felt more valued, which raised his self-esteem. External events changed his internal experience. Other people might work in reverse: they may need to raise their self-esteem first before they are able to receive more money.
If you are a contractor does your fee schedule reflect your abilities and skills? Ask yourself: Do your prices place you in the market for the type of client and work that you want to do?
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
Friday, December 07, 2007
Are you a slave to money?
If you have ever done something or gone somewhere you did not want to, just because you have paid for the tickets and could not get your money back, then you have been a slave to money. What is your relationship to money?
Is money your comfort, your god, your friend, your master, servant, lover? In a sense money does ‘talk’.
In English, Japanese, Taiwanese or French, two simple words ‘How much?’ and an open wallet can get you round most of the world. In a capitalist system we need money to function and a big part of you is the way you handle, control, manage, lose, fritter, invest, eat, burn, love, hate or worry about money.
The things money can buy have probably defined your experience of holidays, birthdays, Christmas; alongside which reside some of your most deep seated values. For example, were you brought up to ‘get your money’s worth’? What happens now when you fail to get value for money…do you end up feeling cheated or ‘ripped off’? Think about the things money symbolises to you. When you were a child, what were the conditions of pocket money? Did money bring you joy and happiness, love, entrapment, resentment or fear?
As an adult, what is your definition of waste or extravagance? I have friends at either end of the scale when it comes to grocery shopping. One buys a lot of sausages and cheap mince and prides herself on her economy; the other spares no expense and buys exotic fruit, fresh salmon and expensive, lean cuts of meats without exception. Her argument is you can buy a lot of quality food for the price of a triple heart by-pass or a mobility scooter! What does prosperity mean to you? Some financial advisers advocate that you save $3.50 a day (the cost of a cup of coffee) so you can reap the benefits of compounding interest and retire in moderation years later. I was inclined to agree with this advice until the day I realised that having the disposable cash and time to enjoy a bought coffee a day was prosperity. It was neither a wasted opportunity to save, nor an extravagance.
Money means different things to different people, and it can buy us experiences that are unique to us. A friend of mine told me her dream was to buy a brand new Porsche. Bridget had worked out she could afford it if she added the loan to her mortgage and paid it off over 25 years. Being financially savvy she knew the real cost of the car but said it was something she just wanted to do in her lifetime so the expense would be worth it. When I found out she had not yet driven one we arranged a test drive. We had only been driving five minutes when I asked her if the car ‘did it for her? Was it worth it?’ She replied, ‘I don’t know, I think I might sooner have six months skiing in Aspen.’ We discussed how she would feel returning to the workplace in order to pay for it. She told me she wouldn’t have a problem owning a better car than the General Manager but she would find it difficult going back to the boring job she had. To her that car was a metaphor for the excitement that she otherwise lacked in her life. Buying it would have provided the biggest adrenalin rush, after that it would have been down hill all the way. What she really wanted to do was break out and test her self-belief. Fortunately she realised in time that a car repayment plan wasn’t the answer.
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
Is money your comfort, your god, your friend, your master, servant, lover? In a sense money does ‘talk’.
In English, Japanese, Taiwanese or French, two simple words ‘How much?’ and an open wallet can get you round most of the world. In a capitalist system we need money to function and a big part of you is the way you handle, control, manage, lose, fritter, invest, eat, burn, love, hate or worry about money.
The things money can buy have probably defined your experience of holidays, birthdays, Christmas; alongside which reside some of your most deep seated values. For example, were you brought up to ‘get your money’s worth’? What happens now when you fail to get value for money…do you end up feeling cheated or ‘ripped off’? Think about the things money symbolises to you. When you were a child, what were the conditions of pocket money? Did money bring you joy and happiness, love, entrapment, resentment or fear?
As an adult, what is your definition of waste or extravagance? I have friends at either end of the scale when it comes to grocery shopping. One buys a lot of sausages and cheap mince and prides herself on her economy; the other spares no expense and buys exotic fruit, fresh salmon and expensive, lean cuts of meats without exception. Her argument is you can buy a lot of quality food for the price of a triple heart by-pass or a mobility scooter! What does prosperity mean to you? Some financial advisers advocate that you save $3.50 a day (the cost of a cup of coffee) so you can reap the benefits of compounding interest and retire in moderation years later. I was inclined to agree with this advice until the day I realised that having the disposable cash and time to enjoy a bought coffee a day was prosperity. It was neither a wasted opportunity to save, nor an extravagance.
Money means different things to different people, and it can buy us experiences that are unique to us. A friend of mine told me her dream was to buy a brand new Porsche. Bridget had worked out she could afford it if she added the loan to her mortgage and paid it off over 25 years. Being financially savvy she knew the real cost of the car but said it was something she just wanted to do in her lifetime so the expense would be worth it. When I found out she had not yet driven one we arranged a test drive. We had only been driving five minutes when I asked her if the car ‘did it for her? Was it worth it?’ She replied, ‘I don’t know, I think I might sooner have six months skiing in Aspen.’ We discussed how she would feel returning to the workplace in order to pay for it. She told me she wouldn’t have a problem owning a better car than the General Manager but she would find it difficult going back to the boring job she had. To her that car was a metaphor for the excitement that she otherwise lacked in her life. Buying it would have provided the biggest adrenalin rush, after that it would have been down hill all the way. What she really wanted to do was break out and test her self-belief. Fortunately she realised in time that a car repayment plan wasn’t the answer.
© 2007 Jane Francis is the author of ‘Price Yourself Right: A guide to charging what you are worth’ [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com.
Wednesday, December 05, 2007
Do what you love and the money will follow … Bullsh*t!
Really?
Then why do ninety-nine percent of artists and yoga teachers struggle to make a living?
And childcare workers, teachers, nurses, herbalists, massage therapists, writers, actors ….
The line ‘Do what you love and the money will follow’ sells tons of books and CDs. It may even spark a few dreams - and it’s a lovely philosophy - but as a message it is somewhat lacking in detail.
To be more accurate it should say ‘do what you love and the money will follow IF you learn how to ask for it'.
Celebrities know there’s a very real place for talent agents and middle managers that act as brokers. If you really don’t have the skills to collect the money employ someone else to do it for you. Or learn how to do it yourself but don’t think it’s going to happen on its own.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Then why do ninety-nine percent of artists and yoga teachers struggle to make a living?
And childcare workers, teachers, nurses, herbalists, massage therapists, writers, actors ….
The line ‘Do what you love and the money will follow’ sells tons of books and CDs. It may even spark a few dreams - and it’s a lovely philosophy - but as a message it is somewhat lacking in detail.
To be more accurate it should say ‘do what you love and the money will follow IF you learn how to ask for it'.
Celebrities know there’s a very real place for talent agents and middle managers that act as brokers. If you really don’t have the skills to collect the money employ someone else to do it for you. Or learn how to do it yourself but don’t think it’s going to happen on its own.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Monday, December 03, 2007
10 MORE tips to help you negotiate your price
1. Sell the discounts
Some people just love a bargain, in fact, they must get a bargain. Keep their attention on the $300 they will save, not the $6,000 they will be spending.
Most people relate to cash better than a percentage--three hundred dollars is far more meaningful that 5%!
Use price points to ease your customer through the psychological pain barrier--$9,999 looks a lot less than $10,000.00.
2. Ask them to make a counter proposal
Get your client to bring their ideas into the open. See how far apart you are. Do a reality check, go back to the original brief and specifications and check they are all mandatory. Since starting the purchase process it is possible your client may have altered his expectations.
3. Price bargain
'If you want a better price, give me a better order.' Search for joint benefits and win-win solutions. For example, you could lower the price if the customer does part of the job or pays you cash in advance.
It is in the nature of your customer to want all the discounts you give him. It is not his job, nor is he ever likely to tell you you are too cheap.
4. Don't drop your price before it is necessary
Don't become too committed to your lowest price early on. Try to hold your price by giving them more value--an extended warranty, a free upgrade. You can always come down later but it's difficult to go up.
If you give them something make sure they appreciate you more for it.
5. Leave yourself room to negotiate
Allow for contingencies. Give yourself the right to add or alter the quotation later if the client changes their mind in some way, or you have unexpected difficulties sourcing raw materials and the like. Put your conditions in writing to save any misunderstandings later.
6. Keep your objectivity
If the negotiation is overheating take time to think things over. Be wary of high pressure tactics. Give yourself an 'out clause' like referring to a higher authority (your boss, your lawyer, your mother) so you have time to take the deal away and review it.
7. Practice saying no, maybe, okay then
Negotiating is a two way process--you can dance to and fro for ages--but always keep in mind the bottom-line and be prepared to walk away. Use your intuition and do not allow yourself to be bullied. You can always say no but do it in such a way that you leave the door open so you can change your mind and say 'yes' later if you think you might want to.
8. Listen for the ticking clock
One property investor buys a house every year in the week prior to Christmas. She gets a great deal and the owner goes on holiday able to make plans for the future. Make sure you know your client's timeline and use this information to your advantage.
Also make sure your contract has specific time frames e.g. this quotation is valid until <<>>. You want to retain control over your time--this is your life.
9. Assume nothing
When you present the quotation, some clients go quiet for a while before responding. Others react as if they've never seen or heard anything so preposterous. You can never know for sure what they are thinking. Ask as many questions as you can to try to find out and be confident you know why you charge what you do, what is negotiable and what is not.
10. Keep an open mind
If you find the market situation or your competitor's tactics have changed you may need to recheck your facts. Don't believe that you offer the right price for all time--do some research and intervene, if necessary.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Some people just love a bargain, in fact, they must get a bargain. Keep their attention on the $300 they will save, not the $6,000 they will be spending.
Most people relate to cash better than a percentage--three hundred dollars is far more meaningful that 5%!
Use price points to ease your customer through the psychological pain barrier--$9,999 looks a lot less than $10,000.00.
2. Ask them to make a counter proposal
Get your client to bring their ideas into the open. See how far apart you are. Do a reality check, go back to the original brief and specifications and check they are all mandatory. Since starting the purchase process it is possible your client may have altered his expectations.
3. Price bargain
'If you want a better price, give me a better order.' Search for joint benefits and win-win solutions. For example, you could lower the price if the customer does part of the job or pays you cash in advance.
It is in the nature of your customer to want all the discounts you give him. It is not his job, nor is he ever likely to tell you you are too cheap.
4. Don't drop your price before it is necessary
Don't become too committed to your lowest price early on. Try to hold your price by giving them more value--an extended warranty, a free upgrade. You can always come down later but it's difficult to go up.
If you give them something make sure they appreciate you more for it.
5. Leave yourself room to negotiate
Allow for contingencies. Give yourself the right to add or alter the quotation later if the client changes their mind in some way, or you have unexpected difficulties sourcing raw materials and the like. Put your conditions in writing to save any misunderstandings later.
6. Keep your objectivity
If the negotiation is overheating take time to think things over. Be wary of high pressure tactics. Give yourself an 'out clause' like referring to a higher authority (your boss, your lawyer, your mother) so you have time to take the deal away and review it.
7. Practice saying no, maybe, okay then
Negotiating is a two way process--you can dance to and fro for ages--but always keep in mind the bottom-line and be prepared to walk away. Use your intuition and do not allow yourself to be bullied. You can always say no but do it in such a way that you leave the door open so you can change your mind and say 'yes' later if you think you might want to.
8. Listen for the ticking clock
One property investor buys a house every year in the week prior to Christmas. She gets a great deal and the owner goes on holiday able to make plans for the future. Make sure you know your client's timeline and use this information to your advantage.
Also make sure your contract has specific time frames e.g. this quotation is valid until <<>>. You want to retain control over your time--this is your life.
9. Assume nothing
When you present the quotation, some clients go quiet for a while before responding. Others react as if they've never seen or heard anything so preposterous. You can never know for sure what they are thinking. Ask as many questions as you can to try to find out and be confident you know why you charge what you do, what is negotiable and what is not.
10. Keep an open mind
If you find the market situation or your competitor's tactics have changed you may need to recheck your facts. Don't believe that you offer the right price for all time--do some research and intervene, if necessary.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Saturday, December 01, 2007
10 tips to help you negotiate your price
1. See your price from your client’s point of view
Before you negotiate your price, first, step inside the shoes of your client for a moment and think about her fears – does she know she can trust you? How does she know you will deliver good value for money? Will you make her look stupid for buying from you?
Make sure you understand exactly what she wants and what she expects to receive from you. Invest time in educating your client how you operate.
2. Plan in advance
Make a list of what you have to negotiate. What will your customer insist on and how flexible are you prepared to be? Can you offer delivery before or after Christmas … Can you offer a six month or twelve month warranty … or would he prefer a monthly contract? Look for solutions, not problems, and keep thinking creatively. Ask him: ‘Would you prefer this or what about that?’
3. Make sure you are dealing with the person who has the authority to say yes
If possible, find out how much discretion the person you are dealing with has, and who else is involved in the purchase decision. How are you going to sell them anything if the person you are dealing with has no authority to buy?
4. Don’t mention your price too soon
Get your client thinking about what you are going to give her before you start her thinking about what she’s going to have to pay you. Build her confidence and reassure her that the quality will be just what she wants and make sure it is, or let the client go.
5. Test them
Tell your customer what others are paying and how happy they are with your products and service. Then test your customer by asking: What were you expecting to pay? How much are you paying now? What are your usual rates? Is there a company policy on this? What did you pay the last person?
6. Sandwich your price between benefits
When you tell your customer how much it costs tell her the significance of all that she is getting and how it will benefit her.
7. Compare the product quality to the price difference
If you are making a comparison between your own products and services, or those of a competitor, tell your client all the extra special effort, or components, you put in. Remember: It’s not the price that’s important it’s what the product does for her.
If your product or service is higher priced don’t be afraid of the competition. Be proud. You are better. Likewise, if you are cheaper – be proud. Tell your customer how and why you made it cheaper, and what the benefit of this is.
8. Show the penalties of not buying
What might she miss out on if she doesn’t buy now?
Show the savings - gross them up or show them as extra profits if they are reselling your goods.
9. Explain the cost (or the savings) in a way that is meaningful to your customer
Reduce the expense into smaller units e.g. $520 extra is just $10 a week; $1.42 per day: a few cents per hour. If it’s a large purchase you can work it over the lifetime of the product.
Compare the value of your deal: What else could they spend their money on? Put it in their language. For example, the cost is less than one meal out. You only need to make one sale to cover it.
10. Create some urgency
Motivate your customer to act quickly. Make them an offer, for example: Buy one and get one free; Free gift with purchase; Extended five year warranty.
Focus their attention on deciding now, not later. Give them a deadline on the offer. ‘Offer valid until [date].’ You don’t want them to procrastinate any longer.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Before you negotiate your price, first, step inside the shoes of your client for a moment and think about her fears – does she know she can trust you? How does she know you will deliver good value for money? Will you make her look stupid for buying from you?
Make sure you understand exactly what she wants and what she expects to receive from you. Invest time in educating your client how you operate.
2. Plan in advance
Make a list of what you have to negotiate. What will your customer insist on and how flexible are you prepared to be? Can you offer delivery before or after Christmas … Can you offer a six month or twelve month warranty … or would he prefer a monthly contract? Look for solutions, not problems, and keep thinking creatively. Ask him: ‘Would you prefer this or what about that?’
3. Make sure you are dealing with the person who has the authority to say yes
If possible, find out how much discretion the person you are dealing with has, and who else is involved in the purchase decision. How are you going to sell them anything if the person you are dealing with has no authority to buy?
4. Don’t mention your price too soon
Get your client thinking about what you are going to give her before you start her thinking about what she’s going to have to pay you. Build her confidence and reassure her that the quality will be just what she wants and make sure it is, or let the client go.
5. Test them
Tell your customer what others are paying and how happy they are with your products and service. Then test your customer by asking: What were you expecting to pay? How much are you paying now? What are your usual rates? Is there a company policy on this? What did you pay the last person?
6. Sandwich your price between benefits
When you tell your customer how much it costs tell her the significance of all that she is getting and how it will benefit her.
7. Compare the product quality to the price difference
If you are making a comparison between your own products and services, or those of a competitor, tell your client all the extra special effort, or components, you put in. Remember: It’s not the price that’s important it’s what the product does for her.
If your product or service is higher priced don’t be afraid of the competition. Be proud. You are better. Likewise, if you are cheaper – be proud. Tell your customer how and why you made it cheaper, and what the benefit of this is.
8. Show the penalties of not buying
What might she miss out on if she doesn’t buy now?
Show the savings - gross them up or show them as extra profits if they are reselling your goods.
9. Explain the cost (or the savings) in a way that is meaningful to your customer
Reduce the expense into smaller units e.g. $520 extra is just $10 a week; $1.42 per day: a few cents per hour. If it’s a large purchase you can work it over the lifetime of the product.
Compare the value of your deal: What else could they spend their money on? Put it in their language. For example, the cost is less than one meal out. You only need to make one sale to cover it.
10. Create some urgency
Motivate your customer to act quickly. Make them an offer, for example: Buy one and get one free; Free gift with purchase; Extended five year warranty.
Focus their attention on deciding now, not later. Give them a deadline on the offer. ‘Offer valid until [date].’ You don’t want them to procrastinate any longer.
©2007 Jane Francis is the author of Price Yourself Right: A guide to charging what you are worth (ISBN: 0-595-38601-6) available at Barnes and Noble (USA), WH Smith (UK) or online at amazon.com
Monday, August 27, 2007
Price Yourself Right and Red Marbles
I was emailed the following story which I liked - even though it’s a little hokey - it’s still good to be reminded that generosity makes the world go round and that some things in life are priceless; it’s not always all about the money.
John was at the corner grocery store buying some early potatoes. John noticed a small boy, delicate of bone and feature, ragged but clean,hungrily apprising a basket of freshly picked green peas. John paid for his potatoes but was also drawn to the display of fresh greenpeas. Pondering the peas, he couldn't help overhearing the conversation between Mr. Miller (the store owner) and the ragged boy next to him.
"Hello Barry, how are you today?"
"H'lo, Mr. Miller. Fine, thank ya. Jus' admirin' them peas. They sure look good."
"They are good, Barry. How's your Ma?"
"Fine. Gittin' stronger alla' time.""Good. Anything I can help you with?"
"No, Sir.Jus' admirin' them peas."
"Would you like to take some home?" asked Mr. Miller. "No, Sir. Got nuthin' to pay for 'em with
"Well, what have you to trade me for some of those peas?"
"All I got's my prize marble here."
"Is that right? Let me see it" said Miller.
"Here 'tis.. She's a dandy."
"I can see that. Hmmmmm, only thing is this one is blue and I sort of go for red. Do you have ared one like this at home?" the store owner asked.
"Not zackley but almost."
"Tell you what. Take this sack of peas home with you and next trip this way let me look at that red marble" Mr. Miller told the boy.
"Sure will.. Thanks Mr. Miller" Mrs. Miller, who had been standing nearby, came over to help John. With a smile she said, "There are two other boys like him in our community, all three are in very poor circumstances. Jim just loves to bargain with them for peas, apples, tomatoes, or whatever. When they come back with their red marbles, and they always do, he decides he doesn't like red after all and he sends them home with a bag of produce for a green marble or an orange one, when they come on their next trip to the store."
John left the store smiling, impressed with this man. A short time later John moved to Colorado, but he never forgot the story of this man, the boys, and their bartering for marbles.
Several years went by until he had occasion to visit some old friends in that Idaho community and while he was there he learned that Mr. Miller had died. They were having his visitation that evening and knowing his friends wanted to go, he agreed to accompany them. Upon arrival at the mortuary they fell into line to meet the relatives of the deceased and to offer whatever words of comfort they could. Ahead of them in line were three young men. One was in an army uniform and the other two wore nice haircuts, dark suits and white shirts....all very professional looking. They approached Mrs. Miller, standing composed and smiling by her husband's casket. Each of the young men hugged her, kissed her on the cheek, spoke briefly with her and moved on to the casket. Her misty light blue eyes followed them as, one by one, each young man stopped briefly and placed his own warm hand over the cold pale hand in the casket. Each left the mortuary awkwardly, wiping his eyes. Our turn came to meet Mrs. Miller. John told her who he was and reminded her of the story from those many years ago and what she had told him about her husband's bartering for marbles. With her eyes glistening, she took his hand and led him to the casket. "Those three young men who just left were the boys I told you about. They just told me how they appreciated the things Jim "traded" them. Now, at last, when Jim could not change his mind about color or size....they came to pay their debt." We've never had a great deal of the wealth of this world," she confided, "but right now, Jim would consider himself the richest man in Idaho. With loving gentleness she lifted the lifeless fingers of her deceased husband. Resting underneath were three exquisitely shined red marbles.
The Moral :
Do you want to be remembered for how much money you made or for your kind deeds?
Perhaps an even better question is to ask yourself: How can you be remembered for doing both?
PS. As is often the case I received this email without a credit to its author whom I would like to acknowledge if only I knew who he/she was.
John was at the corner grocery store buying some early potatoes. John noticed a small boy, delicate of bone and feature, ragged but clean,hungrily apprising a basket of freshly picked green peas. John paid for his potatoes but was also drawn to the display of fresh greenpeas. Pondering the peas, he couldn't help overhearing the conversation between Mr. Miller (the store owner) and the ragged boy next to him.
"Hello Barry, how are you today?"
"H'lo, Mr. Miller. Fine, thank ya. Jus' admirin' them peas. They sure look good."
"They are good, Barry. How's your Ma?"
"Fine. Gittin' stronger alla' time.""Good. Anything I can help you with?"
"No, Sir.Jus' admirin' them peas."
"Would you like to take some home?" asked Mr. Miller. "No, Sir. Got nuthin' to pay for 'em with
"Well, what have you to trade me for some of those peas?"
"All I got's my prize marble here."
"Is that right? Let me see it" said Miller.
"Here 'tis.. She's a dandy."
"I can see that. Hmmmmm, only thing is this one is blue and I sort of go for red. Do you have ared one like this at home?" the store owner asked.
"Not zackley but almost."
"Tell you what. Take this sack of peas home with you and next trip this way let me look at that red marble" Mr. Miller told the boy.
"Sure will.. Thanks Mr. Miller" Mrs. Miller, who had been standing nearby, came over to help John. With a smile she said, "There are two other boys like him in our community, all three are in very poor circumstances. Jim just loves to bargain with them for peas, apples, tomatoes, or whatever. When they come back with their red marbles, and they always do, he decides he doesn't like red after all and he sends them home with a bag of produce for a green marble or an orange one, when they come on their next trip to the store."
John left the store smiling, impressed with this man. A short time later John moved to Colorado, but he never forgot the story of this man, the boys, and their bartering for marbles.
Several years went by until he had occasion to visit some old friends in that Idaho community and while he was there he learned that Mr. Miller had died. They were having his visitation that evening and knowing his friends wanted to go, he agreed to accompany them. Upon arrival at the mortuary they fell into line to meet the relatives of the deceased and to offer whatever words of comfort they could. Ahead of them in line were three young men. One was in an army uniform and the other two wore nice haircuts, dark suits and white shirts....all very professional looking. They approached Mrs. Miller, standing composed and smiling by her husband's casket. Each of the young men hugged her, kissed her on the cheek, spoke briefly with her and moved on to the casket. Her misty light blue eyes followed them as, one by one, each young man stopped briefly and placed his own warm hand over the cold pale hand in the casket. Each left the mortuary awkwardly, wiping his eyes. Our turn came to meet Mrs. Miller. John told her who he was and reminded her of the story from those many years ago and what she had told him about her husband's bartering for marbles. With her eyes glistening, she took his hand and led him to the casket. "Those three young men who just left were the boys I told you about. They just told me how they appreciated the things Jim "traded" them. Now, at last, when Jim could not change his mind about color or size....they came to pay their debt." We've never had a great deal of the wealth of this world," she confided, "but right now, Jim would consider himself the richest man in Idaho. With loving gentleness she lifted the lifeless fingers of her deceased husband. Resting underneath were three exquisitely shined red marbles.
The Moral :
Do you want to be remembered for how much money you made or for your kind deeds?
Perhaps an even better question is to ask yourself: How can you be remembered for doing both?
PS. As is often the case I received this email without a credit to its author whom I would like to acknowledge if only I knew who he/she was.
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