If you are in business, you must come up with prices for what you sell. It doesn’t matter if it’s a service, a product, or a hybrid of both; you have to decide how much it’s going to cost your customer to buy from you.
Most business owners don’t give this a lot of thought, in my experience. Or not as much as they should, at least. They tend to look around at what other people are charging, and pick something similar.
They don’t have a solid, well-thought-out explanation for their pricing, and they haven’t really considered whether or why they could go higher or lower.
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One of my favorite questions to get from a potential client, after I’ve gone over everything, is when they ask if I have any flexibility on my price?
Of course, they always mean, “can I charge them less”, but they feel they are being polite by not directly saying that they think it’s too much or they want to get a discount, or whatever is in their mind about why they want to pay less. So they ask if I can be flexible or “if there is any room” on the price.
And I always answer yes, of course. I am happy to go up on the price I just quoted you. It almost always gets a laugh from them because, of course, they are not expecting the direction I am offering to go. And it cuts the tension (they felt, asking for a discount) of the moment.
But more importantly, it’s a great opening for me to reiterate everything they are getting and reinforce the value offered and how it probably should be more but they are in fact getting a great deal. I explain I do think it’s really worth quite a bit more than we are charging but since I am an honorable businessperson, I will keep it at the low price I just gave them.
It’s a nice party trick, and I frequently close the deals where we have this back and forth. But the point isn’t the little about-face on the request for a deal. The point is, I can explain in clear detail with compelling points why our price is what it is and the value they get, and the differentiation we offer versus other options they have. I can make a clear and straightforward case with lots of backup on why our price offers them tremendous value for the money.
And this is what I see a lot of people in similar positions not able to do. Which means they have to fall back on just charging what others charge or even discounting further just for that (low price) to be the reason someone buys from them.
There are a million reasons not to sell just by being the lowest priced option, even if you have the lowest cost, that I won’t get into here.
So if this is where you find yourself, then start thinking about what you can do to improve your ability to compete on other factors.
If you aren’t the lowest cost but somewhere in the middle, figure out what makes you different and special, and then if that’s enough to give you some additional pricing power and a reason to ask for more. Or win more sales against similarly priced competitors.
Whatever the situation, just make sure you really understand why your buyers buy and what they value and how your offerings compare on that scale. Then make sure your price and sales pitch align with that understanding and take maximum advantage of what you can offer.
Otherwise, there’s a very good chance you’re leaving sales volume, revenue, and profits on the table when with just a little effort you could put yourself in a much better position to do more with what you already have.