Dealing With The Price of Your Product or Service

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My computer hard drive crashed some time ago and my back up support had failed to back up for the last six months (without my ever knowing). I spent a considerable amount of time calling data recovery places to find the best solution. It did not have to be the cheapest quote (though many places thought that was my issue), I just wanted to be confident about the effectiveness of the recovery, the speed with which it could be done and the proximity to my office.

I got all sorts of responses. One reply was: “Yes, well it’s normally $350.”

“Oh,” I thought, “so are you going to offer me a cheaper price?” “Normally” would indicate that this was the case as a rule. I wanted to ask him if now was “normally” but resisted!

There are some rules to follow when dealing with the price of your product or service.

RULE NO. 1

Always state your price with confidence (no, “normally”). You must believe in the value of your product or service for the price you are quoting or it will come across in your voice on the phone that you don’t. You can hardly expect the customer to buy if you personally do not think the price is right. I have heard many a sale lost, simply because the salesperson thinks the price is too much to ask for. The price is fine as long as you have told the customer the value within it before quoting. State the price confidently.

In the example regarding my hard drive, it would not be appropriate to say, “It’ll be $350 for the first three hours and $250 per hour after that” because to me, the customer, that wouldn’t mean anything. I am not a technical person and so how would I know how long it would take to back up my hard drive? It sounded like it could all be too expensive so I said “Okay, bye for now.”

RULE NO. 2

Never assume that the customer knows all that is involved in using your service. Explain the value of what you are doing first, so the customer can understand why you quote a standard fee and an hourly rate on top. Better still, would be to ask the customer a few questions like “What condition is your old hard drive in at the moment?”, “How many megs does it have?”, “What would you like to restore your material onto?” and then, advise the price that will suit my situation.

Otherwise, when a customer rings up for a price, you must never give a price straight away.

RULE NO. 3

When you do this, your conversion rate on in-bound calls is going to be very low. In this case, the salesperson is assuming the customer is shopping around for prices. You must first ask for the customer’s name and telephone number up-front so you can follow them up in three days time. When you don’t follow up a price request, it is the same as not following up a written quote. I have even heard salespeople say, “Well, if they were interested they would call us back”. NO, NO, in sales you must be proactive, call them back and persuade or inspire them to buy from you. I know, from when I was in the seminar business, I converted twenty-five per cent of the people who requested information or a price just by calling them back. If I didn’t call back, my conversion rate from a mail-out was a mere one per cent.

RULE NO. 4

After you ask for the customer’s name, you then ask them some questions as in Rule No. 2. You can even say “So that I can give you the best possible price for your situation, I need to ask you a couple of questions”. This is establishing the customer’s needs and applying the price to their needs.

For example, if my need were not necessarily to find the cheapest price but to find a company that was reputable and that could do a good job, was close to the office and could do the job quickly, some good questions to win me as a customer would have been, “How quickly do you want the job done”, “Where are you based”, “How did you hear about us?” Then, before giving a price you can present your service as offering what the customer wants (you now know from the answers to the questions) and the price won’t matter. You could offer to pick up the computer if you were far away from my office, and have it back within 24 hours if you knew how quickly I wanted the work done.

RULE NO. 5

Never assume people buy on price alone. If possible, it is better not to sell on price. You need to have someone interested in the value for money that you offer first

MORE WAYS TO DEAL WITH THE ISSUE OF MONEY

  1. If you want to make the amount you are quoting sound less, miss out the word “dollars”. Simply say 470, instead of $470.00 dollars. Conversely, if you want the amount to have more value, you do say the word “dollars”.
  2. Notice how I have written the amounts in the above paragraph. When doing written quotes, to minimise the amount, do not put in the cents, e.g. $470. To maximise the value make sure you write $470.00. For example, if three people from one company were attending my seminar, the fourth one would be free. I would write on the invoice “one attendee FOC (Free of Charge) – value $370.00” to increase the importance of the amount they were getting free.
  3. You can minimise the price or difference in cost between you and a competitor by talking about it in daily terms, e.g. “So Mr Jones, what we are talking about here is a difference of $1 a day over a period of one year”. $1 a day for all the extras that we provide over the competitor (then state the extra value you offer).
  4. When customers say your price is “too high”, it’s a good idea to leave out the word “too” in your response. Your response would be “I can understand you thinking that. When you say “high”, what are you comparing that with?”

Jenny Cartwright – International Sales Trainer / Speaker / Coach
Author of “Don’t Get Hung up! – How to sell products and services by phone” and “Secrets of Top Sales Professionals.”

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