The Psychology of Pricingor
Why we are frightened of raising our prices
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• Business Owners and Sales People alike often put failure to close new business to price:
• Through common misconception on how to price correctly
• A failure to understand the possible reasons behind “Your too expensive”
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Common Misconceptions
• The price is set by
»A the Market»B Me
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Answer B
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Common MisconceptionsI’ve got to be the cheapest to win
»A True»B False
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Answer B
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Common Misconceptions
If I raise my price I’ll lose my customers
»A True»B False
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Answer B
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Common Misconceptions
I must offer a Top Quality service/product at a Low Cost
»A True»B False
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Answer B
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• You can offer a value service at a low price
• Or
• You can offer a premium service at a premium price
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Common Misconceptions
When I lose its because I’m too expensive
»A True»B False
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Answer B
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People buy Products / Service on more than price.
• Your most loyal customer buys from you not only because he likes the price of your Product/Service but for a whole range of other reasons including,
• service, • convenience, • location, • inertia, • loyalty, • lack of alternatives
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What Buyers Really Mean When You’re Too Expensive
• You're visited by a salesman who can't articulate the benefits of his product. What do you tell him when he asks for the business?
• I’m sorry but your presentation did not make sense
• OR
• I'm sorry but you’re too expensive.
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What Buyers Really Mean When You’re Too Expensive
• You're visited by a salesman who you just don't like. What do you tell him when he asks for the business?
• I’m sorry but I just don’t like you and I’d rather cut my leg off than give you the business
• OR
• I'm sorry but you’re too expensive.
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What Buyers Really Mean When You’re Too Expensive
• You're visited by a salesman who is selling an old outdated product. What do you tell him when he asks for the business?
• I’m sorry but your product isn’t up to it?
• OR
• I'm sorry but you’re too expensive.
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• Work out what it costs for you to sell your product/service in Detail
• Include ALL overheads as well as labour and materials
• Decide how much profit you want to make and add that to your costs
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• That gives you your sales price
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Then add another 1%
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• Don’t be afraid of increasing price• Increase prices regularly• Declare price increases if a major cost
component increases• Regular price increases conditions your
customers to expect price increases• Not increasing prices conditions your
customers not to expect price increases!13/04/2023 21
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Action Points
• Understand why customers buy from you
• Know your costs in detail
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• Contact Me:
• [email protected]• LinkedIn Laurence Ainsworth• Twitter @laurenceexigent• www.managinghighgrowth.com
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