Is Your Price Right?
Pricing has always been one of the greatest games in business. In times of scarcity, this is ever so true. The price you offer has to reflect value, convey trust and cover costs of sales, delivery, and unfortunately, collections. And you have to be able to get your price.
How do you know when a price is right? Let’s say that you meet a prospect for lunch in an attempt to close a deal. When you finally come to the point of stating your price, one of three things happens:
• Your prospect immediately says no, stands, and walks away.
• Your prospect immediately says yes, shakes your hand, and treats you, the waiter, and everyone at the surrounding tables to champagne.
• Your prospect contemplates the offer. The long silence feels like an ocean in your head until you hear that magical word: Yes!
In two of the three situations you closed the deal, but only in the third have you done it right. If the prospect rejects the offer out of hand, he believes the price is too high, which means that you have failed to sell the benefits of what your company provides. If the prospect takes the offer immediately, you have given away too much value for too low a price; your prospect feels like he’s discovered a Van Gogh original at a garage sale! You know you’ve got it right when your prospect accepts your offer only after some deliberation. In this case, he knows the value he is losing if he says no. Ultimately, your price is your demonstration of value. If you are getting your price in difficult times, congratulations, for you are truly valued for your value.
Comments
4 Comments on Is Your Price Right?
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Michael Kraft on
Mon, 22nd Feb 2010 11:05 am
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Pamela O'Brien on
Mon, 22nd Feb 2010 4:19 pm
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Pamela O'Brien on
Mon, 22nd Feb 2010 4:19 pm
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How To Tell If Your Price Is Right - Business Opportunities Weblog on
Thu, 24th Jun 2010 11:50 am
Even though this is your world and not mine, I often have clients who tell me their prices and I see that they are giving away the store while hurting their own brand.
Hi Andy,
You spoke at a meeting I attended in Cleveland in 2008. I enjoy following you and learning new things via your newsletter. You make it easy for us entrepreneurs to read and digest pertinent data with your quick and easy format. No need to take notes, scroll down, click through register, etc. Good work!
P.S. Also LOVED the link for the gravatar. Apparently it worked. Thanks a million for sharing that. So very clever!
[...] photo credit: estraire Pricing has always been one of the greatest games in business. In times of scarcity, this is ever so true. The price you offer has to reflect value, convey trust and cover costs of sales, delivery, and unfortunately, collections. And you have to be able to get your price. As stated on Profitable Growth. [...]
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and oh, if you want a pic to show with your comment, go get a gravatar!
