Pricing is one of the most pressing questions for businesses of all sizes, and rightly so. Changes to pricing, for better, or for worse, go straight to the profit line on the P&L, so getting the prices your business deserves, needs to be a strategic priority.
In this series of five blogs, I will be sharing the five Pricing-Mindset Mistakes, and how to shift those Mindsets, to realise the prices you aspire to, for your products or services.
By the way,If you can’t wait for the other four blogs, then scroll to the bottom to get all five of them now, in my free ebook ” Pricing-Mindset Mistakes and How to Shift Them.
Pricing Mindset Mistake No.1 – Assuming People Buy on Price
It is almost always the case that people do not buy on price alone.
Yes, of course, the price needs to be in the zone of what the customer finds acceptable, but it’s not usually the deciding factor. If it was, then there wouldn’t be many expensive watches, or performance cars, sold in the world. But these products are not sold on price, are they?
Let’s play the Grocery Game:
Think of any grocery item that you buy and use regularly: toothpaste, cereal, butter, coffee; whatever you like.
- What do you like about it?
- What does it do for you?
- What makes you put it in your basket regularly?
- Why that particular brand, exactly?
Get a piece of paper and write it down, if you like.
You might have thought about the quality, the great taste, that you know and like the brand, or that your mother always bought that one.
Where does price come on your list?
I have done this exercise with hundreds of people, and price usually shows up low on the list, if at all! Why is this, do you think?
Next, ask yourself how much do you actually pay for that product? Do you know?
Is the point getting across?
We buy things for many different reasons, and price features low down on the list of criteria.
Now try the same exercise, but with one of your own products or services.
Put yourself in the shoes of your customer.
Write a list of what you think the customer really likes about your offer, what makes them buy from you.
Where did price come in the list of buying criteria? I bet it was quite low.
Don’t believe it?
Go and ask some real customers what they like about your business, and see what they say.
A tip here: use a third party to do this. If you are the business owner, or sales director, you can be too close.
Research shows that 92% of buying decisions are based on criteria other than price.
So what does make a customer decide to buy?
What is it that’s making your customers ask for discounts?
Let’s go back to the grocery game.
When I first used this exercise, with the marketing team of a major soft drinks company, there was one man there who surprised himself.
He was responsible for a big soft drinks brand, with an aggressive competitor,
and he was adamant that it was all about price. If his brand of drink wasn’t cheaper,
the consumer would buy the competitor’s brand.
We played the game, he chose his roll-on deodorant, and off he went to write the list of why he bought it. His list came back and looked like this:
- Like the smell – reminds me of holidays
- Like the shape of the bottle
- Long standing brand – trust
- Used to like the advert on T.V. Quite macho
Interestingly, there was no mention of whether the product worked or not (I assume it did).
When he had done, I asked him how much he paid for the deodorant.
He couldn’t remember.
This marketing manager then realised that he had written a list of what he valued about the deodorant. Some were attached to features of the product, like the smell and the shape, but most were based on the way the deodorant made him feel.
Mindset Shift No.1: Think Customer Value
People will buy from you when the value of what you are giving them outweighs the price you are asking for it.
Tips for Thinking Customer Value
- Check your external value – ask your customers why they buy from you.
- What do they like about your offer?
- What made them decide?
- What makes you stand out from the rest?
- Check your internal value –ask your sales team why they think customers buy from you. Ask everybody in your business, if possible
- Create a “Value List” and use it everywhere! – use it to create your marketing messages and selling materials, and put it up on your office walls, next to your phones, on your reception desk, everywhere!
- Talk Value before price – train yourself and your team to talk about how your offer solves their problem, or brings an improvement, or creates an opportunity at every customer contact. Watch how this increases the number of customers who say “yes’ to your pricing.
Sales GROWTH Expert provides a range of services to bring external help to businesses that need to grow their own sales experts. Our aim is to support businesses, both small and large, to drive the value they bring to their customers, and the capability of their people to sustain it.
Can’t wait to get the other four Mindset Mistakes?
Click the link below, for a copy of our ebook, PRICING-MINDSET MISTAKES AND HOW TO SHIFT THEM.
Link to workshop
Pic, Frustrated with pricing?
Join other business owners and sales leaders on 21st June in Newbury
at Pricing With Confidence
URL to workshop
If you need to get your prices right, email amanda@salesgrowthexpert.co.uk for a free telephone or Skype consultation.