Discount: An intuitive way of anchoring
In many industries, the way to go is: I show them a “high” price (that I know will never go for), and as soon as they read the proposal, I’m giving them 30% off. It’s a no-brainer! This way, they’ll go to their boss and say “Boss, I got us a GOOD deal”. You want them to say that. [And they still won’t buy (but this one is for another email).] What was described here is an intuitive way of anchoring. To make the offer higher, and with the discount (by default), the “deal” will appear nicer for…
You anchor or you’re anchored
In any negotiation, somebody is anchoring (and at least trying to anchor), whether as a buyer or as a seller. Consciously or unconsciously. Anchoring.- The cognitive bias where you stick to the first piece of information received. Said piece of info will serve as an “anchor” to the next one. Money talking, how you get a “better” or “worse” deal. As a buyer, you’re (usually) trying to go on the most economically efficient way. You want to get a better deal and spend the most reasonable to what…
Dis-positioned
Dis-positioned. The lost battle driven by price. It’s an interesting thing that keeps showing up in many shapes, shades and forms: how businesses lose themselves into the weeds, and go into the gentle battle for control already losing. They show up as order-takers. They show up saying “Yes” to every request. They show up in fear (of losing the sale). They show up giving all the power (and price decisions) to the customer. They show up angry (that they’re taken advantage of). There’s a bright…
No marketing needed
An actual conversation: – When your product is so good, you don’t need marketing. – Ok. And what is marketing? – Well… social media, ads, PR… – Sure that’s A PART OF marketing. What about product development, innovation, pricing, distribution? – Ah, no. [product dev] That’s for product. [innovation] For R&D. [pricing] For Finance (or Sales). [distribution] For Sales. As if your business works in siloes (it doesn’t). Quoting Peter Drucker, “[…] the business enterprise has two — and only…
Help me out?
Your input in this is going to be quite interesting and helpful. All you need is to have an open mind and let go of certainty. You have 2 offerings in a market: A and B. They’re quite similar. The price for A is 3,3 X The price for B is 0,9 X Without context, and just taking the price as the only factor to consider… What are your assumptions on A and/or B? What do you believe A (or B) represents? What would you say makes one have this gap in the price?
Maybe I’m wrong
Maybe you’re wrong. And we got all this mixed up. The prices in the market are not as high as you think —or as I think. Maybe you’re product/service/offering is not THE best in the market —and that’s ok. And even with all of that, if you focus on how your customer can best be helped, you’ll be steps ahead. And you’ll come up with something uncommon. To get uncommon prices. And your customers and you will both be happy.
Market prices are important
They can give you a context. That’s all. To be the same as them. To go lower than them. Or break the rules and rise above them. And it’s got nothing to do with your product/service; but about your offering. It’s about your customer’s desired next phase.
Raising prices
“Do it little by little. Incrementally. Otherwise they’ll run for the hills.” That’s great advice on pricing. NOT. Doing this actually brings you to have slow, incremental increases. It’ll make it easy for your customers to push back for a discount (which will get you closer to the original low price). And it’s all still focused around you. And customers care for themselves. So, shift the focus on to them. Find out what they want, and how you can help them. And price accordingly to what they…
What remains unsaid
What you don’t say with your words, but tolerate or reinforce, is culture. What remains unsaid is equally or more important than what you actually say. To yourself, your team, or your customers. What kind of culture you wanna shape?
Revenue is not your friend
Or “sales”, if you’d like to put it that way. Not even cashflow is your friend. You can have millions in revenue. Millions in cashflow. And still on the verge of killing the business. You need to focus on your profit and your margins. And this comes from the value you help create to your customers. Because those (profit + margins) are the ones that make your business sustainable. They are the things that fund your mission. Without that fund, you’ll run dry or burn out. It’s that time when you…
