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Pricing Offline

by johntoll
9 replies
Pricing..

A lot of people are afraid to talk about pricing.

I love talking pricing because if I'm not giving a price then I'm not getting the prospect any closer to pulling out their card.

But it seems like there is a whole science behind pricing.

My target market is businesses with between 10-20+ employees. The more employees the easier it is for me to make the sale.

Here's what I have been doing pricing wise:

Package - Starts at $5,500

I go into almost every meeting with a base package of $5,500. I bundle everything together then provide addons later down the road.

When it comes time to talk about pricing I pull out a sheet that shows the total value of the service and the price. If they say that it's too expenses then I do two things before I lower the price:

1. I try to add more value to the service
2. I help them think of ways to break the payment up to make it easier on them. Ie, 50% now then I charge your card 50% later. Or 4 payments of $x.xx with a certain time frame.

If I have to lower the price then I will.

Another approach that I have tried:

Monthly fee:
Instead of going in starting at 5.5K, I"ll start at a monthly fee. Somewhere around $190/month.

If they agree to the monthly fee then I say okay, that sounds great and if you want to save some money then let's do it annually.

The monthly and annual fee are actually cheaper than the 5.5k upfront fee..but I have had more trouble making the monthly fee work for some reason.

Right now I have competition that's selling a crappy version of what I sell for $90/m. When I saw that my competition is selling a similar service I actually raised my price.

I have tried various pricing models. The funny thing is that I have learned that people will generally object to price whether it's $99/m or $4000, so why not give them something to actually bitch about?

How do you deal with pricing?
#offline #pricing
  • Profile picture of the author MichaelWinicki
    Originally Posted by johntoll View Post

    I have tried various pricing models. The funny thing is that I have learned that people will generally object to price whether it's $99/m or $4000, so why not give them something to actually bitch about?

    How do you deal with pricing?
    Great topic!

    I'm right there with you.

    I started out with a more expensive monthly package that combined various services, and of course I got push back on the pricing.

    I thought, "OK, let me break up my services and offer them a la carte... with several services priced as low as $99 per month, and then it will be easier selling."

    I ended up making it more difficult on myself.

    First off they (perspective clients) will whine about $99 a month as frequently as $499 a month.

    Secondly by breaking up my services I offered, I made things more complicated by introducing another layer of what they have to decide on... So not only do they whine about the price (even if it's $99 a month) they can't make a decision because they don't know what option or options to take.

    Ugh.

    A while back, before I ventured into doing this I was listening to a GKIC Gold Call interview with a couple guys that provide monthly "done for you" service to auto dealers and they said they went from offering services a $99 to $299 per month and went directing to $2,500 a month because it wasn't any more difficult selling the much more costly packages (keeping in mind their target customer was typically doing 8 figures in sales annually so they could afford the monthly hit of $2,500).

    I should of paid more attention.
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    • Profile picture of the author johntoll
      I thought, "OK, let me break up my services and offer them a la carte... with several services priced as low as $99 per month, and then it will be easier selling."

      I ended up making it more difficult on myself.
      Exactly.

      I ended up realizing that it's not about price. It really comes down to prospecting and solving a problem. So when I raised my prices I did two things:

      1) Started going after businesses with a little more money
      2) I focused on solving a problem that the prospect will pay for

      I look around at my competition now and laugh at what they are doing. It's only a matter of time before they are all out of business. I think that low prices are fine if you can drive high volume, but if that's the case then you better be good at marketing or have some deal setup to drive the sales in.
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      • Profile picture of the author ylian
        what service do you offer ?
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  • Profile picture of the author Matthew North
    Originally Posted by johntoll View Post

    Pricing..

    A lot of people are afraid to talk about pricing.

    I love talking pricing because if I'm not giving a price then I'm not getting the prospect any closer to pulling out their card.

    But it seems like there is a whole science behind pricing.

    My target market is businesses with between 10-20+ employees. The more employees the easier it is for me to make the sale.

    Here's what I have been doing pricing wise:

    Package - Starts at $5,500

    I go into almost every meeting with a base package of $5,500. I bundle everything together then provide addons later down the road.

    When it comes time to talk about pricing I pull out a sheet that shows the total value of the service and the price. If they say that it's too expenses then I do two things before I lower the price:

    1. I try to add more value to the service
    2. I help them think of ways to break the payment up to make it easier on them. Ie, 50% now then I charge your card 50% later. Or 4 payments of .xx with a certain time frame.

    If I have to lower the price then I will.

    Another approach that I have tried:

    Monthly fee:
    Instead of going in starting at 5.5K, I"ll start at a monthly fee. Somewhere around $190/month.

    If they agree to the monthly fee then I say okay, that sounds great and if you want to save some money then let's do it annually.

    The monthly and annual fee are actually cheaper than the 5.5k upfront fee..but I have had more trouble making the monthly fee work for some reason.

    Right now I have competition that's selling a crappy version of what I sell for $90/m. When I saw that my competition is selling a similar service I actually raised my price.

    I have tried various pricing models. The funny thing is that I have learned that people will generally object to price whether it's $99/m or $4000, so why not give them something to actually bitch about?

    How do you deal with pricing?
    Lowering price doesn't help you make sales, as far as I've seen. It's revealing a symptom, not a cause of why it's 'Too expensive.'.. and that only lessens the perception of value of what you offer.

    Have you tried telling them how much your product costs just before the presentation, or even better, on the prospecting call? This is a great tip I picked up from Claude which has made my funnel really tight.
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    you cant hold no groove if you ain't got no pocket.

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    • Profile picture of the author qu4rk
      Great thread. What I find that works for me is the good ole low, middle & high packages. People often pick the middle, which works for me, because if I would have offered them one, then it would have been the low. I think people like to feel like they are choosing.

      I like what the OP is saying about bundling. I never thought of this for myself, but I have seen Sdentrepuer posting about his bundles for things like social media. Now that I'm going after a mix of large & small companies I will put together some bundles targeted towards their business problem...instead of we offer this service & that service.
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      • Profile picture of the author DABK
        Usually, I give 3 price points and, usually, they pick the middle one and often I have to break that into 2 or 3 payments (I add 3%-5% to each), so $6,600 upfront or 3 payments of $2667.

        The low price would be $1,500ish, the middle $6,600, the high $24,000ish.

        I also offer the highest price for just a few dollars more than the middle one if they buy right then or within x days. Then they go for the highest price and they buy right then.

        I'm looking into changing prices, to have lots of things at various price points...

        17
        97
        247
        997
        1577
        3577
        6677
        9999
        15000

        That kind of thing. The idea being that they can enter my world at 17 or 97, then, a while later I can move them to 247 or 3577, a while later yet, to 1577 or 6677 and a few even to 15000 or higher. (The 17 would be just a book I wrote.)

        I don't know how I'll end up doing it as I've just realized I'm perfectly positioned to narrow down my focus to the mortgage, real estate agents and appraisal companies. So, if I specialize in them, and can show them I'm one of them by 12+ years of experience, I ought to have an easier time selling myself and, of course, selling my self for a higher price.

        That's the theory I'm trying to turn into practice, anyway.

        PS It really took me 3 years to realize that, having had 10 years real estate appraisal experience, 2 years loan officer, 1.5 years mortgage processor experience, I ought to go for the mortgage and real estate dudes! And, I swear, I'm one of the smart ones!

        So much for smarts, eh?
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        • Profile picture of the author qu4rk
          Originally Posted by DABK View Post

          Usually, I give 3 price points and, usually, they pick the middle one and often I have to break that into 2 or 3 payments (I add 3%-5% to each), so $6,600 upfront or 3 payments of $2667.

          The low price would be $1,500ish, the middle $6,600, the high $24,000ish.

          I also offer the highest price for just a few dollars more than the middle one if they buy right then or within x days. Then they go for the highest price and they buy right then.

          I'm looking into changing prices, to have lots of things at various price points...

          17
          97
          247
          997
          1577
          3577
          6677
          9999
          15000

          That kind of thing. The idea being that they can enter my world at 17 or 97, then, a while later I can move them to 247 or 3577, a while later yet, to 1577 or 6677 and a few even to 15000 or higher. (The 17 would be just a book I wrote.)

          I don't know how I'll end up doing it as I've just realized I'm perfectly positioned to narrow down my focus to the mortgage, real estate agents and appraisal companies. So, if I specialize in them, and can show them I'm one of them by 12+ years of experience, I ought to have an easier time selling myself and, of course, selling my self for a higher price.

          That's the theory I'm trying to turn into practice, anyway.

          PS It really took me 3 years to realize that, having had 10 years real estate appraisal experience, 2 years loan officer, 1.5 years mortgage processor experience, I ought to go for the mortgage and real estate dudes! And, I swear, I'm one of the smart ones!

          So much for smarts, eh?
          I like those price gaps, that almost forces them to pick the middle, especially if the low lacks the service they want. I'm going to continue the 3 price model, but with bigger gaps like you have. I'll bundle services & the service that they really want will be in the middle package.

          Thanks for your insights here.
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  • Profile picture of the author Oziboomer
    Originally Posted by johntoll View Post

    Pricing..

    If I have to lower the price then I will.
    - so I'm guilty...not often but i understand....

    NOW...

    Exactly.

    I ended up realizing that it's not about price. It really comes down to prospecting and solving a problem. So when I raised my prices I did two things:
    This is confusing....

    Are you lowering your prices to close sales?

    Or are you taking a position?

    As far as laughing at the competition a wise man once told me...

    "There is always someone whether "Smarter" or "Dumber" than you who can charge LESS - than you when it comes to prices.

    If what you do works and you are profitable then congratulations and I sincerely wish you the best for your business.
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  • Profile picture of the author javrsmith
    The key to your approach is the first part where you qualify your potential customer. Looking for businesses of a certain minimum size is a great idea. I have tried pitching to smaller firms, even those that I know can afford to pay well. They are really reluctant, especially in my small market.
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