You probably think I mean you are losing sales, because you are too expensive.
I'm not.
It's probably not the size of your price that is bugging people, but the $ number that is turning them off.
Stay with me.
I'll explain with one my stories. (I know you love my stories.)
Story one: Phone reaction to an odd price - decreases 'price shock'.
Meet David Coote:
David has an immigration business.
When working with David and his staff 4 years ago, I asked them what happened when people rang for information about migration matters.
His staff told me, that after listening to the person's story, they would suggest that the prospect make an appointment to speak with David and bring all their documentation with them.
They mentioned that the initial consultation would be $200.
At which point the prospect sucked in
their breath with shock.
Price was perceived to be an obstacle.
[Have you ever had a prospect shocked at your price?]
Test and Measure
"OK," I said to David's staff, "the first thing we are going to do is alter your price.
What you need to say, is that the initial consultation would be $197, and keep a record of the prospect's reactions."
After 2 weeks we met and I asked what had been happening when they told the prospect the price of the initial consultation.
"Oh," they said with surprise, "All the 'sucking of their teeth' stopped. Nobody is shocked by our price now."
Story two: Buckwheat pillows pricing - increased sales.
Julie in Parkes NSW Australia sells buckwheat pillows filled with the hull of the grain. It is an amazing pillow that molds it's shape to the shape of your head, supporting it firmly and keeping your spine straight as you sleep. I love mine.
At the time she had a range of different sizes and combination packs of pillows. All were priced with prices ending in either a "0" or a "9".
I explained that they would sell better if their price numbers ended in either a "3" or a "7". I explained why, but she was understandably sckeptical.
Julie chose to do a test and measure and picked the slowest moving pack of pillows to test the theory.
She spoke to me afterward and was shocked that she had sold two of the slow moving packs in the next week (to different parts of Australia). The only thing she had changed was the number at the end of the price.
Story three: A Garage Sale - odd pricing puts a stop to negotiating prices.
Do you hate having to haggle over prices when you sell things?
Last weekend we had a garage sale.
Instead of pricing a metal lathe at $1500 we hung a sign on it for $1497.
The purchaser just accepted that that was the price - and paid in full.
An old refrigerator was priced on Facebook at $350 and an enquirer started to haggle with the price but was told we could accept $147.
His response: "Seems an odd number but sure I’ll go $147 pending inspection"
Story four: A car advertised for sale. Increased number of enquiry calls because it was priced oddly.
My old 280SEL Mercedes Benz had seen better days. I advertised it on Ebay for $3,873. I had people call just to ask why it was priced the way it was. That gave me the opportunity to discuss the car in detail - converstions I would not have had, had I done what everybody else does and advertise for say $3,999.
The older man who bought it was counting out the notes and when he got close to the agreed price I said "That's enough". He replied "No, we agreed to your asking price of $3,873" and dug into his pocket for the coin to complete the transaction.
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Why did odd pricing change people's reaction?
There is a swag of research called Psychological Pricing, that tested how people reacted to different dollar amounts for the same product or service.
What they (and I) have found is:
1. People perceive a price that ends in a '0' (like $200) to be a full 'non-competitive' price.
2. Prices ending in a '9' (like $499) although performing well in the retail sector, still draw the consumer into having to compare it as a price (I'll explain below)
3. Pricing that ends in a '5' is just viewed as a 'mid point' between two 'full' prices.
4. If a price ends in an odd number (3 or 7), it is either perceived as:
i. A 'discounted' price (with as much of the profit squeezed out). Or . . .
ii. They see it NOT AS A PRICE AT ALL!
(The prospect perceives it, as 'just a number')
Now David Coote's prospects saw his $200 initial consultation fee as "expensive" - a full price.
Ending his price in a '7', turned off the shocked reaction because the prospects perceived $197 to be 'just a number ' - and not a $ price, that they will have to shell out.
Pricing objection solved
Try it for yourself.
Quote your next sale in a price ending in either a '3' or a '7'.
Test and measure this system to see a lift in your sales close ratio (the number of sales you win out of the number of quotes you do).
Hey, what about letting me know how it goes for you?
Happy pricing,
Paul Johnson
Check me out here:
http://www.missingpiecemarketing.com.au/about
p.s. For those of you who go looking for my p.s.'s - all the above and heaps of cool new business generating tips are in my new 6 session course:
'The Secrets of Winning More New Business'.
No, I'm not going to try to 'sell' you on the results you'll get out of my courses, or the extra money you will make. Others have done that for me. Click here
You'll have to call me on 0407 261 900 (+61407261900 outside Australia) or email me by clicking here.
Well, go ahead, click on either of those links above . . . .
. . . I'm waiting
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