I wrote a blog post a few months ago about getting the most out of your price. The key point from that post was that your price alone contributes to the way your brand is perceived. Although the specifics might change depending on your industry, there are three guidelines that apply to every business with a concern for the way the customer views them.
1. Your pricing should be simple. If it’s hard to understand, we imagine your brand’s personality, product, and personnel are going to be the same way.
2. Your pricing should be fair. These days, nothing about your business is a secret. We are too familiar with industry standards to be tricked by price gouging or phony manufacturing costs.
3. Your pricing should be experimental. You have to remember, everything you’ve done until this point has been based on your perception of what your customer thinks. There is no way to know how your customer truly feels about your pricing until you test it.
This will be kind of a “part two” to that post, because I want to talk more about revealing that price you’ve [hopefully] worked so hard to perfect.
If you ask any in-home salesperson what the hardest part of selling is, chances are they’ll tell you it’s presenting the price. Of course that’s the worst part, right? The person they’re speaking too is naturally interested in what they’re selling, and if it was free they would take it, so price is the predictable obstacle.
This is a problem because in order to understand the cost of the product, we as consumers need to understand the full value of the product as well. We’re used to knowing what we’re getting when we buy a 12-pack of Coke or a roll of toilet paper, so when we’re not acutely aware of how your product can benefit our lives, we’re hesitant about the price we must pay for it.
I think that’s probably why free trials are so popular in the world of SaaS (software as a service). When we can experience a product first-hand, with all its capabilities (read: not some “lite” or “basic” version of the product) we can learn how exactly it’s beneficial for us, thereby understanding the value of it and the reason for its price. Once a user has had the product for a month, or whatever, they’re now much more willing to pay a monthly fee for the software they’ve grown accustomed to.
This is an example of the right price-reveal for the right product; someone has understood the the need they have and is now able to fully comprehend the price associated with satisfying that need.
The knowledgeable Dr. Flint McGlaughlin, a respected authority on business optimization, pointed out an easy way to know when to reveal the price of your product. He said, “the price should be presented only when the value is established and the fulcrum is fully weighted on the value side.” That is, only when you’ve built enough weight in the value of a product can you balance it with the cost of that product.
However, depending on the expectations of consumers within your industry, revealing your price after the full value is understood may leave your audience feeling skeptical rather than interested.
Another point from Dr. McGlaughlin I’ve found interesting is his definition of cost. To him, cost is much different than price; cost is factors like confusion, effort, and fear combined with the actual monetary price of the product.
So, how does this timing of price-reveal apply to your business? It might not be an easy application. Different industries have different nuances, and even different audiences within that industry, so it behooves you to take this aspect of your brand seriously. As I mentioned in my first post, experimentation is key. Test carefully what price points work best for your audience, then look for the most effective time to reveal that price.