It’s a scenario that’s all too familiar: You’re working to win business with a great new prospective client, and your sales prospecting courtship is off to a great start. But you’ve just started the whole discussion around price, and it’s starting to feel like the conversation is heading south. You know your prices are higher than your competitors’, but you’re not having much luck justifying it to your prospective client.
It’s no surprise that pricing is such a big decision driver in all realms of business. In fact, it may be the most important of marketing’s four P’s (the others being Product, Promotion and Place). But rather than hiding behind your pricing, here are five ways to turn pricing into a positive lever to help you win business:
1. Focus on Value
Value = Benefit/Price. Rather than focus on the actual price point like most businesses do, expand the pie. Focus on emphasizing the benefits of your product or service and ultimately demonstrate the value you’ll be creating for your customer.
2. Connect the Dots to Dollars and Cents
Value isn’t a fuzzy thing – it’s measured in dollars and cents. Each feature you provide ought to either increase revenue or decrease costs for your customer. So rattling off a list of features your product or service offers isn’t going to resonate with your prospect. Instead, you need to connect the dots between features, benefits and value in dollars and cents. For example, if a feature you offer is complementary logo design services, the benefit to your customer is that they will save six hours of time instead of doing it themselves, which might be worth 6 hours multiplied by $50/hour in average designer wage = $300 of value.
3. Get the Pricing Metric Right
A good pricing metric should track with the value delivered and should be easy to measure. For example, your software product might be better priced based on hours of usage vs. a fixed price per seat. A pharmaceutical example would be pricing treatment medication per minute of therapy vs. pricing per volume of medication (since administering to children may be higher value and higher cost).
4. Tier Your Offerings
A one-size-fits-all approach doesn’t work well in marketing. It also doesn’t work well in pricing. Your customers have different needs, so give them different options. For example, offer an entry-level option that comes with limited support, online ordering only and shorter net payment terms.
5. Build Fences
Your different customer segments perceive value differently. Tiering your offerings using variations will naturally fence off your customer segments. For example, airlines fence off business travelers through the Saturday-night-stay requirement (and charge them a higher price).
Pricing is much more than setting a single price point. Think about pricing in a strategic way, and you’ll be on your way to winning more business and increasing your profits.