Pricing has always been one of the greatest games in business. In lean times, this is more true than ever. The price you offer has to reflect value, convey trust and cover costs of sales, delivery, and unfortunately, collections. And you have to be able to get your price.
How do you know when a price is right? Let’s say that you meet a prospect for lunch in an attempt to close a deal. When you finally come to the point of stating your price, one of three things happens:
- Your prospect immediately says no, stands, and walks away.
- Your prospect immediately says yes, shakes your hand, and treats you, the waiter, and everyone at the surrounding tables to champagne.
- Your prospect contemplates the offer. The long silence feels like an ocean in your head until you hear that magical word: Yes!
In two of the three situations you closed the deal, but only in the third have you done it right.
If the prospect rejects the offer out of hand, he believes the price is too high, which means that you have failed to sell the benefits of what your company provides.
If the prospect takes the offer immediately, you have given away too much value for too low a price; your prospect feels like he’s discovered a Van Gogh original at a garage sale!
You know you’ve got it right when your prospect accepts your offer only after some deliberation. In this case, he knows the value he is losing if he says no.
Ultimately, your price is your demonstration of value. If you are getting your price in difficult times, congratulations, for you are truly valued for the value you bring.
About the Author
Andy Birol is the author of "Focus. Accomplish. Grow... the Business Owner's Guide to Growth." He is also a noted small business coach, consultant and speaker who has been interviewed on CNN, Wall Street Journal, The New York Times, Entrepreneur, and Fortune Small Business. His blog is Profitable Growth.
