Sales

Price Factors

There are influencing factors at play, largely beyond our control, impacting how our prices are perceived by potential clients.

Pricing can be very simple, and incredibly complicated.

It’s simple when you price your service to be competitive, affordable and profitable.

The moment you put that price in front of a potential client is when things get complicated.

Same price, different response

I’ve spent over a decade pitching potential clients, winning some, losing others.

Over this time, I’ve come to realise that no two opportunities are remotely the same.

Not even close.

Despite there sometimes being evident similarities between the types of client, the services I'm offering or the budgets available, the outcomes are often wildly different.

I’ve come to believe that in these instances, this has more to do with the potential client than it does with my pricing.

Price perception

There are influencing factors at play, largely beyond our control, impacting how our prices are perceived by potential clients.

It gets personal.

Every potential client is completely unique.

These underlying principles / laws / driving forces combine to give any single person their own unique interpretation of your pricing.

I have identified a handful of these factors, although I am sure there are many more at play.

Some are levers we can pull in our favour. Others are seemingly impenetrable defences.

Here's an overview...

The Comparison Factor

When assessed alongside comparative quotes from other providers your price will be perceived differently.

When a client receives quotes from three providers you have unwittingly entered a draw to become ‘the cheapest’, ‘the most expensive’, or somewhere in between.

In this scenario, unbeknownst to the client, it may be that the three quotes are all from the cheaper end of the market.

The ‘most expensive’ could still be far below the typical market rate.

The Finance Factor

The client may be predisposed to viewing service fees through the lens of their company’s finances and established proportions or ratios they believe should be adhered to.

Their thinking might go “why should I spend 15% of turnover on marketing when a business should only spend 10% of turnover? Everyone knows it should be 10%”.

An embedded belief such as this could be the starting point from which they determine the value of your offering.

An uphill battle from the get-go.

The Familiarity Factor

How familiar a client believes they are with your service will shape their opinion of your price.

Sometimes a little knowledge on the client side can be a dangerous thing.

Their understanding may be limited resulting in a simplified view of the complexities and intricacies of your offering (which justify the price you are quoting).

Lack of knowledge can be just as impactful – see The Fear Factor.

The Attitude Factor

We all have a unique personal attitude toward money that spills over into business, even when we don’t intend on it.

There’s no guessing your client’s opinion about money.

You can try and figure it out, but it’s not straight forward.

Take the director of a large company who spends lavishly in their personal life. They could be tight or greedy with their business finances just as much as they could be equally lavish and spend-happy.

Either way, their personal spending habits will influence their perception of your prices.

The Fear Factor

Underlying fear can slow down and completely stall a client’s decision-making process.

There is always an element of risk when engaging a new provider.

Traditional sales teaching suggests that any objection to price is in fact an unanswered question or lack of understanding held in the client’s mind about the service.

What it doesn’t teach is that the fear, or doubt, could have nothing to do with the service itself.

A client who has been ripped off by a consultant 5-years prior is likely to have reservations when dealing with any consultant in the future.

The Zeros Factor

Big companies often spend big. As such, big spends that aren’t quite as big as their other big spends can look small.

Conversely, smaller companies may be more likely to see and deal with smaller numbers in their day to day.

Whether it be invoices, bills, annual revenue, employee numbers (the list goes on).

A client that is used to dealing with small numbers might hesitate when they see bigger ones, and vice-versa.

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