Do you find yourself defending your pricing to potential clients? Or worse yet, are those potential clients just choosing not to work with your agency altogether?
If so, read on. I might have your solution.
There are always going to be prospects who go in a different direction. That’s just the nature of sales. Not every prospective client closes. But if you’re struggling to close clients then you should audit your sales process and one of the first places I would start is with…
I’m going to assume that you have done your research and have priced your services competitively (if you’re not certain about that, reply to this email, and I’ll have an IPPC Account Manager reach out to help you).
But what you might not be doing is presenting your pricing correctly.
So let’s do a quick 2 step diagnosis:
Step 1: Do you have more than one price option?
I often see that smaller or newer agencies fall into the trap of offering just one price. The logic goes something like this: we offer HVAC marketing, here’s what we do, and here’s the price. Simple. To the point. And…wrong.
Researchers at Yale did a study in 2012, where they presented two different scenarios to consumers. In Scenario #1, consumers were offered two packs of gum at the identical price ($0.63) and in Scenario #2, consumers were offered the same two packs with a slight price difference ($0.62 vs. $0.63).
Amazingly, an additional 31% of consumers, more than a 2/3rds increase, now decided that they wanted to buy gum only because they saw a value proposition! FOMO kicked in and they moved from shopper to buyer.
Takeaway: you need more than one pricing option which leads us to…
Step 2: Are you offering 3 part tier pricing?
Here’s another study from Duke University that William Poundstone writes about in his classic text on pricing, Priceless: The Myth of Fair Value (and How to Take Advantage of It). In the study, the researchers wanted to see if they could boost the sale of a beer brand competing against a 2nd brand by offering a 3rd “decoy” brand.
If you wanted to boost the $1.80 bargain brand, you introduced a “super cheap” (which actually isn’t all that cheaper) brand and sales for the $1.80 bargain brand went up nearly 50%. And if you wanted to boost the $2.60 premium brand, you introduced a “super premium” brand, and again sales went up nearly 50% AND you eliminated all $1.80 sales and introduced 10% of super premium sales.
Takeaway: I recommend that you offer a 3 tier pricing model.
I know that might take you back to the drawing board (and that can be a real pain in the rear quarters). I’m certain, though, you’ll see improved results. This isn’t theory. It’s human nature.
As a final caveat, you should do this with ethics and integrity. Don’t be creating pricing tiers that offer no value or value that you can’t provide. But I have yet to see an agency that can’t break out its pricing into tiers so go ahead and take a shot at it.
