DR. MICHAEL GERHARZ
Subscribe

Posts in Tag: Pricing

Oh no, you have to raise prices

We both know what happens when you raise prices.
People go quiet … and you suddenly hear every possible doubt in the room even if nobody says a word.

They are not buying the story.

Eyes narrow a little.
Someone sits back.
They start doing silent math in their head.

Not financial math.
Trust math.

Most leaders do not have the words for that moment.

They have numbers to justify the increase.
They have decks to proactively debunk the rebuttals.
They have logic and charts and operational detail.

But when a customer hears they will pay more, none of that lands. They want something simple and human.

And leaders often cannot say it.

Which is the real problem. Not the increase itself. The moment where the leader tries to speak and the customer no longer hears reason. Only cost.

That is the moment that decides everything.

Do you have the words for it?

Keep lighting the path,
Michael

PS: This is exactly the kind of situation we solve in a Clarity Lab. I’ve just opened up a few spots in January.

It’s too expensive!

Or is it?
Because maybe it’s too cheap.

Price is a story. A cheap price tells a different story than an expensive price.

It’s too cheap when your customer chooses the competition over you because the story your customer derives from the price has destroyed trust in your offer.

Price is also an enabler. Higher prices enable more premium offers.

It’s too expensive when the service you provide can’t live up to the story your customer derives from the price.

No, you don’t owe me for the years

Our customers couldn’t – and shouldn’t – care less for how long it took us to make something. It’s our decision to spend the time and it’s our decision to make the offer. If we decide to offer our service or product to a customer, all our customer needs to know is whether our offer does what we promise it does.

They owe us for the result, not for the effort. If someone comes along who provides them with the same result but less effort or less experience, there’s no reason why a customer should pick us – let alone pay more because it took us 10 years to get to the point where we can make that job in 30 minutes.

Rather than focus our story on the experience we have, it’s much better to focus our story on the experience we give. Make that the best they have ever had … and our customers will stop worrying about why we charge what we charge.

A different perspective on price

A common approach to sales processes is to try to squeeze out the maximum price for an offer.

That’s because price is often an afterthought. There’s the product. And then there’s the price. The goal is to charge the highest possible price for the product and maximise the profit for the seller.

Yet, price is a story. People buy the price just as much as they buy other properties of our product. When they buy a premium priced product, they might tell themselves the story that deserve only the best. When they buy at a bargain, they might tell themselves the story about how clever they are. A million similar stories exist around price.

Thus, a different approach is to embrace that fact and treat price as one aspect of the product. The goal then is to try to squeeze out the maximum value for that price and maximise the value for the buyer.

What stories do your customers tell themselves around price? How can you deliver on that story and maximise the value?

Price as a message

In our regular Clubhouse session on leadership communication we had an interesting discussion about price. One of the participants reported that they managed to get a deal despite having the most expensive offer (by far) among 12 competitors.

Upon further dissecting the pitch it turned out that they got the deal not despite being the most expensive competitor but because of it.

The customer’s management told themselves the story that they only deserve the best. The high price communicated exactly that.

So, when it came to pitching the concepts, the decision was basically already made at the moment the customer heard the price. Everything that came after that was just there to justify why this was indeed the premium offer that they deserved.

This is an important lesson about pricing. Often, the price is seen as the result of adding up the effort of everything that went into building the offer. Yet, price is essentially a story. And so a different perspective on price is that it can also be the starting point of the story. The task of building a product is then to build a product that deserves to be sold at that price point. How does our offer need to look like so that – despite the premium price tag – it still feels like a bargain?

Get This Moment Counts in your inbox.
How exceptional leaders communicate when the message has to land

    I value your privacy. No spam. Just “Great stuff, brilliantly articulated” (to use the words of longtime reader David).