Sales guru, Richard Denny, made a very interesting observation about people’s buying habits. Â He discovered that on average only 15% of people will buy based on the cheapest price they can find and only 5% will buy based on the most expensive price. Â This leaves 80% of people in the middle who don’t buy on price.
And thatâ€™s quite a staggering thought. Â It means that most people have flexibility in what they are prepared to spend on a product or service. Â If they have flexibility in what they would spend then you have flexibility in the price that you can charge. Â This is called â€śprice elasticityâ€ť.
I love this concept is because it’s so liberating: You don’t have to feel as though the only way you can win the business is by being the cheapest. Â In fact, if you look at any major retail outlet from Tesco to Argos to Harrods you’ll find that their prices are very often not the cheapest. Â In other words, they are fully aware that the majority of us don’t buy on price â€“ we buy on what we think is a fair price for the product or service weâ€™re getting in return. Â We buy based on the perceived value of a product or service.
Okay, so this is all very interesting but what has it got to do with your website? Â Often website owners are scared to put their price on their website because they worry that people will either be put off or that they will open themselves up to comparison with their competitors.
This is crazy. Â You shouldn’t be basing your prices around your competitors (because when times get hard and prices start crashing, you, along with your competitors are spiralled into a price war and it’s that kind of behaviour that bankrupts businesses). Â Instead, your price should be based around the perceived value your customer has of your product or service. Â The more value you can demonstrate the higher your price can be.
So, for example if you sell LCD TVs make sure that your website packed with useful information; specifications, manuals to download, pictures front and back of the TV, go the extra step and offer some free guides, advice and consultation. Â Then start offering high end value; three year extension of their warranty, free delivery, free home setup service, free technical helpline, free ÂŁ10 voucher from a DVD retailer, 25% off a DVD player, and so on.
Once you start thinking about what you can offer you’ll find all kinds of routes to increasing your prices. Â So, by proving your value your visitor will be happy to spend a little more with you than your competitors because of the huge value you add.
This is something I really want you to get excited about because it frees you to be more creative about your business and also simultaneously gives you a pay rise.
Now, if you are still unconvinced that you should put your price on your website then here’s a bit of research done by Gartner that might change your mind. Â They discovered that finding the price on a website was the single most important piece of information visitors required. Â In fact, it scored nearly 30% higher than the next most important item on the list.
Incidentally, this applies to the service sector too because the same visitor mentality applies â€“ people will still want to know how much you charge. Â If what you do is completely unique for each of your customers then offer guideline prices. Â You could even offer prices based on previous projects in the case studies section of your website.
The fact is people are more likely to be put off by websites which conceal their price because it leaves it up to the visitor to guess what you might charge. Â Now thatâ€™s not far short of insane because the last thing you want your customers to do it is guess your prices. Â They could guess that youâ€™re too cheap or too expensive but either way it means your website has utterly failed you (and them).
In summary, put your price on your website, make it really clear, demonstrate the value in what you do (which justifies your price) and above all be proud of it!
Did you miss Jed’s Profit Fix #1 article? Read Say What You Do here.