I’m sure that at sometime you’ve been to the cinema or a concert and wondered “how do they get away with these prices at the concession stand”? You’ll have thought why am I paying 10 times as much for my coke as I would pay at the supermarket? Or, seriously they expect me to pay a fiver for a warm beer that I would normally pay £3 for if that?
Now you might think that this blog is going to be about how you too can price gouge (the definition of which is:- Price gouging is a pejorative term referring to when a seller spikes the prices of goods, services or commodities to a level much higher than is considered reasonable or fair and is considered exploitative, potentially to an unethical extent). No, this blog is not going to be about how you too can be exploitative but about the context of the sale and how that can massively impact on the prices you can charge for your product or service.
The thing is that when we talk about setting our prices we almost always look at our cost, the demand for the product in certain markets, possible competitor products, and perhaps alternatives to our products. The Price-Product Link becomes an ingrained religious belief in most business owners beginning with textbook formulas for setting prices. We very rarely look at the context of the sale for our product, which can and does have a massive impact on the price we can charge.
How about looking at Starbucks or Costa Coffee, before either of these coffee shop chains came along the average price of a coffee in a cafe was at least half of what a basic flat white is in these establishments. The existing establishments would have never looked at charging what Starbucks charged because they saw themselves as cafes whereas Starbucks does not define itself as a cafe or even more elegantly as a coffee house.
They describe themselves as being in the ‘third place of business’ home, office, Starbucks in between. They are not just merchants of jazzed up coffee drinks. They are merchants of place, of feelings, of status, and maybe most of all, of experience. For them, the context of where they provide the coffee or any of the other beverages they sell is just as much the product as the drink itself. This understanding of the context of the sale at Starbucks allows them to charge more than other establishments who sell cups of coffee.
Of course, Starbucks are not the only ones who understand the context of the sale. Lots of businesses in different sectors have taken the context of the sale to heart. Changing the environment in which we experience products, such as beer, wine, cocktails, etc has become almost vogue and has allowed those vendors who understand this, to benefit from higher prices as a result.
So how can you develop your ‘context of sale’.
Start by thinking about where the sale is going to happen, is it going to happen in person, is it going to happen on the phone or on line. It’s easy for the likes of Starbucks to set the context of their sale as they are completely in control of their environment, but for a lot of businesses, this is the difficult part. Firstly if you’re in any of the trades (joiner, plumber, painter and decorator, electrician, etc) the single biggest mistake they make is emailing quotations, if you email a quote then not only are you not in control of the environment of the sale, you’re effectively only selling on one thing and that’s price. What’s the first thing we look at when we receive an emailed quote, we all scroll down to the price.
All that hard work they did trying to impress on the quality of their work and service gone to waste because they didn’t take into account the context of the sale. One of the first recommendations to all my clients is, Stop Emailing Quotes, an email never sold anything. Deliver quotations in person, that way you can remind them of the benefits of using your business. Remember the first business that takes price out of the equation wins the sale.
If you’re selling professional services then think about where you’re holding the sales meeting, or initial consultation or whatever you call it. If the environment is not right then it will impact on the price you can charge. If it’s at your office, is the office clean, tidy and inviting? Sounds obvious but you’d be surprised how many offices I’ve been in that would fail even the most basic of hygiene tests. If you’re meeting at their premises remember to respect them, new carpets, take your shoes off, etc.
If you’re trying to close sales online here a couple of things to think about:-
Start by familiarising yourself with the latest technologies. It takes just one online search to see how many types of applications exist to help you perfect your online sale. I use Zoom which is great for face to face online meetings and sharing your screen etc.
Learn to really listen. You may not be with your prospect physically, and you certainly won’t be able to read their body language as if you were in the same office. Therefore you must concentrate on refining your listening skills because you will need to learn to pick up on certain subtleties in the tone of voice when your prospect asks questions or responds to one. Don’t jump the gun and start formulating answers before you hear out your prospect. You can gain great insight into their real needs while also differentiating the customer experience that you are providing. When potential clients get a true sense that they’re being heard, they will let their guard down. I know it’s tough but resist the temptation to jump too quickly into your show and tell.
The big point to take away for this blog is that context alters or liberates price from product. Move the exact same product from one context to another and its price can easily be increased.
Would you like to understand more about advanced pricing strategies? Advanced pricing strategies is just one of the topics that we cover in our next level virtual business coaching programme. To find out more click the blue button..
Twelve intensive half-day meetings.
