Page 83 - Selling the Invisible: A Field Guide to Modern Marketing - PDFDrive.com

you can handle: Charge almost nothing.”
She’s right.
If no one complains about your price, it’s too low. If almost everyone

complains, it’s too high.
So if no price resistance is too low and 100 percent is too high, how much

resistance is just right? How much resistance tells you that your price is right?
Fifteen to 20 percent. And there is one simple reason why: Close to 10

percent of people will complain about any price. Some want a deal. Others are
mistrustful and assume every price is overstated. Still others want to get the price
they had in their mind when they approached you, because it’s the price they
hoped for and already have budgeted in their mind.

So throw out the group that will object no matter what your price Then ask:
In the remaining cases, how often do I encounter resistance?

Resistance in 10 percent of those remaining cases—for a total of almost 20
percent—is about right. When it starts exceeding 25 percent, scale back.

Setting your price is like setting a screw. A little resistance is a good sign.

Avoiding the Deadly Middle

Companies in many services essentially set their rates by studying the going,
high, and low rates, and then deciding where they fall on the quality spectrum.
This unfortunate practice tells their customers exactly how good the company
really thinks it is.

Ask yourself: If that’s how you are pricing your services, what are you saying
to your customers and prospects—that you aren’t that great?

Another problem with this pricing strategy is the Problem of the Deadly
Middle. If you are the high-priced provider, most people assume you offer the
best quality—a desirable position. If you are the low-cost provider, most people
assume you deliver an acceptable product at the lowest cost—also a desirable
position. But if you price in the middle, what you are saying—again—is: “We’re
not the best, and neither is our price, but both our service and price are pretty
good.” Not a very compelling message.

The premium service and the low-cost provider occupy nice niches all by
themselves. If you are priced in between, however, you are competing with
almost everyone. And that’s a lot of everyones.

Beware of the Deadly Middle.