Consultative businesses often hesitate to publish their rates. In many cases, they fear an upfront price might reveal sensitive information to competitors or scare away customers at an important point in their buyer's journey.
This can't be further from the truth. In fact, by showing your rates, your conversion rate can improve.
An approach to publishing pricing information:
- Share what factors drive the price of a service up and which ones drive a price down.
- Explain why other companies might charge higher or lower rates.
- Share the upper and lower ranges of your typical client budgets.
An advantage of following this approach is that you will not be tied to a fixed price. As a result, you are able to set budget range expectations, adjusting by scope. Additionally, you have educated prospects about the factors that play into market prices for what you do. (Even if they don't buy your services.)
Note: I've drawn inspiration from Marcus Sheridan's approach to publishing pricing and rates.
Five reasons to publish pricing or rates
1. Price transparency enhances your credibility.
Your company's reputation is enhanced when you publish your prices. Imagine having a face-to-face conversation with a salesperson. You ask about the price of a product they're selling. But she/he won't give you a straight answer. Despite how many times you press, they remain evasive. Would you believe you would buy from him or her after that interaction?
In contrast, when you publish prices or rates upfront, it can help you build a certain level of trust with your customers right away. It shows you are confident in the value of your product. After all, if you're not ashamed of the prices you charge, then what you'll be selling must have some real value.
2. Clear expectations help avoid budget confusion.
Customers often experience confusion and frustration when companies conceal their prices from them. Budgets aren't clear to customers. You'll often just end up dealing with more unqualified leads.
Clear pricing thresholds allow you to avoid such a lose-lose scenario. You don't have to give your customers definitive, flat-rate prices once they understand budget ranges.
3. Pricing pages are marketing tools.
You can set customer expectations and even prompt a higher-value or right-fit sale by utilizing one or more of these strategies:
Anchoring the Price. A fascinating study was conducted at the University of Arizona (PDF). The researchers found that both homebuyers and real estate agents alike tended to view a listed house as a great deal when it was placed next to an identical house that carried a much higher price. Context is everything. Generally speaking, you would list your most expensive product or plan, then list your less expensive options. Prospects will view your next lower-budget option in a more favorable light.
Highlighting a Product. Highlighting one of your products (your most popular service) can lead to increased sales related to that product. What if you operate a cleaning business? Highlight your deluxe package as a recommended choice for the majority of your customers.
Using Charm Pricing. A price reduction of 1 cent. Sure, there's only a penny difference between $20 and $19.99. Still, something about that lower number provides a psychological impetus for consumers to buy.
Many companies are selling based on their own perception of value, which leads to buyers buying that way.
4. Improved value perception using the 3Ps.
Many business leaders mistakenly believe that people buy based on perceived value. In reality, many companies are selling based on their own perception of value, which leads to buyers buying that way.
We tend to lower our value perception when we sell objects or hours (doing so commoditizes). In contrast, when we position our goods or services in a way to achieve desired outcomes, this tends to raise the buyer's perception of value (not their perception of cost).
In the diagram below, are three common focuses. When setting or presenting your pricing, choose the appropriate Perceived Value and Perceived Risk for your product or service to achieve the highest value possible.
Product = Vendor = $ Perceived Value/Risk.
Everything is done by the seller. Businesses sell (or buy) based on a 'product' or a ‘deal. Results that are quick and not always lasting. Safe. Be aware that a smaller commitment/transaction may be an introductory engagement before a larger engagement.
Process = Partner = $$$ Perceived Value/Risk.
It's a collaborative effort between sellers and buyers. Businesses sell (or buy) based on the ability to continually improve over time. Results that are longer-term without rocking the boat too much. Still fairly safe.
Performance = Coach/Leader = $$$$$ Perceived Value/Risk.
Buyers are guided by the seller. Businesses sell (or buy) based on perceived or measured value and expected returns on investment. Preparation can deliver significant results. An experienced person initiates the project, and subject matter experts execute it.
At the core of the 3Ps concept is that all work, and increasing the perceived value of your offerings opens the door to greater revenue for your business alongside higher outcomes for your clients.
Open the door to greater revenue for your business alongside higher outcomes for your clients utilizing the 3Ps.
5. Boost your SEO with information people are searching for.
A great deal of Google searches revolve around the question: "How much does [insert name of product] cost?" If you are upfront about your prices on your website, you are going to score points with your customers. As a bonus, you may enjoy a boost in Google rankings because you are saying what people are asking. It's pretty much an exact match, which is excellent for search, especially for those nearby.
In nutshell, don't hesitate to publish your pricing or rates.
Describe the factors involved in the marketplace. Help your customers understand what drives prices up, and what drives them down. Let them know why some companies are more expensive than others. Set their pricing expectations, and they will appreciate you that much more.
While it may seem awkward at first to publish rates and pricing info publically, it can do wonders for your business. So, give it a try!