How to Sell Your Product or Service - Presenting Pricing or Proposals (Part 10 of 11)

Summary

This video script focuses on the psychology of pricing and how to present pricing options confidently to customers. The speaker explains two primary pricing strategies: fair market value pricing and premium pricing, encouraging salespeople to embrace the value of their product and charge accordingly. A key tactic involves offering three pricing options, with the middle one being the most attractive to customers. Additionally, the speaker advises offering flexible payment methods, such as credit cards or PayPal, to cater to different customer preferences. Overall, the script emphasizes confidence, clarity, and strategic thinking when presenting pricing in sales.

Takeaways

• 😀 Confidence in pricing: Don't hesitate when presenting prices. If you believe in the value of your product, there’s no reason to hold back on pricing.
• 😀 Two pricing models: You can either follow a fair market value pricing model (comparable to competitors) or a premium pricing model (charging a higher price due to superior value).
• 😀 Premium pricing mindset: If you choose the premium pricing model, emphasize the additional value your product offers over competitors to justify the higher price.
• 😀 Example of market differentiation: Just as some people prefer an affordable steak at Denny’s while others opt for an expensive steak at Ruth’s Chris, your product may appeal to different demographics based on its price point and value.
• 😀 Three options are better than two: Offering three pricing options (high, middle, low) makes customers more likely to choose the middle option, which is the one you want them to buy.
• 😀 Psychology of pricing: When two pricing options are given, customers usually choose the cheapest. With three options, they tend to select the middle one to mitigate perceived risk.
• 😀 Flexible payment terms: Offering various payment methods (credit card, PayPal, online payments) and flexible payment terms (e.g., Net 30, Net 60) makes it easier for customers to commit to a purchase.
• 😀 Positioning your product: If you follow the premium pricing model, highlight how your product offers more value and stands above the competition. This positions you as a premium brand.
• 😀 Build pricing confidence: The mindset you have about your pricing will influence how confidently you present it to customers. Be clear whether you're offering a fair market price or a premium price.
• 😀 Offering payment flexibility: Always have clear payment options ready for customers so that they feel confident in the purchasing process. This could include different payment methods and schedules.

Q & A

Why is presenting the price confidently important in sales?

Presenting the price confidently is crucial because hesitation can make customers doubt the value of your product. If you believe in the worth of what you’re offering, presenting the price without hesitation reassures the customer of its value.

What is the difference between fair market pricing and premium pricing?

Fair market pricing aligns your product’s price with similar offerings from competitors. Premium pricing, on the other hand, charges a higher price for a superior product or service, justifying the extra cost by emphasizing added value.

How does the mindset of a fair market price affect the sales pitch?

If you have a fair market mindset, you'll focus on how your product compares to others, highlighting small differences and presenting it as one of the many similar options available in the market.

What role does the premium price mindset play during the presentation?

With a premium price mindset, you position your product as superior, emphasizing its unique benefits and why it justifies the higher price. You explain why customers should pay more for the value your product provides.

Why is it beneficial to offer three pricing options instead of two?

Offering three pricing options is effective because customers tend to gravitate towards the middle option. With two options, they often choose the cheapest one to minimize perceived risk, but three creates a balance, making the middle choice seem like the most reasonable.

How does the 'middle option' strategy work in sales?

The 'middle option' strategy works by placing the pricing tier you want customers to choose in the middle. This strategy takes advantage of the psychological tendency for customers to select the middle option when offered three choices.

Why should you be aware of your target customer demographic when setting prices?

Understanding your target demographic helps in choosing the right pricing strategy. For example, premium pricing works when you’re targeting customers who value higher quality and are willing to pay more for it, just as a diner would choose a more expensive steak if they’re willing to pay for the experience.

How can offering flexible payment options help close the sale?

Offering flexible payment options, such as net 30, net 60, or net 90 terms, as well as various payment methods like credit cards or PayPal, can make it easier for customers to commit to the purchase by accommodating their financial preferences.

What is the benefit of presenting pricing options with different payment terms?

Presenting options with different payment terms allows the customer to choose the most suitable payment plan, which can increase the likelihood of a successful close. This shows flexibility and willingness to meet the customer's needs.

How should you handle the closing question after presenting pricing options?

After presenting the pricing options, ask the customer which option best fits their budget. This question transitions the conversation towards closing and gives the customer the freedom to choose, making them feel in control of the decision.