Back to one of my favorite topics, pricing.
You know, I’m usually talking about how you can raise prices, but this time…
Frequently a “price cut” is the answer to “How do we get more sales?” By now you know that this is often disastrous for many businesses and all other alternatives should be pursued first. See if one of these tactics can help you.
And one you’re done, do tell me what you think in the comments.
To your success,
[flv:http://mm.paullemberg.com.s3.amazonaws.com/5Tactics.flv 400 300]
Chevrolet Guy says
Hi Paul. Just found you and added to my favs. Good application for the car sales business. Good stuff even for a guy who has sold for year. I’m a terms guy. Change the terms, lower their monthly pain. If we can give them a little bonus some times it goes a long way. I’m also a believer in controlled price reductions as long as I know there is a high probability of obtaining return customers.
Joseph Warmann says
Thank you Paul,
Loved the trade-off idea of breaking the offer into component pieces that we can negotiate on.
I have used a couple of these in the past with success and will be adding your other ideas to the arsenal! Thanks for the great info!
Glenn, you are welcome. When you get a chance, report in about your success. Let people know what is working. –pl
Carolla Dost says
Haven’t seen you since that amazing Stompernet event you did last August. Hope you remember me. Just a heads up. Your videos are amazing, but it appears that it stops every 10 seconds trying to catch up to itself, which makes it tough to watch. I will stick it out, because I so believe in what you have to say having learned so much from you already. If it wasn’t for you I would have lost my business already. I keep checking in on your blog and hope the people that I am sending your way are availing themselves of your incredible knowledge. This video is amazing, as I have raised my prices 3 times in the last year where everyone else has dropped theirs. This video will help me with those people who are looking to cut costs and not make me lose money. Thanks again.
Hi Carolla, Nice to hear from you. Not sure about the videos, I haven’t seen that same problem – could be bandwidth on your side or just temporary server crush. Glad to hear that the price increases have worked out for you. Congratulations on being bold. It usually pays off. -paul
Clarke Echols says
The problem is probably Paul’s webhost server not putting out data fast enough or you have a slow Internet connection (I had the problem at 1.5Mhz line speed). When that happens, click on pause and wait a little while. You should see a loading-progress bar at the bottom of the video screen. When it gets well ahead of the position marker in the playback, you can put it back in “run” mode.
It’s an annoyance, but it happens when the amount of data in the video stream is too high — common with higher-resolution videos.
Do you have a template payment contract form you use? Can you email me a copy? Funny, I was just going to start doing this, but had no idea of what the contract should be. Thanks in advance! Super information as usual!
Kathy Vaughn says
What an incredibly eye opening video. I’ve been implementing the opposite of each one of your tactics out of a fear of losing the sale but your clear cut explanation truly drives it home that I’ve been heading in the completely wrong direction and better than that… you’ve just erased my fears! Thank you Paul for another incredible post full of content that I can begin implementing immediately!
Clarke Echols says
Something I learned from another sales person years ago —
To make a sale stick, you have to over-sell. In today’s market with the culture changes of the last 25 years or so, that means showing huge value that’s real.
Something that really annoys me is someone selling a product for $69, or maybe even $179, and piling on bonuses “worth” thousands of dollars to convince you to order. It makes me want to scream at them, “***SHOW*** me you’ve actually sold that stuff for that price to somebody who wasn’t a neon sucker!”
And the goo-roos who send you a “free” DVD then try to telemarket you via phone into an open-ended “coaching” program that’s going to set you back $5K-25K per year. COmpare that with Clayton Makepeace, who some morons think is ripping people off [like a guy who blasted one of Clayton’s promotions as an outright fraud and he didn’t even know anything about Clayton, and certainly wasn’t about to spend an hour learning from the recording that would add huge value to his own business at zero cost).
Clayton has far more free content in the archives on his blog site than these other guys have in the packages they sell for $thousand$ then boast of the “million$” they “made” in $ale$. They don’t mention that “sales” isn’t the amount you “made”. Any moron who’s passed basic college accounting can tell you what you “make” is your gross sales minus costs and overhead. Big difference.
Same for other ethical operators.
Saying your DVD is “worth $97” when others are putting similar content out for $39, tells me you have an exaggerated opinion of yourself or it better be very good.
On the other hand when I quote a website at a bargain price of $4000 to a friend who’s having a struggle in business and really needs a *good* site, then half-way through they decide they can’t afford to finish the project so they hire another “writer” for $800 to give them what they [think they] want, not only irritates me because now I have to bill them $2K for a job that didn’t get done in order for them to pay me for my time, but defrauds them because the “fix” they got is a disaster but they don’t know it.
I’m being dishonest with them because I didn’t make sure up-front that they knew exactly what they were buying and why it’s vital to their business to understand enough about what a good copywriter and web site creator brings to the table. If I did that job correctly, they’d never even consider hiring the other writer without even telling me.
Result: I’m miffed, they’re miffed, and everybody loses. My fault.
Sell the **VALUE** you produce and price becomes a lot less important. If you need to save the deal, add value to the package using the excellent suggestions you provided, but don’t cut price or you cut your throat.
Simple example of what you warned about:
If your business makes a 10% net profit on gross sales, cutting your price by 20% makes you lose 10% on every sale because your overhead doesn’t go down the same amount. A Chevy dealer (owner) was buying a product from me in my TV service shop while I was in college (1968). He gave me some excellent advice:
“Always remember you can’t make money turning dollars. You always have to sell everything for more than you paid for it, or you’ll lose money.”
The only exception is when you’re clearing out product that’s no longer saleable at normal price and you want to get rid of the stale or obsolete inventory without sending it to the landfill.
And if you’re in a professional services business, make sure you get a retainer before you start, even if it’s a good friend. — No exceptions. If they can’t afford the retainer, find a better client.
Or as farmers often say: “Good fences make good neighbors.”
Paul Test says
Thank goodness. Comments now fixed. Sorry for any consternation this may have caused.