What is Price? And why is it important or not?
Price - that eternal word that pops into our lives, discussions, relationships, and transactions. As soon as we are born into this world and start our journey in this world and develop a modicum of awareness and ability, we are told that everything has a price and we can get it as long as we are willing to pay for it. Yet, what exactly is price?
Price can be that thing one dances around without ever asking. A middle-class person might cringe asking the price of a luxury car that he can ill afford, cringe marrying a person that is way out of his or her league due to his inability to "pay the price" and so on. For all of its complications, price by itself is innocuous, fluid, and builds around the context. At its heart, it is nothing but the meeting point at which two people are willing to give up what they have got. The buyer willing to give up their money and the seller willing to give up what he is selling.
Why the price question is avoided?
Yet, for all of its simplicity, price can throw people off. Freelancers routinely cringe or hate being asked the price question too early or at all. Sellers go into a tizzy, providers feel their stomachs churn. Each one goes to great lengths to avoid the question till it becomes inevitable? It begs the question why?
The reason is simple - because it proves an age-old principle of negotiation: The person that comes up with a price number first is usually the biggest loser. By implication, means that there is a chance they are leaving money on the table. Yet, this is only half the truth and has a lot of exceptions.
Why do sellers hate being asked or asking the price question early or at all?
1. Fear of quoting too high or low - This is a common fear. Most sellers and providers fear that they may lose the ability to earn something more if they end up quoting too low
2. Fear of losing the sale - This is another common fear. Most sellers and providers avoid this question until the very end to ensure that they have built a certain amount of relationship with the client or the buyer to make the price question irrelevant. They fear losing the sale or the client very early
3. To avoid being undercut by competitors - Buyers and clients shop around. If you quote a price very early, they may use it to find better offers or drive down someone else's price
Why do buyers hate being asked or asking the price question early or at all?
Buyers are usually asked the "What's your budget" question which is another way of asking what price they are willing to pay
1. Fear of losing the product - Buyers fall in love with the products or things they buy all the time. They already have a conversation going in their heads about how their life is going to be with their purchase. They fear they may lose the item if they cannot afford it
2. Fear of paying too much - Buyers hate paying more than what they think they must have paid. The pain of social or familial embarrassment of paying too much is something they loathe.
Avoiding the price question is, therefore, a sensible strategy so that one can avoid all of the uncomfortable situations above. Before we dig into strategies to avoid the price question and win, lets understand a slight different but related concept - value. As Warren Buffett says, "Price is what you pay, Value is What you Get". Therefore, if one can establish value, price can either be won or avoided altogether.
Strategies to avoid the price question
Step 1. Prime the client or the buyer
This sounds like a counter-intuitive move but this is a strategy that has great implications and great impact. This strategy can be implemented by publishing standard project services with caveats, conditions and outlining what the client is going to get.
Do you have an online profile where you have listed your portfolio and the advantages of working with you or buying your products? Have you published a comparison of why you or your products are superior? If not, do all of these to prime the client of the buyer. Before they engage you in any conversation, they will know what to expect. It will also act as a filter for the wrong clients and buyers.
Step 2: Ask them their budget and their Need
Now that you have a primed client or need, the next step is to establish a budget and why they want what they want. This will give you an idea of what the client is thinking about in terms of price. More importantly, when you understand their need, you will likely uncover their emotional needs which will serve as a powerful anchor for you to avoid the price question altogether
Step 3: Talk about value - Go back and read Warren Buffet's quote. Usually, clients and buyers confuse value and price. The ticket to Niagara falls might cost $100 but the value is priceless. In a similar manner, outline the value that you are going to deliver and the value the client is going to get.
If you are writing a blog for someone, outline your research process. Outline the various techniques you are going to use. Outline the contextualization you are going to provide the content. Outline how plug and play your content is. Outline how much time you are going to save the client. When you do these, you will certainly establish value and if you have done
Step 4: Close, document, and start - Too often, most people forget to ask for the sale or go for the close. Once you've done Steps 1-3, if the client or buyer is still with you, they are just waiting for you to move them to the next step.
Document what you agreed on, clearly lay down they will get, what they will pay, under-promise and over-deliver. Once you've done the above consistently, you will have a long term and would have started getting on the road to avoiding the price question almost every time.
Lastly, bring it all together into a neat system. Read our earlier blogs on this:
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