Top Startup Pricing Mistakes (2 of 2)
It’s tempting to lower your prices if you’re having trouble selling & marketing your product. It seems like it would increase sales, but that’s usually a mistake. (Normally, price isn’t the real issue, and lowering it actually makes your product seem worse.)
Two sides to the equation — Cost & Value.
In last week’s email I talked about cost, and explained that money is probably not the “real cost” of your product, especially in B2B. Other resources, such as time, behaviour change or uncertainty can be your true blockers. (I explain how to identify your true blockers in last week’s email here).
This week we’ll talk about the other side — Value.
People cannot accurately assess your product's cost until they understand its value to them. If you hit them with a price before they understand the value, they’ll think it’s expensive. So start by understanding how they think about getting value from your product:
What do you help them do?
Are you an investment? A status symbol?
Do you remove stress, risk or uncertainty?
Save time & hassle?
What do they compare you to?
What (or who) do you replace?
In short, what mental calculus do they perform to price your product? Is that notion f value clear in your head and in your marketing? If not, try this…
We use a simple interview technique (borrowed from FBI hostage negotiator Chris Voss) to unpack prospect’s mental math. My partner Nopadon eloquently demonstrates it in this two-minute video! Dig in and take notes.
Hey, team, have you ever heard of that famous negotiation book "Getting to Yes".
Well, what if I told you pushing prospects for No could actually help you boost conversions? Why am I going to tell you to push prospects for
No? You need Yes to sell. Right? So it sounds totally counterintuitive.
But let me tell you how I'm Nopadon from startup course, strengths.
And Yeah, let me tell you a story. I had a client once who was in a discovery meeting, and the prospect was giving them nothing but Yes.
Yes. This is great. Yes. It would help us do this, that and the other.
Yes, Everything is amazing.
So I thought of a ridiculous price, and I kept it friendly. And I said, Hey, what if we were to charge you? I don't know, something like a thousand pounds per seat?
Would you pay for it? What do you think? And of course, as you imagine, they laughed at me, said, Absolutely not. We wouldn't pay for that. And I said, Well, why not? You said it would help you do this, that and the other.
And they said, Yeah, but for that price, your product would have to do X. It would have to do Y., And it would have to do Z.
And at that price, we'd have to stop using these two other solutions.
We'd have to pull the budget from these other places. And that was incredibly valuable to us because what they were doing was highlighting what mattered most to their success criteria.
So whether it's a sales presentation landing page, people would have a tough time widdling down to the outcomes, features and benefits to focus on what matters most to the customers.
I've seen companies list the 20 plus features. I've seen the copy on their landing pages that use the dreaded all in one where they're Super vague, or it leaves the prospects board and, at worst, confused.
Using this technique can help highlight what matters most declines and prospects. So don't be afraid to push them for no. You'll learn what really matters to prospects, and
it's totally priceless.
You can tighten up your sales script, update landing pages, improve the copy in your emails, and will make your whole funnel work much.
Better. And it all starts with a little No.
Thanks a lot, guys.
I'll see you later.