The Price is Right®
How do you know if you are charging the right price?
That is a difficult question for Business Owners to answer. A few approaches that some Owners use are:
- Let the Sales Team figure it out.
- Calculate hard costs and add a reasonable margin.
- Figure out what the competition are charging and match them or beat them.
The problem with all of these approaches is that they leave out a critical piece of the puzzle. How much are your customers willing to pay? How do you answer that question?
You might be leaving money on the table by not asking your customers directly. Rather than leave your profits to guesswork, incorporate a question about your pricing when you solicit customer feedback.
At Client Insight Inc., we have conversations with our clients’ customers and our questions include: “Is your Supplier’s pricing fair?”
We don’t just ask that question in isolation. Rather, it is asked along with many other questions about service quality, product quality, service level, the customer experience, etc. Because we have conversations, we are able to delve into customer’s response to better understand what they think and why. Here is what we have discovered. Customers are willing to pay a higher price if they have experienced the following:
- Your customer service goes ‘above and beyond’ their expectations.
- They feel valued, heard and respected by your company, and have a solid relationship with one or more of your staff.
- Your product or service is unique or superior.
- They feel they can depend on your company to reduce their purchasing risk.
In other words, decisions about your pricing cannot be made in isolation from the knowledge of your customers entire purchase experience. People are willing to pay more when they experience quality service and have relationships that secure that service quality.
If you would like to learn more about what your customers think of your pricing in relation to their overall experience, then ask them. You might be surprised to learn that you could move your pricing up, or….that you need to up your customer’s experience before even thinking of price adjustments.
Client Insight….we ask the right questions, including questions about pricing. Contact us to learn more about how to find out if “the price is right.”