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June 28, 2022

Pricing Experiments I’ve Done. So…You Think Your Price Matters?

I was being interviewed today about selling techniques…and the subject of price came up.
I’m going to shorten this to just give the essentials about pricing experiments I did in the past, and their results.

I had an office with about 8 salespeople. We were selling our vacuum cleaner (in people’s homes) for $1,589. One of the sales managers suggested we would sell more, if the price was lower. Of course everyone chimed in that it was a great idea.

So…’Claude The Terrible’ said “OK, pick a lower price, whatever you want. For the next 30 days we’ll sell for that price. Right now, our office closes 41% of our presentations (them, not me). Just remember that our costs are the same, so much of the lower price will come out of commissions paid…so decide on the price. They picked $999.

For the next 30 days, we sold the machine for $999 (not me, them)….and at the end of the month…yup, 41% of the people bought. The lowering of the price made no difference.

A few decades ago, I was getting tired of hearing objections like “Bad time of the month”, “Can’t afford it” “Have to think about it”. Sure, I was making sales…and making money, I just hated hearing the objections. So I decided to sell something so inexpensive, that I’d never hear another objection again. They would either say “Yes” or “No”.

I went from a $1,200 vacuum cleaner to a $24 set of home medical books. I created a short presentation…maybe 5 minutes…and started knocking on doors.

Guess…….Yup, even though it was only $24, I was still hearing the same objections about not having money, having to wait, wanting to think about it…the exact same objections. What did that teach me? That the objections were automatic and had nothing to do with the price or what I sold. If they didn’t want what I had, they gave an objection. If they wanted it…they bought.

So…why didn’t they just say “No”? Rapport. They didn’t want to break the rapport we had, so they would invent an objection that prevented them from buying from me. They thought they were being kind…polite.

Some things are very price sensitive…groceries, fast food, gasoline, mortgages…

But mostly what we offer, services and products that can’t be shopped easily…price isn’t as important as presentation. What value does the prospect see in what you are selling? And who controls the value they see? Us.

I remember being on a presentation and quoting the price as “Nineteen ninety five”. (Meaning $1,995)

The guy started giving several objections…..he had to wait, he had to think about it…

Finally he said “You know..$19.95 is actually a pretty good price, but I just have to think about it.”

Honestly, I think if I had the ability to sell at twenty dollars…I still would only sell slightly more vacuums.

One guy told me “I can’t afford the payments”..to which I said “It’s only $1 a month”. I did that to prove a point to a trainees I had with me . The guy said “Yeah, you make it sound good, but I may get laid off, you never know”.
Sometimes I just enjoy myself.

If they want it, they will justify any reasonable price. If they don’t want it, price doesn’t matter.