Emotional Pricing is Eating Away Your Profits

You have the client ready to buy. They nod at all the right moments, say the right things, and indicate they are ready to do business with you.

Then something in your head snaps and you say, “Of course, the price is negotiable.”

Fear is an emotion.

But that’s not our biggest mistake when it comes to emotional pricing.

It starts when you set the prices in your product catalog. Every item in your price list has a bit of insecurity baked in. You hear voices from the past saying, “How much? Really? I don’t want to own it, just use it for a few hours!”

Equipment, labor, markup – each comes with baggage that is festering in your gut and telling your brain to tread lightly.

We need some sort of cleanse.

I recently listened to an NPR story, “The Price Tag Hasn’t Always Existed, It Had To Be Invented.”

A mere 150 years ago, retail prices were non-existent. Merchants tried to get what they could. Buyers haggled on every pound of sugar or bolt of fabric.

The very next buyer could get a different price if they were in a hurry and didn’t want to haggle. If they were short on funds they might make an emotional or even logical argument as to why the product should cost less.

Imagine the damage to profits when all pricing was made up in the moment according to what kind of negotiator the buyer was that day?

Here’s the scary part. It used to take years to train a clerk on how to haggle effectively. They had to consider what was “fair” to the buyer as well as what the product was worth. Putting a novice in this role could be catastrophic.

Retail shops remained small because they couldn’t transfer pricing knowledge quickly or effectively.

Think about it: Isn’t this the same problem we have in AV Production Rental and Live Events?

“I need experienced salespeople who know what this stuff is worth and how it all works!” says every owner looking to hire new folks.

That’s an impossible request.

The solution is price tags. Let’s get started.

Price is more than a number. You need to set an expectation. Here are five conditions your price tag needs to meet:

Credibility

Think about your last Amazon.com product search. Did you choose the item with more images, more specs, and more reviews? Of course you did. You felt better informed by that seller than the sketchy company with an incomplete listing.

Function

Each product has its own scope of work. Put that in the product description. It makes your version more distinct from the competition. The more informative the description, the more value conveyed.

Intentionality

Your price means something. $4.99 means we want you to know that we think $5.00 is a deal-breaker. In other words, “You dear buyer will flip for one penny.” $10.00 for the same product means “We don’t care what others charge for similar products, ours is better.”

There’s no right or wrong, but consistency will convey the message you want to send.

Scarcity

Selling things in bundles (such as five for $10.00) says something about how many the customer might want, but also that the price is accordingly low. Items that are individually priced appear readily available.

So that fancy, expensive widget that makes everything else work should be packaged in a system with all the bells and whistles. If that’s the only way to get it, then the price can be much higher.

Honesty

How can a price be honest? Simple, stop negotiating it.

Once you have gone to the trouble of removing emotion from your products and their individual prices, imagine how much braver you will be about taking the customer’s money or walking away when they won’t respect your value.