When crafting an offer, you want potential customers to find your prices appealing. You’re seeking a balance between what someone is willing to pay for your digital products and what is profitable for you. But what do you do when your clients inquire only about minor services, and convincing them to accept higher prices and broader projects becomes challenging? Discover a simple method that can help you turn the tide!
Finding the perfect compromise is challenging, but there are various ways to persuade someone to accept the rates that matter to you. In this post, I’ll share a straightforward method that increases the chances of a customer considering your prices more attractive or opting for a larger order than initially planned.
Before we delve into it, I will explain the basics. How does someone perceive a price as “attractive”?
Reference Prices
When you see a price, a simple mechanism kicks in. You naturally compare. You try to estimate how much such a service or product should cost and how much it is worth to you. Marketers and researchers call this a reference price.
If the product is known to the consumer, they compare its price to similar products they are familiar with. They assess it based on what seems reasonable if there’s no such reference point.
If you want to buy chocolate, you roughly know what expense to expect. You compare the price of a chocolate bar to the prices you know from experience, and based on that, you assess the cost of chocolate as high or low. You know what quality can convince you to accept higher prices.
But if someone on the street suddenly proposes selling you an air humidifier, and you’ve never thought about such a device, you compare the offered price “on sight” to what seems reasonable. Your assessment is highly subjective.
In the second scenario, it’s more straightforward to convince you of a particular rate and shape your perception of what is expensive or affordable because you lack experience and a point of comparison. You need to form a lasting opinion only over time. And this is where the creative industry, eCommerce and online business come into play.
Rates in the eCommerce
The example with chocolate was straightforward. Everyone has bought at least one chocolate bar. In the creative industry and eCommerce, it looks entirely different. Clients face two main problems:
Enormous price range – in the eyes of a budget-conscious client, the same service can cost anywhere from $40 to $4,000. How much does a logo design cost, a photo session, a professional hosting for eCommerce, or book translation cost? The answer: it depends.
Lack of awareness – clients typically lack a point of comparison. They lack a reference point that helps them assess rates as high or low. They rely more on instincts and what seems to them. After all, one doesn’t buy websites or VPS hosting with Linux as frequently as chocolate bars. It’s challenging to have significant experience in this.
However, sticking to the previous example, I assume that your product is closer to an air humidifier than chocolate. Once you understand this situation, you can consider how to leverage it in your offers.
Reference Prices: How to Convince a Customer to Accept Higher Prices?
Consider two questions:
- Does a petrol-powered tiller cost more or less than $800?
- How much does a petrol-powered tiller cost?
These two questions seem independent. The answer to the first theoretically has no connection to the second. However, research shows that it is quite the opposite.
If, in the initial question, I were to inquire whether a tiller costs more or less than $2,000, statistically, the response to the second question would tend to be higher. In other words, the higher the suggested amount in the first sentence, the larger the amounts given in response to the second.
In psychology, this is called priming. It’s a situation where something you see first influences how you behave towards what you see later. The price of the tiller in the first question primes the way of thinking about the price in the second question.
There is only one condition: the person being asked should not have a clear reference point, meaning they should not be sure how much a tiller costs, as in that case, the first question cannot mislead them.
Now let’s put it all together and create the sales strategy to convince the customer to accept higher prices of your services.
How to Leverage Reference Prices?
In the case of products and services where the customer lacks a clear price reference point (meaning they are not entirely sure how much something should cost), it’s worthwhile to utilize priming. How?
First, present the customer with an expanded and more expensive proposal. Add things they didn’t explicitly ask for or provide more options and variations than they declare they need. Then, present the final offer for the service they initially sought. Because they first encountered a complex and expensive offer, the final one will seem cheaper and more tailored to their needs. In the result they may accept higher prices than they would without priming.
Make Your Agency Professional
To make your agency truly professional, you need to leverage the full benefits of technology and various business areas. Implement the strategy outlined in this article, and also utilize professional tools for marketing, SEO, and eCommerce. Choose a hosting solution tailored to your business needs as well.
There’s also a significant chance that, having seen the expanded offer, they will decide on more than they originally planned because they weren’t aware of what else could be done and how it might benefit them.
Example:
Let’s say you’re a graphic designer, and someone is ordering a logo from you. Even though the inquiry may concern just the logo, it’s worth proposing a richer version of this service.
Begin by presenting a pricier option with added elements, like a visual identity design or animation elucidating the implemented alterations. These could be all the additional services that build upon the initial inquiry but are related to it. Of course, they will also increase the price.
Only in the second step, present the cost of creating just the logo in the offer, which is a response to the initial request for a quote. It’s a straightforward approach, but surprisingly, not many individuals implement it. They price only the variants suggested by the clients themselves. Why? Because, after all, they didn’t ask for anything more.
Meanwhile, there’s little to lose by adding something extra as an additional option. Creating a broader offer doesn’t take much more time, and the potential benefits are significant.
I have never encountered a situation where a client would be offended that I proposed more than they asked for. Usually, they decline if the larger proposal doesn’t interest them, and from time to time, it allows me to extract quite a substantial order from what initially seemed like a modest inquiry.
Conclusion
Running a business is about professionalism. Using professional tools, professional technologies, but also professional business knowledge. After all, you wouldn’t run your applications and websites on your personal computer; you’d invest in a professional VPS server with Ubuntu, right?
Avoid amateurism in sales, marketing, and other business areas. Therefore, mastering the use of reference prices should be perfected by you.
Business is not only about delivering services at a high level but also about managing accounting, marketing, and sales professionally. Priming is a well-established concept in business psychology and should be part of your sales and communication strategy with the client. This way, you’ll convince the client to accept higher prices for your services.
If you enjoyed this article, then you’ll love WordPress Hosting for Enterprises from UltaHost. Get 24/7 support from our support team. Our powered infrastructure focuses on auto-scaling, performance, and security. Let us show you the difference! Check out our plans!
FAQ
How can I strike a balance between what customers are willing to pay and what is profitable for my digital products or services?
Crafting an appealing offer involves finding the right balance between customer willingness to pay and profitability. Utilize the reference price method to navigate this challenge and turn potential customers’ inquiries into higher prices and broader projects.
What practices and tools you can use for making an agency truly professional?
To elevate the overall professionalism of your agency learn about essential elements, such as technology, marketing, SEO, and eCommerce tools, to enhance your business operations.
What is a reference price, and why is it important in pricing strategies?
A reference price is the benchmark against which consumers evaluate the cost of a product or service. It’s crucial in pricing strategies as it influences how potential customers perceive the attractiveness of prices.
In what situations is the use of priming and reference prices most effective?
Priming and reference prices are most effective when customers lack a clear reference point for the cost of a product or service. This typically occurs in industries with a wide price range and where customers may not have a solid understanding of what certain services should cost.
