What’s your pricing strategy and how clear is it to the consumer? Some companies are trying to be the low cost provider. Others may adopt the strategy of a premium offering at an above average price. Both are valid strategies. But today, I’d like to focus not on the strategy choice but on the clarity of the actual price to the consumer.
Last weekend, my wife and I went car shopping. Just a few days after my son started back to school, it was clear that the “two car, three driver plan” wasn’t going to work. Our goal was to decide on a brand and model which we did relatively quickly. From there it turned to availability at the end of the model year and price. Despite being in a relatively high end showroom, I felt like I couldn’t get a straight answer on price. The salesperson literally told me “I’d be happy to negotiate on your behalf.” I could see myself sitting in the showroom for hours with this approach.
We took a lunch break, drove a different brand and then I sent a text to a sales manager I know at a different dealership simply telling him what model I was thinking of buying. A short time later, he sent me a text with his exact pricing. I told him I was on my way. It was late on a Saturday, so I left with specs on available cars which I looked over on Sunday. On Monday morning I shot him a text to tell him my first choice and that I had a second choice if that wasn’t available. By that afternoon, I stopped by to sign the paperwork and make a deposit.
While the second dealer had a better price, I may have never gotten there had the first given me a straight answer. Once they lost my trust, all bets were off. When I think of price clarity, I think of Southwest Airlines and what they call Transfarency® (an obvious meld of transparency and fare). In an industry that banks on complex and confusing pricing, they managed to make it relatively simple. This is a big reason I usually choose to fly Southwest. The other is that I’m in St. Louis and I don’t have a lot of options. But even if I did, I’d still choose Southwest. They have treated me well over the years.
How easy is it for customers to understand your pricing? And, more importantly, does your company and its salespeople present themselves as honest and professional? Do your customers believe they are getting a fair quote? Or do they feel like you’re trying to squeeze every last nickel from them? If it’s the latter, they might buy from you to fulfill an immediate need, but don’t expect a long term relationship. And it is long term relationships that lead to much more business over time.
Every company has both a right and an obligation to make a reasonable profit. In my opinion, the best way to do that is with a good value offering at a straightforward price. It generates repeat business and customer referrals.
I learned my lesson. The next time I buy a car, I know where I’m stopping first. Chances are there won’t be a second stop. Think about that. If a customer calls someone else first, they might not make a second call.
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]
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your cash is flowing. know where.®
Ken Homza
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