It amazes me sometimes that I see companies or salespeople use guesswork when it comes to top-down pricing. If you throw out a number and hope it sticks to the wall is a little unprofessional. This way of doing things is a great way to leave money on the table and even lose a client. Research to give a proper quote is the most professional solution to this issue. Being prepared reminds me of a saying “Proper Preparation Prevents P Poor Performance”
Proper research on what exactly your competition is charging. Not only looking at the price but make sure you know what exactly what the product entails. Is there something extra or something missing for what you are offering. If you offer more benefits and features then your competitor this is a possible reason why you can have a higher price than whatever your competitor is offering. One thing that is important to understand is the more flexibility that you have with your product the more flexibility you can have in your pricing. Also the more add-ons or extras you offer allows you to increase your price higher than the competition that might not have extras. This helps you be more unique and separates you from the competition.
A big part of the research has to be how much are you potential customers willing to pay for your product. This is probably one of the most important metrics to obtain data. Of course, it is self-explanatory but whatever your customers think your product is valued at there is not too much to you can do besides adding extras. What are the drivers that influence your customers to purchase your product? Drivers can be something that separates you from your competition. Why would they choose your product from the rest? Once you obtain this data look at what price that will cast a wide net what price will capture the biggest market share
Put It All Together
Once you have gathered as much data as possible you should have a better idea how to price out your product with the best opportunity to make the highest profit without alienated some potential buyers by what I call is “price offending” them. This research will allow you to have an aggressive price that allows your sales team to pitch with confidence. The key is also figuring out ways to increase pricing with extras services or add-ons to enhance the likeability of your product or service. Does your pricing allow for upsells or cross-selling that includes other products you might offer? Does it wipe out certain products that are not really necessary when releasing your price? For the sales reps perspective, it is always best to keep options simple. Never complicate the decision part of the sale. Since of course leads to customers wanting to think more about buying what you are offering.
In Conclusion: Top Down Pricing
Top Down Pricing is something taken lightly or just pushed to the side but if done correctly this eliminates any wasted time by trial and error. CRM’s and AI systems can help you obtain, manage, and decipher the data from your research. These are great tools but if you can figure out the best pricing for your product doing this manually. Sometimes your price may be significantly higher than your competitors. As long as you have value and can show how your product can benefit the customer more than any other product there should not be a problem. Remember what is expensive to you may not be expensive to someone else. The opinion of something being expensive is subjective.
I am interested in how has top-down pricing influenced your business? Please leave some feedback in the comment section.