Considering a price increase to motivate your prospects?
First uncover what is really motivating your prospects decision or indecision.
If you’re considering a price increase to motivate your fence-sitters, remember a few of things:
- Be darn well ready to go through with the price increase with or without converting those prospects in your pipeline.
- Tell your prospects that don’t convert by the end of the current period that you will not honor the old price, even if that means losing their business.
- Be public about your pending price changes. Check out how Hubspot handled their price change in September 2011.
- Prepare for the perception that you are attempting a high pressure technique. Will your customer have this reaction?
“Really? Your software is $25,000/year and you’re raising your licensing fees to $50,000 starting next week. So if I call you on Monday and I’m willing to pay you $25,000, you’re not going to take my money?”
A prospect’s lack of action may indicate that:
- They have a concern about a business problem they have, but not an burning desire to solve that problem right now with your solution.
- You haven’t shown enough value or utility to the prospect for your product.
- The prospect is “just browsing” and might simply be too nice to tell you that after you gave them a whizz-bang demo and spent more than an hour on the phone with them, that they aren’t really interested in buying your product. (…which is your fault because you didn’t properly qualify the prospect before investing this time with them…)
If any of these are the case, using a pending price change won’t make a lick of difference in motivating the prospect to purchase your service.
A personal anecdote around this concept…
Over Memorial Day weekend this year, I was dead set on buying a new car. I’m not a car guy and we’ve been a one-car family for nearly four years. But, starting in mid-June I would be driving to Sacramento to work every day which meant becoming a two-car family.
I settled on a Honda Civic because of price and gas mileage and was down to final, typical negotiations. We’d settled on price and model but it seems that the dealership just couldn’t find the color I wanted. “Here we go, I thought…”
I’ll spare the details of our banter over the course of an hour as I held firm on “metallic blue” while the dealer ran laps to his phone to locate the chosen model in my preferred color from other area dealerships, returning every few minutes to explain the scarcity of this combination and more importantly, how their promotion of 0.9% financing would be expiring tomorrow. If I wanted to take advantage of this nearly free financing, I should consider selecting a gray or white model he had in stock.
Finally, I said – “Listen, it’s no big deal. I can just come back over July 4th. I’m sure you’ll have the promotion all over again.” For me, this was bluff. I damn well knew that I needed to buy a car this weekend because my commute would be starting in two weeks and I’d burned my entire weekend traipsing about the Sacramento Valley in search of my next automobile purchase. I would have taken the gray one if the search for metallic blue ultimately yielded no results.
But… the dealer didn’t know that and in the end, he found the color from a dealer in Santa Rosa.
Here’s the thing – he tried to use a potential price change to motivate me to make a decision. But… ultimately my decision to purchase the Civic was not driven by the looming promotion ending. It was an internal clock – a pressing time constraint to solve a potentially serious problem: If I didn’t buy a car this weekend, I’d be leaving my wife high and dry at home everyday without a car then spending subsequent weekends in torturing myself at car dealerships all over again.
Therein lies the lesson… It wasn’t necessarily the pending price increase that motivated my buying decision. Instead, it was an internal factor that I did not share with the dealer.