Recently I was overseeing the development of landing pages for our website. The topic of whether or not we should display our pricing came up and I found that that majority of our team agreed that we should not reveal it. I wasn’t particularly surprised because this is a common tactic, but it’s one I […]
Recently I was overseeing the development of landing pages for our website. The topic of whether or not we should display our pricing came up and I found that that majority of our team agreed that we should not reveal it. I wasn’t particularly surprised because this is a common tactic, but it’s one I have discovered to have the opposite intended effect. I believe that opinion has it’s place but that statistics and authoritative citations are the best way to reveal truth in any matter. Since I’m apart of a surprisingly down to earth and well-considered team of people so I decided to write this article so I could communicate – not just my opinion (at the end of the article) but – the reasons for my opinion.
The first thing to keep in mind is that this really isn’t a question of whether or not you should share your pricing. At some point in the sales process you have to tell the customer. It’s really a question of when and is the website the right place to some or all of that?
Before answering some of the questions relating to this topic, I think it will be beneficial to consider a couple of the common assumptions people have going into this topic:
One website says “Price: $x”. Translation “There is no point in calling us because we’ve already told you everything about our product as well as our price. We don’t negotiate and we have nothing else to offer you. Come back if you’re certain you want to hire us.”
While the other says “Starting at $x – Request a Consultation to Learn More”. Translation “Well, it’s usually $x at the minimum. But if you’ll tell us more about your needs we can educate you more on your options and build a customized proposal.”
It’s my experience that most people think of the first example when they think about communicating pricing on your website. The former is a statement while the latter is an invitation. The latter being an example of how displaying your pricing can gain prospects you would otherwise lose if you don’t reveal your pricing or if your pricing is communicated improperly.
One of several downsides to revealing all your pricing is that you don’t get the opportunity to introduce the customer to your products and services in stages, thus preventing sticker-shock. So, in the case of internet marketing, that’s a terrible idea and there are many ways to avoid doing so.
Example: “Base Price $x – Learn about Add Ons >>”
When you state your price like my first example above then it becomes difficult to change your pricing, for any reason, at a later date. But when presented properly you can easily protect the practical need to increase pricing for a variety of reasons including the simple reason that you’d like to charge a client more for the service because you believe they’re willing to. (See the Ethics of Pricing section below for more on this.)
Now that we’ve discussed a couple common assumptions I think we can move on to answering the question of why would you show pricing? For the sake of quick credibility consider that HubSpot writes about this often. And the Nielson Norman Group (if you don’t recognize them you’ll recognize their clients) does as well.
When you give your pricing and information over the phone the prospect might right it down. If they do they might right it down correctly. And if they don’t write it down they who knows if they’ll remember it at all, much less correctly. You become forgettable.
But when you rely on your website to communicate the details of your products and services; there’s a multitude of benefits without the aforementioned risks:
In addition to the most poignant benefits there are many fringe benefits. One of them is that you can openly discuss pricing in the form of articles like this which address questions prospects are searching for. Like “How much should I spend on SEO?” or “How much to websites cost?”. This not only increases traffic to your website but directly increases lead generation, builds trust and loyalty with prospects even before you get on the phone, etc… etc…
It’s definitely not always the right thing to show pricing for many of the same reasons it’s not always right to hide it.
For example, if we’re selling software it would be unorthodox to not reveal pricing for a $50, or less, product and to require a phone call. We would, almost certainly, lose sales to our competition who do reveal pricing.
But if we’re displaying a $50,000 price tag for a custom marketing strategy that’s unorthodox as well. That figure would not only scare away smaller budget customers but it would communicate to higher budget customers that we’re not providing a custom service because we pre-calculated the price.
I choose to lead the answer to this question with: “Can we offer a fixed price for this product or service?”
If we can’t, then, obviously, we have no price to reveal and a call is required. But if we can, then the next question is what reasons should prevent us from revealing it. It’s usually the reasons mentioned earlier in this article. But, since I’m not omniscient, surely there are other considerations. This leads us to what I see as the most common root of this issue:
My father has been in car sales for nearly 50 years. Worked his way up from cleaning cars to running one of Oregon’s largest dealerships, Landmark Ford. In an industry notorious for sales people who omit, deceive, lie, pressure and even bully people into sales I’ve watched my dad, though not perfectly, demonstrate to me a clear ethical boundary that I’ve seen him train his own employees with.
Myself, having been in the internet marketing industry for over ten years now; I’ve seen those same negative sales techniques applied and the respective consequences to follow.
One of the things that sales people in both industries have in common is a desire to reserve the right to change the price they charge each customer to reach the maximum price the prospect is willing to pay even when the product or service being sold is identical.
This may seem consistent with the foundational purpose of businesses; that is maximizing profit, but – all things considered – it’s really not. And it comes at a high price: your reputation (which translates to fewer future sales).
To this day car sales people are known for giving one price to one customer and giving a different price to the next customer on the same vehicle, with the same options, in the same day. It’s so widely known, and so detrimentally affected dealerships, that dealerships have literally re-branded and re-structured their companies running perpetual advertising campaigns just to combat that stigma. Take Toyota in Portland for example: their slogan is “No bull.” and their pitch is that they don’t negotiate on prices or commission their sales people on the sale of vehicles (though they do get commissioned on upgrades).
There are a lot of ways to value your products and services. But generally it comes down to one of two questions: what is it worth to the them and what is it worth to you?
As of the writing of this article the city with the lowest cost of living is Augusta, Georgia. Compared to Manhattan, New York with the highest.
If a web developer lives in Augusta and solicits to a business in Augusta he’s probably going to give them a price that he think’s they can afford. Respectively it’ll be a price he’s willing to work at.
But if a developer in Manhattan solicits to a Manhattan business the same will happen but it will, most likely, be much pricier than his Augusta counterpart.
But what happens if someone from Oregon solicits to New York? Should they sell at the Oregon price for an easy sell? Or should they sell a New York price for a bigger pay out? Now what happens if they call Augusta? Can Oregon beat Augusta’s competition? Probably not.
This is an example of one of the reasons why pricing has to be allowed to change. Sales people get it. Customers get it. And it doesn’t hurt reputations because it’s just economics. But what if Oregon solicits a New York price to prospect #1 and an Augusta price for prospect #2? What if one of these prospects are seasoned enough to pickup on your indicators that you’re trying to max out the price you give them? Worse, what if they find out that’s what you’re doing?
I’ll tell you: you probably lose the prospect and you definitely lose their trust. Your reputation with them and anyone they share their experience with is – for the foreseeable future – tarnished irrevocably.
When does this go from being an economic matter to being an ethical matter? When the provider puts their desire to maximize profit before the customers needs. When the focus is allowed to shift from meeting that customers needs to squeezing them of every dollar they are willing or able to offer.
This approach is proven ineffective in the short and long term by massive companies all over the world (Google, Nike, Chipotle, etc…) again and again – particularly since the dawn of the internet. Especially as a marketing firm our entire business model sources it’s profit in the generation of profit for our clients. So if our profit model is designed to scale with the clients growth then we’re just riding their coat tails.
It’s not unlike the link between work culture and profit.
I recommend you evaluate your industry, consult with your team for insight, coordinate with your team for relevant decision influencing data, and define a clear answer to Why and When that your company can rely on.
In the end, what I advocate for within our industry and company is revealing fixed pricing for our hourly rate, software, hosting and webmaster services. Then reveal base pricing accompanied by a call to action for packaged services that can accommodate customization’s. And, finally, not revealing pricing for products or services that are variable scope.
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