How top-down pricing can improve your turnover
As the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I’d like to talk about why you should always reveal your most expensive solution first. A lot of research has been done in this area and there are a number of ideas we can learn from it to improve our pricing strategy and income.
Create a high reference price – and watch clients spend more
One key idea is top-down pricing. Basically, it means we should always talk to clients about our most expensive option first because it creates a reference price, or an anchor. And what the research has found is that when we talk about the most expensive option first, people end up spending more money than if we’d revealed the cheapest first.
A related idea that I also teach is the price-order effect, and what this says is that you should reveal your prices in a certain order. Sometimes we might have a verbal conversation with a potential client about our services, and – using top-down pricing – we’d talk about the most expensive first. But next – if they don’t buy at this price, and only if they don’t buy – we’d talk about the second most expensive, then the third and so on. We’d do it in that order. That’s what I refer to as top-down pricing.
But what if I use a price list, or a software-based approach?
Sometimes, of course, you may have to reveal all your prices at the same time. On a price list, for example, or on your website. (Although for reasons I’ll explain to you another day, I don’t recommend putting prices on your website.) Or you might have your prices listed in a brochure that you use in face-to-face meetings, or be using a software-based approach. A simple tip in these cases, for example if you use Cloud Pricing, is to make sure you always have the most expensive price near the top. Or, if your prices are displayed on a horizontal scale, then place the most expensive to the left.
Make your prices seems lower – but without reducing them
Why? The reason’s very simple. It’s because people generally read prices either from top to bottom or from left to right. So because the most expensive one is the first price they read, it becomes the reference price by which they judge the others. And, because the other prices are lower, they see them as smaller than they really are.
If you’d like to hear more, you can watch a video here where I go into a little more detail.
Every month I provide free online training helping accounting professionals get results from value pricing. If you want to get access to that free training click here to register your place on the list of people I invite.
Wishing you every success on your pricing journey.
Chartered Accountant, public speaker and #1 best-selling author of
“Effective Pricing for Accountants”
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