Imagine you’ve been asked to sell new software to existing clients. This happened to a friend of mine recently. The plan was to offer the software on a trial basis and then convince clients to pay $2000 a month ongoing.
The plan was doomed. And there were three problems at play.
1. No frame of reference
My friend’s clients had no frame of reference for the new product. They’d never seen it before and they didn’t know whether they needed it. They’d rightly be thinking: ‘Is $2000 expensive, cheap or about right?’
When we introduce a product or service it’s our job to provide a contextual anchor that makes the price look like great value. Steve Jobs did this when releasing the iPad by first telling the crowd that “pundits” speculated it would be sold for $999, before thrilling us all with his pronouncement that it was “only $499”!
When you omit an anchor you risk your client using the closest proxy, and once they’ve done that you have lost control of the sale. It’s hard to sell $2000 software when they are used to paying $49 for something they (mistakenly) think is similar.
Here’s the trick. Before you reveal the price be sure to insert into the conversation a frame of reference that is ideally related. In this case, my friend could say things like:
- ‘A similar software can cost up to $3000 a month’;
- ‘I reckon this software will save about 20 hours a week, or about $40,000 a year’; or
- ‘We have two versions of the software. One is $6000 a month, and this one is $2000’.
When paying $2000 feels like a relief, you know you’ve anchored them effectively.
2. ‘Yes or no’ rather than ‘this or that’
My friend was only planning to offer one choice of software to clients: the $2000 option. Unfortunately, that frames the decision as a binary ‘yes please’ or ‘no thanks’, and because it’s much easier to stick with the status quo, ‘no’ is more likely.
A smarter play is to introduce at least two product options because it changes the decision from ‘whether I’ll buy’ to ‘which one I’ll buy’.
Note the difference in these questions, for example.
- Do you want an orange? Yes/no.
- Would you prefer an apple or an orange? An orange.
Asking clients for a preference jumps the decision-making queue because it assumes they want a piece of fruit, the only question is which. While they can still say they want neither, it is more difficult for them because you’ve drawn them into considering the merits of having one or the other.
In my friend’s scenario, that means adding a more expensive version of the software to the rollout discussion with the intent of making the $2000 option look great. You may not ever sell the more expensive option, but it will help you sell the cheaper one.
3. Free pilot program
The third problem my friend was facing in this new software rollout was offering it as a free pilot program. Making something free lowers the stakes for the client and theoretically makes it easier for them to agree.
The problem though, is when no cost is involved, there is no value either. No skin in the game. Your clients will be less likely to use the software because they’ve paid nothing for it. Then, when you invite them to upgrade and pay they will decline because they remember they didn’t use it!
Instead, we need to sell the product as if there are dollars attached. If we need to we can then waive the fee for a few months as a special favour to them. Importantly, they need to feel they’ve bought it or they will never use or value it.