It’s one of the biggest questions many leading companies have to confront. Do I put my prices on my website? Hardly a month goes by without a client asking me this question, or someone posting it in an online forum.
Several years ago, Canadian National confronted the question and made a very courageous decision. Not only did they publish their freight cartage rates on their website, they also removed all rebates, discounts and hidden charges, and simplified complex upgrade formulae for different types of rail cars and proportional payload calculations, among other pricing-related initiatives.
But wait, there’s more. The company also published a pricing calendar on their website, which listed the months in which shipping rates would be reviewed on an annual basis.
There are a couple of benefits associated with this level of pricing transparency. Firstly, it should reduce customers’ price sensitivity or, conversely, confidentiality drives greater price sensitivity.
Secondly, pricing cannot be treated as confidential. It’s ‘out there’, and customers and competitors have the hard facts.
Thirdly, transparency should reduce customer power. As long as the policy is adhered to, there should be less demand for cheaper prices.
Finally, there should be less time spent negotiating prices and resolving invoicing disputes.
Perhaps an even more interesting example is provided by the website HumbleBundle.com. What’s interesting about this business is that it doesn’t have list prices – it sells bundles of digital products (games, eBooks) using a pay-what-you-want pricing model.
But the site makes amazing use of lessons from behavioural economics and gamification. By displaying the average price paid for the bundle, and incentivising customers to pay more than the going average (by rewarding them with two additional products), the average price keeps rising. No wonder the site has generated $23 million in sales.
However, neither of these two businesses have truly direct competition. They both have indirect competition, road transport in the case of Canadian National, and sites like iTunes in the case of HumbleBundle.
And competition seems to be one of the biggest factors in deciding whether to publish prices online.
You are only as smart as your dumbest competitor in the world of pricing, and if one or more competitor publishes their prices, and customers value such pricing transparency, then it may become an ‘industry norm’.
In other cases, pricing transparency may promote brand awareness or a competitive advantage. That doesn’t necessarily mean publishing actual prices though – just the pricing methodology might suffice.
The home page of PodLegal.com.au promotes the fact that the law firm charges fixed prices, not by the hour, differentiating the company from others in the industry, without specifically mentioning prices.
The only answer to the question – should we publish our prices on our website? – is that it all depends. It depends on what your customers, your competitors and your industry wants or is accustomed to, versus what you want to do.