Many startups count their prospects money more scrupulously than their own.
They price themselves the way they see the topography of their world. They rely on the generosity of their clients. This is a mistake.
Each client has someone whose job description includes vendor management. They want to be recognized from up high as someone who ‘can negotiate well’. It is a treasured part of their identity. That same person is a stoppable force that wants to meet an unmovable object. They will respect it and not do continued battle they will instead look for a resolution, the value not on a spreadsheet.
It is your job to give them what they want. We need to raise our price by 300%.
Higher price implies ‘better’. When evaluating vendors they will see a difference in price, ‘why does this vendor charge more‘. Why do people buy the higher priced item. That same reasoning, or lack thereof, are the same dynamics that drive a client.
People spend more because they want to be seen, if only by themselves, as someone of distinction. A company also desires this recognition. They want their internal clients, what we call employees, to perceive their employer as caring, offering them the best, making an outsized commitment to them. They want employees to brag to their peers ‘my company is better than yours’. That is a part of the employee’s identity. I choose my employer. It is this way with external clients. ‘We aligned with this vendor because we value all those benefitting from our decision’.
You are fixated on what the competitors do, what they price, what is the industry norm, the service they provide. You assume that they are right, that they are smart, therefore their decision and business model is right, that merely by their continued existence their strategy, tactics are ideal, and should be emulated.
You have become trapped within the narcissism of small differences
The process of raising prices by 300% begins within you. Why did you spend more in the past. In a choice, why did you pick the higher priced. Why did you buy the Peloton bike and not its lower priced, and equally reliable substitute. Get on a whiteboard why you did it:
People pay more for intimacy
Vanity is personal. It is also corporate
People pay more for impeccable and thoroughly professional presentation
People pay more to relieve themselves of all the burdens of selection and purchasing and implementation
This is a long essay that I have divided up into its component pieces:
The Cultural Shift
Define It or the Prospect Will
Exploiting the First Mover Advantage
Reverse Engineering a 300% Price Increase
Each Sales Office is a Franchise
Why Good Salespeople Fail
Why The CEO Should Not Be Selling
Intimacy is a Premium
Breeding Your Competitors
SDR’s. Million Dollar Solution. Hundred Dollar Problem