Money or Time – It’s Pervasive in Pricing
I recently took up paragliding. Awesome sport! Once you’re good at paragliding, it’s pretty easy. You fly a kite, take a few steps, take off, sit down in your harness and fly. Awesome!!! However, while you’re learning, it’s a lot of running, schlepping gear, untangling lines, oh, and a lot of waiting.
While running, schlepping, untangling and waiting, I would often think of a quote from Patricia Fripp, a world class speaker coach, that went something like this: “When you’re early in your career, you have more time than money. Later in your career you will have more money than time.”
As a 54 year old sweating, panting, exhausted man who has more money than time (or energy), I kept wondering why my instructor didn’t have an “elite” training package. I would have paid more to have a program with less schlepping and waiting (the running I had to do and the untangling I had to learn.) My instructor could have segmented his market. (Of course I don’t know how big the market is for out of shape old people who want to learn paragliding.)
The more I obsessed on this, the more I realized this concept of money vs. time is pervasive in pricing. People with little money and lots of time are very price sensitive. They spend time searching for the best prices, the best values. They check different distribution channels. They use coupons if available. They wait for sales. They search the Internet for tips on how to buy at the best price.
People with more money than time don’t do any of this. They decide what they want then buy it. Of course they want to pay a lower price but they aren’t willing to put in very much time or energy to make this happen.
This same concept holds true during negotiations. As a general rule of negotiations, the most patient person wins. People with more time can be more patient. People with less time (or patience) tend to pay more.
In B2B businesses, when your customers have “use it or lose it” budgets, they are time sensitive, impatient. They may not want to pay more, but they will. They should be paying more.
Think about your customers. It’s very likely some have plenty of time without much money, others likely have plenty of money with little time. You should think hard about how to charge one group more than the other.
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