Premature Pricing: When to Communicate Pricing Information

When during the sales cycle should you talk about pricing? The correct answer is “it depends.” It depends on the type of sales cycle or buyer’s journey. It depends on the type of product you sell. It depends on the familiarity of your market with your competitors.

However, if there is one guideline on this topic it is this: Communicate price after value is understood. Sometimes they happen simultaneously.

Notice that almost all B2C sales situations clearly show the price of the product immediately. In many of these cases consumers already know the value. Imagine shopping for a pair of Levi’s. You already know the brand and the quality. You decide if the price is worth whatever value you think you will get.

We also know that price is often a signal of quality. In many B2C situations consumers use price as one of the factors that tells them the quality. Since quality is likely one piece of value, you may interpret this as price is a signal of value. In these situations, consumers are determining value simultaneously with observing price.

When selling automobiles to consumers, almost nobody pays the list price. It is a negotiated deal. In this situation, the salesperson doesn’t just quote you their best price. Instead, a great salesperson will try to figure out how much value you will receive (think willingness to pay) before they start negotiating.

One B2C example where we often see price long before we know value is in real estate. Buyers tend to set a price range and say they only want to look at houses in a certain range. They don’t even know the value of a house with a price either above or below their state range.

This same thinking transfers to B2B pricing as well. If you sell a product where the value is already known—think office supplies—the price can be delivered early in the sales cycle.

In many B2B sales situations we use direct salespeople. The most important role of a direct salesperson is to communicate the value of our product to the buyer. Let me say that again. The most important role of a direct salesperson is to communicate the value of our product to the buyer. In most situations, the salesperson needs to learn the needs of the buyers and figure out how to best communicate our value. This is not a trivial job.

If you agree with that, and you agree that we should only communicate price after value is understood, then the rational conclusion is that salespeople should first listen to the buyers, determine the level of fit and communicate our value to those buyers. THEN they can quote prices.

I have seen salespeople lead with price. Ugh. When a salesperson leads with price, either we have scared a customer away or we have a price that’s too low. If we can lead with price and don’t scare the customer, it implies that we don’t need a direct salesperson to communicate our value.

My recommendation: Think about how customers learn about your value. When do they learn it? Then, do your best to make sure price is communicated either after or during the communication of our value.

Mark Stiving

Mark Stiving

Mark Stiving is chief pricing educator with Impact Pricing LLC. Connect with him on LinkedIn

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