What would it do beyond the significant impact on your top- and bottom line? Think further: How this would impact the perception around your brand? Think about what this would unlock; The boost this would give to your ability to fire up your innovation engine; The attention you could pay to get everything ‘just’ right; How your customers would talk about you to their peers. The flywheel this would put in motion.
‘Dream on’, you’ll likely think. And that’s indeed often the first reactions I hear when I bring the subject up. I get answers in the range of ‘Our sales would never get on board with that’ or ‘our customers would never agree’. That’s a too simple answer to me.
What would need to be true?
The question is not ‘would your sales or customers agree?’ but instead: ‘What would need to be different for them to say, ‘I’d love to buy that – thank you!’
It all starts with a discussion with yourself about: What would have to be true?
To me, this is about making three fundamental changes. And honestly, it’s not at all about your product. It’s about Mindset, Value perception, and Emotion.
1 – Mindset
It all starts with the belief in our strength and uniqueness. Even in a commodity market, your solution can be priced 10x compared to ‘the alternatives.’ It starts with the notion you know that your solution is ‘not for everybody.’ There is, however, a specific segment in the market that thrives on it. When they use your solution, it creates +10x value for them – and they know.
This is where segmentation gets strategic. Companies that thrive on your solution are not ‘just’ in this industry. They have particular characteristics. They’re led by people with specific psychographics i.e., their shared personality traits, beliefs, values, aspirations, attitudes, interests, lifestyles, and other factors. As Seth Godin would say: “People like us do things like this.’ It’s not about your product; it’s not about your people. It starts with your own believe that for some people, the value you offer is invaluable.
2 – Value perception
That brings me to the second element to work on: Value perception – both internally and externally amongst your customers. Getting very clear about the impact of your solution i.e., the real value received by your prospects and customer both in hard, measurable terms (such as top- and bottom-line impact), and as well in soft terms, such as their competitiveness, their brand perception, their innovation pace, etcetera.
Too often, our pricing is exactly the opposite. It’s determined by the norms and expectations of those around you. Per-user/per month is such a metric. Why? Why is that a metric you have to use as well? Why do you have to play the same game as everyone else? Per-user/per month has nothing to do with value. That’s about cost. Once you take the cost perspective, the only way forward is the ‘race to the bottom’ – the battle of the discount. Not good for your customer, not good for your business.
Let me challenge this with an example. I once challenged sales at my previous company by translating the price of our software in # of cups of coffee per day. It opened some eyes. Here’s the story: When you go to Starbucks and buy a single shot espresso, you pay $1.75 without asking anything. Well, multiply that by 22 working days, and you have $38,50 per working month. Again, nothing you’d worry about.
Now, why are we prepared to pay $38,50 per month to get our coffee – no questions raised, and do we make a big fuzz about selling (yes, selling – this is a problem that starts inside your company) a full-blown ERP system at $30,- per user. It’s the wrong conversation.
If you deliver an annual $10 million impact to their bottom-line why shouldn’t be allowed to charge a million $ annually
Let’s turn it to a different category where we behave different: No one will ask for a discount when buying the latest Maserati, Ferrari or Pagani. You wouldn’t dare.
3 – Emotion
And that brings me to the third ingredient that’s of high importance: Emotion. To succeed in 10x-ing your pricing emotion is a critical element. You can have a very entertaining conversation with a prospective CEO about how your solution will impact the bottom-line of her/his company in tangible numbers, but only once they start to feel how this will help become self-sustaining, or independent, or be recognized for their success, it turns them into a buyer.
To connect back to the car example above: proofs pricing is about something different than ‘features.’ All cars mentioned have four wheels, a motor, seats, etc.… So why pay €250.000 or more, when you can get the same functions for €25.000 or less. The value perception comes from paying attention to what people want – what they desire: luxury, belonging, strength, recognition, respect, good looks, delight, affection, and so on.
Emotion does strange things to us. The feeling of becoming the best, the feeling of success, the recognition from people they admire, the sense of being worth it, creating freedom and so on, do much more to us than the number below the line. And too often we ignore or forget this.
What can you do today?
So, the question to you: What stops you from 10x-ing your price?
What is the next step you could do today to make this a reality? What would have to be true?
Want some additional guidance? Well, then that first step would be to schedule a call.