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A potential customer reaches out to your account or customer service team to inquire about your product or service. After discussing the features and benefits, the conversation often shifts to pricing. Your sales team prefers the term “cost” because it sounds more appealing and justifies the impressive features and benefits highlighted on your website and in your sales literature.
However, complex and convoluted pricing structures can often deter customers. They want clarity from the beginning. How much will they spend, and what value will they receive in return? I have never sold or offered the “cheapest” or “lowest priced” service or product, nor do I intend to. I am motivated by delivering value, which I believe results in a higher quality customer experience.
As a seasoned entrepreneur, I recognize that pricing products and services is not always straightforward. Customers may be uncertain about which options best meet their needs. That’s why having an educated and easily accessible sales and customer service team is crucial. By asking the right questions, our reps can guide customers to the most suitable options while highlighting the associated benefits, a strategy that all successful sales trainers advocate.
In this article, I will outline some ideas and steps our company has implemented, such as our new instant pricing calculator, designed to enhance customer satisfaction and improve our bottom line. Additionally, I will discuss a frustrating situation that negatively affects the customer experience.
Related: An Entrepreneur’s Guide to Startup Pricing Strategies
Why pricing complexity kills trust
One of the best examples of pricing complexity can be found with cable TV providers. While the industry is easy to pick on, many people over 30 have likely experienced the frustrating runaround associated with cable TV pricing.
Fifteen years ago, when I moved into a new house, contacting my local cable TV provider to inquire about their packages was at the top of my to-do list. I also needed reliable internet service, and if the same company offered both, that would be ideal.
The customer service representative (CSR) who answered my call was friendly and seemed knowledgeable. They informed me that it was my lucky day because they were running a “special.” If I signed up for the day’s deal, I would receive a landline, a premium cable package (which included hundreds of channels I had never heard of) and internet service for around $300 per month. Essentially, I could save money by bundling these services.
I definitely needed internet service and figured I might as well try the extra movie channels. I wasn’t particularly interested in the landline, but my grandmother was thrilled that I would have “reliable phone service.” However, there was a catch: The introductory offer would expire after 24 months. But I thought I could deal with that issue later, so I signed up.
All good deals must end
A couple of years later, my monthly cable bill increased by about 30%. After navigating through a complicated phone tree, I finally reached a sympathetic CSR. After I shared my frustration about the outrageous pricing, complete with a veiled threat to cancel everything, they agreed to reinstate my previous pricing plan. I lost the HBO and Showtime channels that I had forgotten were included, though, and if I wanted to keep them, it was going to cost me about $30 per month.
Fast forward to a few years later: After a challenging workday, I hit the roof when I saw my new $400 cable bill. It was time to change my cable TV plan.
After going through the phone tree again, Tony answered my call. He was nice, easy to understand and seemed knowledgeable about the company’s offerings. I informed Tony that I wanted to make a few simple changes. The good news was that he had a solution.
First off, I didn’t need a landline telephone. The rare times I used my home phone were only to locate my misplaced mobile phone. Otherwise, it never rang, not even for a call from my grandmother. Since I only watch a few sports, news and rerun channels, I could do without the dozen or so channels featuring UFO discoveries and home shopping options. However, I did want to increase my internet speed.
You might think my requests were straightforward, and that with a few keystrokes, my monthly bill could be reduced while getting stronger Wi-Fi. I wasn’t surprised to learn that the introductory offer I had benefited from twice before was no longer available. Darn.
Tony found a new deal. I could drop the landline, keep my cable channels, switch to a mid-tier internet package and save about $40 per month. There was one catch: Tony offered me a mobile phone line, along with a free flip phone, to replace the landline.
“Thanks, Tony, but I already have a mobile phone plan, complete with all the bells and whistles of a cellular contract, and I don’t need another phone.” In fact, this cable provider doesn’t even sell mobile phone services to the general public, only to existing customers. I suppose that’s one way to boost their market share.
Agreeing to the “deal of the day” was the easy way to lower my bill. However, no new cellular line meant no price reduction.
A follow-up call days later resulted in an internet service quote of $195 per month, which seemed high to me. Tony also informed me that an unlimited internet package was required since I would be streaming additional services. Me streaming other services was one thing Tony got right.
I understand the bundling offer. The same goes for auto insurance companies running ads during my favorite shows. What I don’t understand is why a company would want to sell me services that I don’t need or want, and never will. However, I don’t want to pay for market share in areas where the company doesn’t specialize.
Most of us prefer à la carte services and pricing. Show me the options for cable channels and their prices, as well as the costs of various internet packages. Feel free to display the landline and mobile phone packages as well; if I’m interested, I may choose one. But today, I only need a reliable, high-speed internet package with fewer channels and a smaller monthly bill.
Related: 10 Pricing Strategies That Can Drastically Improve Sales
Pricing calculators will empower your customers
My desire for à la carte services motivated me to develop an online pricing calculator for our website. When a new customer contacts us, they are often unsure about the services they need. To address this, we developed an instant online pricing calculator, which also shows our pricing compared to our competitors’ pricing. This tool allows both new and existing clients to select the types of services they require, choose from a few add-on options and view our rates. Here’s an example:
Our transcription company serves a variety of industries, including medical, legal, law enforcement, corporate and education. The pricing for a single speaker with good audio quality for a duration of 30 minutes is easy to calculate.
In contrast, transcribing a legal deposition involving 10 speakers, two of whom speak different languages and talk over each other in challenging audio conditions, presents greater difficulties. Attorneys and legal clients typically require verbatim transcripts, capturing every sound and syllable. As a result, the cost for producing these transcripts is higher due to the time and expertise involved.
Our updated pricing calculator also helps clients understand our services and the reasons behind the costs of select add-ons, which we hope will increase their comfort and confidence in our offerings.
In cases where a customer is unsure about what they need or our available service options, we see this as an opportunity to explain our different transcription services and establish a personal relationship with them.
Related: Why Entrepreneurs Should Explain the Cost of Their Product to Customers
Upselling works when customers benefit
As a student of sales and marketing strategies, I recognize the advantages of upselling, which involves offering additional services to clients. Often, customers are not aware of all the services available to them. In many cases, bundling services can create benefits for both parties.
However, when presenting special deals, it’s essential to provide options and solutions that truly benefit the customer. Forcing a square peg into a round hole does not help anyone, and resentment usually follows.
If you haven’t already, consider using a pricing calculator for your business. This tool may encourage further interaction between your company and valued customers.
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Ben Walker
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