How to Masterfully Explain Online Why Your Stuff Costs So Much

by Marcus Sheridan

money

Over the last 4 years, I’ve arguably talked more about the issue of discussing pricing on your company’s website maybe more than any single person or entity online. I do not say this to brag whatsoever, rather, I bring it up because just as it was a hot topic then, it seems that companies still want to have internal civil wars as to how to address their company pricing, with debates raging in board rooms and marketing departments across the globe.

This being said, I have come to the conclusion there are basically two types of companies when it comes to this subject:

1. Those that are embarrassed of their pricing

2. Those that are proud of their pricing

Think I’m oversimplifying it?

I’d beg to differ.

Doing it the Right Way when Face to Face

One of my dear friends and mentors is Ian Altman. Ian travels the world and teaches companies how to grow their revenue by changing the way they think and talk about selling.

He’s as good as anyone I’ve ever seen and his services come at what some would consider a steep cost.

But if you asked Ian if he was “expensive,” he would likely say something like:

“Well that depends. Many of the companies I work with are able to account for monumental gains in sales revenue by applying what I teach them—numbers that dwarf what they spent on receiving my training in the first place. So whether you view that as ‘expensive’ or ‘cheap,’ is up to you.”

Ian knows how to change one’s paradigm with just a few simple words, which is exactly why he’s so successful at what he does.

Doing it the Right Way Digitally

“There is No Such Thing as Cheap or Expensive, But Thinking Makes It So”—-Shakespeare, if he were alive today :-)

The subject of pricing, no matter what you sell, always has been and always will be relative.

This is exactly why those that know how to explain pricing, and truly get how to demonstrate “value,” generally induce more trust and results than those that do not.

It’s also why those that show any sign of fear or embarrassment when discussing their pricing often will lose their prospect’s trust before the conversation even begins.

Let’s look at one more example online, one that I feel is easily some of the best copywriting I’ve ever seen on this important subject.

Most of you may not have heard of Tom BIHN bags before, but their quick background is that of a company that started making high-quality bags (mainly for travel, biking, laptops, etc.) here in the US in 1972 and have managed to grow quite the following over the years, in what is a highly competitive market.

But the reason I bring Tom BIHN up is the way they address the subject of pricing on their website. Here are their exact words:

Why are TOM BIHN bags so expensive?

TOM BIHN bags are carefully constructed of fine quality materials and components in our own Seattle factory. They’d be less expensive if we had them produced in China or Vietnam, but then we’d lose control over the quality of the finished product and the quality of the jobs we create. Our turn-around time (the time between designing a new product and being able to ship it to customers) is quite fast, especially for a small company. We could use cheaper materials, but we’ve been making bags for a long time and plan to make them for a lot longer still: we don’t want folks complaining about this or that part breaking or wearing out prematurely. There are plenty of less expensive products on the market and it’s up to you, the consumer, to decide if the quality of our products justifies their expense.

Why are TOM BIHN bags so cheap?

So now that you know what goes into our products, you might wonder why they aren’t even more expensive. First of all, we sell almost exclusively to the end consumer, so there is no wholesale-to-retail markup: you buy directly from the factory. Second, we are a lean little company: we are not top-heavy with vice presidents, nor are we traded publicly. We are a museum-quality example of human-scale capitalism: we make stuff and sell it to people.

Pretty slick, huh? Heck, after reading that, do you think many people are going to complain about their pricing being too high?

Of course not.

That’s the essence of transparency and excellent copywriting online my friends, and it’s something possible for each and every one of us.

So my challenge for you is a simple one:

Embrace the subject of pricing. Whether it’s digital or in a face-to-face conversation, you’ve got to change the way you talk about this subject if you want to overcome the concerns of your prospect and earn their business. And like Tom BIHN, embrace who you are. Embrace what makes you special.

By so doing, you just may turn the entire pricing conversation on its head…

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{ 28 comments… read them below or add one }

Yolanda Nix March 5, 2014 at

Marcus,

Another helpful reminder on this subject. Finally, someone putting it into terms that I ‘get’ and understand. Great examples here!

Reply

Marcus Sheridan March 7, 2014 at

That’s how we roll Yolanda, simple terms :-)

Best to you,

Marcus

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Marie Wiese March 5, 2014 at

Marcus,
Your timing as always is brilliant. We are right in the middle of trying to explain to a customer why we charge what we charge and why we are not willing to discount our price by 80% like he is asking. By creating a response to two simple questions (Why are you so expensive? Why are you so cheap?) we can change the conversation. Thank you. Thank you. Thank you.

Reply

Marcus Sheridan March 7, 2014 at

You’re very welcome Marie, thrilled to help in any way.

At the same time, being that we are having this little conversation, I can tell you that I think this prospect of yours that is trying to knock your price down so far is a “bad fit.”

I can see someone trying to save 10% or something like that, but 80% just means the person completely lacks vision and respect for your services…and likely needs to “shop around” to see that you all offer great value. In all my years of business, anyone that tries to negotiate a number like that has a very strong chance of being the biggest pain in the butt customer you’ve ever had.

Hope that makes sense,

Marcus

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Jordan J. Caron March 17, 2014 at

Good call on the bad fit Marcus. I’ve sent out a few quotes to people in the last two weeks. I’ve heard back from them but they think my prices are too high.

When I was starting out I would sell myself short but only because I needed to start somewhere. I will not back down on my pricing based on the results I deliver. So when someone wants to haggle over my rates, I move on as I know they’ll be a bad fit.

It’s nice to be in a position where I can select who I want to work with.

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Leon Streete March 5, 2014 at

Great post Marcus, you’ve tackled a big subject in a simple way with the example from TOM BIHN. So much so I will now be using something similar to accompany my pricing page. This is also something I discuss with clients who are worried about competitors seeing what they do and I think it will be a big plus when it comes to qualifying the right customers from their marketing into their sales funnel.

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Marcus Sheridan March 7, 2014 at

Leon, thrilled to hear it. In fact, do me a favor and email me once you get that new pricing info up. I’d love to see it!!

Marcus

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Weston March 5, 2014 at

Great post Marcus. Particularly impressed with the Tom Bihn example.

On the other hand, I find Ian Altman’s approach very weak and unconvincing. Particular the “weasel wording” of “many of the companies…”.

If it was coupled with an outstanding risk reversal/guarantee I might be able to overlook the wording, but “as is” I find it extremely lacking. He certainly wouldn’t get my money with an explanation like that.

Reply

Marcus Sheridan March 7, 2014 at

Couple of points Weston:

1. I paraphrased Ian based on my limited skills. So if anyone is unconvincing, it’s likely me. ;-)
2. That being said, I’ve watched Ian many times in live negotiations and very successful businesses don’t take his approach that way at all.

But everyone is different, and communication styles aren’t for everyone.

Best,

Marcus

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Darin "Doc" Berntson March 5, 2014 at

Another great post Marcus.

Love the way Ian moves the conversation… simple and effective.

I know I need to do a much better job of pricing. I have a page talking all about it, but have yet to publish it. It’s a silly fear I have, and I think it has to do with the market I am in. But, I am hoping to get more business outside of my local market, so I think I will just buckle up and publish the page.

Thanks again for the reminder!

Doc

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Marcus Sheridan March 7, 2014 at

Doc, my man, you’ve got to at least experiment with this. Seriously, I want to hear how it goes for you and if it makes any difference.

Thanks for all your support,

Marcus

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Gabe Bryo March 7, 2014 at

Hi Marcus,

your post hits the nail on the head. Clearly, the way you present things can always have an impact on how the client perceives “value”. It’s important to give added value and to justify one’s value. These days, many people tend to go for the cheaper option and later end up regretting it. It’s important people know that when they’re paying more, they’re actually paying less!

Thanks for the post !

Gab

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Marcus Sheridan March 7, 2014 at

Yep, that’s exactly right Gabe. And the companies that figure out how to leverage that better than anyone else are able to achieve the best margins and find the most financial peace.

Thanks for stopping by,

Marcus

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Antoinette March 9, 2014 at

High or enough? How one can be high if it is just right? How can one be inexpensive if it is just right?

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Sagar March 10, 2014 at

Nice and informative post

Cheap pricing and expensive pricing are the two most important aspects in business. Frankly I too agree that cheap and expensive are just thinking insights.It is common thing that if we want quality things then we should pay good price. But is it necessary that quality comes only with good price ? Different people have different answers and and their explanations.

The natural insight of buyers is that it is ‘expensive’ and the insight of sellers is it is ‘cheap’. The above post explains clearly why the stuff costs so much. According to me it always depends upon the way of doing and thinking .

Thank you for sharing

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The Content Bloke March 10, 2014 at

It’s all a matter of perspective. Unfortunately some people’s perspective is that they want it cheap or not at all. This is one of the problems when it comes to writing web content. There are so many people offering blog articles at just a buck or even less a pop that it’s hard to compete sometimes, even though the quality of my articles is demonstrably superior to that of the discount content merchants.

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Naveen Kulkarni March 11, 2014 at

Hi Marcus,

Excellent post. On the same lines, I was reading a book “Influence” which had few great points to consider for understanding psychology of people and influence the buying habits (and of course more sales).

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James Frost March 11, 2014 at

I’ve read all the recent posts and now have nothing to read.When something new will come ?

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Casual Curtains March 11, 2014 at

very good article, a good read.

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Brent Carnduff March 12, 2014 at

Well said Marcus! Loved the Tom BIHN example!

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Devin Bisanz March 12, 2014 at

This sounds good, but I’m curious to know HOW he did it… like did TOM BIHN just walk into a store and sell his product at a high price??
Is there a way he positioned himself to get initial credentials in the fashion industry??
Thanks

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Tony March 14, 2014 at

Another post with great advice, Thanks!

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Dee Syed March 14, 2014 at

We face this problem a lot in our business as we’re a specialist hosting provider and need to justify the higher costs of our products in comparison to the thousands of budget hosting providers out there. Our approach is to clearly outline what customers are getting over and above the cheaper offerings backed by customer testimonials to show how others are benefitting from our services. Agreed, we don’t get as much volume business as cheaper providers but the maths works out roughly the same – e.g. whether you sell 20 accounts at £5 per month or 2 accounts at £50 a month, the revenue is still £100.

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Marcus Sheridan March 18, 2014 at

Glad this helped a bit Dee. Have you seen WPEngine’s site and how they explain pricing? I read that and it really sold me!!

Best to you,

Marcus

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Dee March 18, 2014 at

Hi Marcus,

I certainly have! WPEngine have pretty much set the standard of managed WordPress services and we follow them closely for guidance in addition to passing on clients with requirements that are too complex or large for a boutique outfit to handle. Just about to download your ebook now and looking forward to it :)

Best,
Dee

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Ruth Zive March 16, 2014 at

The customers that flinch when they hear our pricing are not generally the customers we want to undertake. If there isn’t an implicit sense of value derived, it’s going to be an unpleasant engagement – yet another another reason why it’s helpful to be very forthcoming about fees.

I’m always transparent about pricing, but the discussion is framed around ‘value’ not cost. The customers that ‘get it’ are the customers I want :).

Great post Marcus.

Reply

Marcus Sheridan March 18, 2014 at

GREAT point, as always, Ruth. I’d really love to see your client and prospect interactions at some point. Seriously, I have a feeling I’d learn quite a bit from you!

Marcus

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heenapatel March 22, 2014 at

Great artical thanxx for sharing with me……:)

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