5 Pricing Mistakes to Avoid

Author: 
Mikita Mikado, co-founder and CEO of PandaDoc

The influx of new sales enablement softwareoptions has completely changed the way sales teams operate, eliminating many disconnections in the sales process. But even with this newfound efficiency, there’s one thing sales still needs to ensure buyers act: a good pricing strategy. Here are a few major pricing strategy mistakes that could ruin your sales and what you should do instead:

1. Failing to present prices simply

Rounded numbers on prices “feel” better to consumers, according to a studypublished in the Journal of Consumer Research in February. The study found when consumers see a round numbered price, they can assess the value immediately, and therefore make a purchase decision more quickly.

When pricing your product or service, remember to keep it simple. Showing today’s consumers prices like $59.87, instead of $60, will likely encourage them to think about the price longer than necessary, which will inevitably land them at the conclusion the item is $60 when they round up. Do the math for them and they can choose to purchase more quickly.

2. Comparing prices to appear “competitive”

Though this pricing strategy may appear smart, it is one of the most deceptively bad strategies. Today’s ultra-informed buyers are skeptical, and the cheaper something is, the higher the red flag waves telling them something’s not right. Although affordability is important, buyers still want value. Instead of comparing your significantly lower prices to the competition, for no other reason than “look at what you’ll save,” say why your prices are lower. What does your brand do differently on the back end that allows you to provide great quality for less?

3. Not selling the experience

Last year, The Wall Street Journal took a look at how different types of purchases affect us differently. Though our impulse tells us to buy material things, spending money on experiences proves to hold more value in the long run.

So, in terms of pricing, we can use this knowledge to increase conversions – if we present products and services in the right light. When dealing with pricier products, sell the experience rather than just the product itself. Focus on the long-term benefit, and demonstrate how the product or service can create favorable change in the buyer’s lifestyle.

4. Making purchasing more painful than necessary

Research from Iowa State University
, published in 2014 found that people experience less pain spending money when converting through one-click options, whereas counting cash (by dragging and dropping e-dollar bills in the experiment) impedes purchasing.The takeaway? When developing a pricing strategy, seek to alleviate any unnecessary pain in the purchasing process.

Whenever possible, bundle items together. Reduce the amount of steps needed in the buying process by offering complete packages – that way buyers aren’t plagued by painful shocks each time they click to add an item to their order. Also, reduce the time between decision and closing by embedding payment right into the proposal or contract.

5. Poor presentation

You can have everything about your pricing right, but if you don’t present it in an appealing way, buyers aren’t going to be compelled to buy. Help build brand consistency by ensuring all collateral you send to prospects look clean, professional, and match your organization’s feel. Personalize your content and embed short videos that describe your product or service.

Even if the rest of your sales strategy is on-point, the way you communicate pricing could completely cost you a deal. Don’t compare prices for no reason or require too many steps to complete the purchase, giving the customer time to second-guess. When in doubt, keep it simple.

 Mikita Mikado is the co-founder and CEO of PandaDoc, a platform helping sales teams create, deliver, and track intelligent sales content to close deals faster. To learn more about simplifying your sales documents, connect with Mikita and the PandaDoc team on Twitterand LinkedIn.