How to Justify a Higher Price –
You don’t have to have a lower-cost product than your competitors to make sales. If your price is higher, you need to do a better job of establishing authority, credibilty and expertise, getting great aviation pr and demonstrating the value your product provides.
Transcript – How to Justify a Higher Price
Paula Williams: Welcome to Aviation Marketing Hanger Flying Episode number 45, Justifying a Higher Price. So I’m Paula Williams.
John Williams: And I’m the guy on the right that you see in the picture, I’m John Williams.
Paula Williams: This is a podcast, so a lot of people aren’t seeing the picture, John.
John Williams: Some may be.
Paula Williams: [LAUGH] That’s true, okay. And we are ABCI, and ABCI’s mission is-
John Williams: To help all you folks sell more products and services in the aviation world.
Paula Williams: Absolutely, all right so if you have any comments on this or any other episode you can use #AvGeekMarketing and we will reply to every tweet.
Or if you want to do comments on our blog post or on Facebook we will reply to those as well. So the motto of episode number 43 and a lot of other things that we’ve been talking about was.
John Williams: Price High & Justify.
Paula Williams: Price High & Justify and since then, and actually since we started working in the aviation industry we’ve had a lot of people in our consulting practice in our office hours and other things talking about how to justify a higher price.
Say, yeah but [LAUGH] won’t I lose all my customers? And I’m really nervous about raising my prices, I feel weird about that.
John Williams: So be nervous and feel weird about it and do it.
Paula Williams: Exactly! [LAUGH] No but you do, seriously. If you feel weird about it, it could be that you need to think more about how to justify a higher price, and in this episode we are going to be talking about how to do that, and how to make sure that it fits to use a higher price right?
So a great campaign needs three things, right?
John Williams: Of course.
Paula Williams: The list, the offer and the presentation. So in the last episode, we talked about reducing your list so that you are making your marketing more specific. But the other two things also need to match in order to justify a high price, and that is, your offer needs to be appealing to these folks, and it needs to be a high end offer, with a high value attached to it as well.
And the other thing is your presentation has to be high-end in order to make all this work. And we’re going to talk about some of the things that going into that, and it’s not scary, it is not undoable. You don’t have to spend oodles of money on your marketing to make it high end.
One of the ways that we talked about doing this was to reduce the list. So, you can produce higher quality materials but fewer of them. So you’re not sending out direct mail to a monster list, and you’re not doing things that are hugely expensive, but you’re spending the money where it does the most good.
Right, so we also talked about how the higher up the economic ladder you go, the less tolerant people are of the one size fits all marketing. And how people are tuning out in droves to the emails and other things that are really the mass market venues for marketing.
So when you do send an email, it has to be very, very specific and personalized as much as you possibly can. So you want to subdivide your list into smaller lists, but, today, we’re going to go into more detail about creating an offer that is focused on value, so that you can command those higher prices.
So, how do you command, or how do you communicate value?
John Williams: I’m sure you’re going to tell us.
Paula Williams: [LAUGH] Okay there is a term called dollarize, which is not even a term in the English language, I don’t think that it is used. It was used actually first by Napoleon Hill, when he was talking about solidifying and clarifying your thoughts in terms of a specific value or a specific amount of money.
It’s since been used by Jim Rohn and Dan Kennedy and a whole bunch of other people that we really like so [LAUGH] we’re going to use it here. Dollarize means basically how much in dollars, I suppose if you were in some other country you would use a different term for this, help them save or earn.
So every time they use your product they save X amount. Or they have the potential to earn X amount by increasing their capacity or making their turnarounds faster so they can fit in one more flight per day or any number of ways that you can save or help them earn money.
And that is the very best way to sell a product, is to tell them that they are printing money by buying your product. They are making their product more valuable. They’re earning more money, or they’re saving money by using your product. It’s very hard to resist, so if you can make a compelling argument that dollarizes the value of your product, do that, right?
Okay, another way that you can communicate value is you can say how much would it cost them to use an alternative? And this works especially well if the alternative is the status quo, or doing nothing. So let’s say you have an innovative software product that maybe they’re not using now and they’re doing something by hand that your product could help them do.
And it’s taking them an hour, and your product could help them do that in ten minutes. So then you can dollarize that value by saying 50 minutes of a person that you pay $25 or $30 an hour, is now put back into your company, because that person could be doing something else, or be doing what you’re paying them to do more specifically.
So that’s another way to communicate value. If you can’t do that, if you can’t Dollarize which is always the first option, the second option is to say, what value does your product provide? And here we’re not talking about features, we’re talking about value to the customer, so in other words, is this going to make me safer?
Or is this going to make my customers feel better about my company? Is this going to provide me with prestige of some kind? How can you communicate that value, because not everything is equatable to dollars, and we understand that. But it has to be something that is of value to your customer and not just a feature of your product because maybe they don’t know that it needs to
Paula Williams: Slice and dice and julienne, you know what I mean? [LAUGH] Whatever the feature is of your product. It may not be valuable to your customer because they don’t understand how they could use it and they don’t understand how it applies to their life or their job or their business.
So you need to be really, really specific about this. So let’s talk for a minute also about cognitive dissonance.
John Williams: It’s everywhere, it’s everywhere.
Paula Williams: Yeah this is a freaky psychological term, cognitive dissonance and what it really means is that what you’re seeing is in conflict or what information you have is in conflict with other information that you have.
And a lot of times this happens when people try to raise their prices and they don’t have everything lined up to do that yet. Okay so here we’ve got, and this is a podcast, so I’m going to-
John Williams: Read the slide.
Paula Williams: Tell the story, exactly. We have a picture on this slide of a sign that says, do not enter, and then underneath it says enter only.
So what the heck are you supposed to do? You’ve got two conflicting pieces of information. And when you’re trying to sell something, and the prospect gets two conflicting pieces of information, what are they going to do?
John Williams: Stop.
Paula Williams: Stop, they’re going to not buy from you, unless everything matches up.
Because that’s the number one thing that sets off the BS meter, is that the information doesn’t match what they either already know, or what they assume, or the other information that they’re receiving from you, right?
John Williams: Mm-hm.
Paula Williams: Okay cool. So first of all, the first way that people create cognitive dissonance is when they have a premium priced product, but the salesperson does not look like a person that would be selling a premium priced product.
And this is a problem nowadays, especially because everybody is going casual with their dress codes. And we also had an episode not too long ago about dress codes and got a lot of feedback on that.[LAUGH]
John Williams: Well, whether you like or whether you don’t, the higher up the scale you go, the dressier you have to be.
Paula Williams: Right, and this can be in conflict with some of the information that people already know, because you think of Steve Jobs and other high tech millionaires and stuff like that who are very casual, but-
John Williams: Then you talk about the billionaires and they’re different, they’re like the old school.
Paula Williams: Right, and in aviation most of our customers, if you look at the demographics, are older, they’re former military. There’s a lot of things about them that kind of take them out of that tech billionaire category and put them more in line with the more traditional point of view.
So, if you’re sending someone into a sales situation, that does not look the part, it’s going to create some cognitive dissonance with the person that they’re selling to. And it’s not just what they’re wearing, it’s also how they’re wearing it. So we’ve got two pictures, one of a person in a suit with a tie and a confident attitude. When considering how to justify a higher price, which is better?
He’s standing up straight, he’s got a confident demeanor. He’s smiling and other kinds of things. On the other side we’ve got a person whose hair’s a little messed up, shirt’s a little wrinkled, has a bunch of stuff clipped to his belt, just kind of doesn’t really fit with the high end, end of things.
He’s carrying his lunch and he’s got a drink in his hand. His pants don’t quite fit, they’re a little bit wrinkled at the bottom where they should break, a lot of things are just not quite right about this person. So, even if you were wearing exactly the same clothes, there are things that you can do that make that visual appearance fit with the image that you’re trying to portray or not fit with the image you’re trying to portray.
So we have an equals on one picture and a does not equals on the other picture. And the equal sign basically means this is cognitively coherent, the other one is that it is cognitively dissonant.
John Williams: And actually that’s really not a good picture for the one you’ve selected, cuz he’s got his hands folded.
Paula Williams: Jeez.[LAUGH]
Paula Williams: Picky, picky, picky. You can fold your arms, when you’re casually having a conversation. You don’t want to think too much about it, but you do want to have good posture, so.
John Williams: Yeah, that gives off a closed body language.
Paula Williams: That’s true, maybe we should have a podcast on body language.[LAUGH]
Paula Williams: That’s not what we’re talking about today, but cool.
John Williams: Well, that’s part of the picture.
Paula Williams: That’s true, so that is part of the picture. So, yeah, and there’s a lot of folks, sales coaches, and other kinds of things who can give you that information more specifically, but just so you know, that is a thing, cognitive dissonance with the way people look.
Because they do jump to conclusions, good, bad, or otherwise, about-
John Williams: Even if you don’t think you jump to conclusions, you do.
Paula Williams: Yes you do.
John Williams: The first 7 to 14 seconds, you make a decision on what you see.
Paula Williams: Right, okay. So one thing on your cognitive dissonance checklist is, what does the sales person look like?
Next thing on your checklist is, what does your office look like? Does this look like a place that somebody sells high end products and services out of, or does it look like?
John Williams: The vet’s office.[LAUGH]
Paula Williams: Yeah, exactly. And a lot of people are, again, going to more casual workplaces and they have couches and croquet games out on the lawn and ping pong tables and other kinds of things.
Which is fun and cool and everything else, but you really want to think about what image are you portraying. If someone-
John Williams: And those particular things you described are where the product is designed possibly, produced possibly.
Paula Williams: Mm-hm.
John Williams: It’s not sold there.
Paula Williams: Yeah, and if you go to a high-tech software company, you kind of expect that sort of thing.
But if you go to an FBO or you go to a place where the,
Paula Williams: Industry is aviation, you really expect to have a comfortable, well-lit, clean office.
John Williams: And if you recall, even the software houses we visited, getting ready to acquire software. Their techies did the stuff you said but the sales guys wear a coat and tie.
Paula Williams: That’s true. That is true. And they did have, they gave us a tour and you expect to have a lot of fun things in a tech organization but they also have some really nice lobbies and other things where they did most of the sales choreography.
John Williams: Mm-hm.
Paula Williams: Okay, cool. So, we’ve got two pictures of offices here. The first one has good lighting, a bookcase, some palm trees, high end furniture, other kinds of things. And this could be just a simple matter of decluttering in a lot of cases, that people have a perfectly nice office, but it doesn’t look perfectly nice because of the clutter and craziness that happens there every day.
So first one is a match, second one where they’ve got reupholstered couches and people with bare feet and other kinds of crazy things going on is no match, so dissonant versus.
John Williams: Not.
Paula Williams: Not, right exactly. Okay second thing what does your office look like? Third thing, what does your documentation look like?
Okay, if you get a contract, or marketing materials, or any other types of documentation from a company, does it look like it’s been slapped together? Does it have typos in it? Does it have things scratched out and other things? Now if it’s a high end product or service that you’re selling.
It doesn’t exude a lot of confidence or it doesn’t inspire a lot of confidence if the the documentation is imperfect, so you want to make sure that gets proofread probably several times before going out of your-
John Williams: That and it needs to be on high quality paper.
Paula Williams: That’s true yeah, that does make a difference as well.
So if it’s printed on the super thin you can see through and they print it on both sides it makes it hard to read and it’s just cheap and-
John Williams: And printed with a high quality printer, not smeared.
Paula Williams: Right, and people think, these things don’t matter, but they really do.
John Williams: Again, when you see this stuff, subconsciously, whether consciously or not, you make a decision of what you think about this company.
Paula Williams: Exactly, so, once again we have a match. This matches with a premium price product. This seems like a company that I feel comfortable doing business with or not, depending on the quality of the documentation.
So let’s talk about websites. If you are selling a high end product, and your website looks like it was built in 1999, there’s going to be some cognitive dissonance, right? People think, well they’re not serious about their company or they’re not serious about their customers. Or they just don’t have a clue about technology.
Or any number of things that they might think if they see a website that is using the square buttons and the old style HTML frames when people used to use that. What was that product that everybody building their websites in like 2000? FrontPage, Microsoft FrontPage, things like that.
They may have a better product now.[LAUGH]
Paula Williams: I shouldn’t be slamming somebody’s product, but-
John Williams: Well it’s archaic at least.
Paula Williams: Yeah, exactly. If you have an archaic looking website where the fonts are pixellated and things don’t seem to be modern and up to speed, then people are going to make that assumption about your company as well.
Either that you don’t have the money to invest in making that work or, that you just don’t care.
John Williams: Or you just threw something out there because you thought you should.
Paula Williams: Exactly, so, we’ve got two pictures here. One is of Centrex Construction which we think they have a beautiful website.
We didn’t build it, but it’s fabulous. And the other one is a very old, I actually got this from the Wayback Machine. So it is not the American Literacy Council’s current website but it’s an old one that I pulled out as an example here of what not to do, so we have a match and a,
Paula Williams: Doesn’t match.[LAUGH]
John Williams: Mm-hm.
Paula Williams: For a high-end product. Okay last thing, what do your marketing materials look like? If you’re using a high-end product and we’ve done a blog post on this or at least a yeah, I think it was a blog post a couple of years ago on high-end design versus mass market design.
High-end design has fewer colors and uses them more consistently. High end design uses higher quality paper. High end design uses fewer fonts, so, a maximum of two or three accents or kept to a minimum, so, it’s a lot more cohesive looking, there’s more white space, and other kinds of things.
So, we’ve got a high end design on the top, and a low end design on the bottom. It just looks cleaner and-
John Williams: Fewer colors and fewer words in the pictures.
Paula Williams: Right, in fact, if you pick up two magazines, pick up the Robb Report and then pick up,
Paula Williams: Hot Rod magazine, those are two magazines about cars. And the Robb Report, if you flip to an advertisement there may be ten words on that advertisement, and the vast majority of what’s going on is image or a picture, and the rest of it is a call to action.
So it’s a lot more curated, a lot more carefully designed, then if you pick up Hot Rod Magazine where you see several pictures on one page.
John Williams: And lots of words.
Paula Williams: [LAUGH] Lots of words. And a lot of things mixed together, where the Robb Report is a lot more curated.
Things are in sections and it’s a lot more easier on the eyes.
John Williams: But the demographic they’re going after is completely different
There is a woman in one of our networking groups who has written a couple of books and she’s famous for being the Mayflower Madam. Her name is Sydney Biddle Barrows, and she’s written a fantastic book called Uncensored Sales Strategies, which we highly recommend, we really like the book. She certainly knows how to justify a higher price!
But what she talks about in that book is running a business of a certain type, [LAUGH] so to say, where they provide companionship to gentlemen. And there’s a lot of businesses of a certain type that provide companionship to gentlemen that are of various-
John Williams: Levels of quality?
Paula Williams: Levels of quality I suppose.
But what Sydney did really well is set expectations from the very beginning. She controlled every moment of the customer experience from the phone call on. So that when somebody called this company, there were very specific scripts and she hired people specifically because of their tone of voice. So that it would attract a certain type of customer who was a higher end customer who was going to treat her employees better than the run of the mill business of this type, right?
And so from the very first phone conversation, the phone scripts were written to use high-end vocabulary. So it would turn off a few people who were looking for something other than what she was offering, but people who were looking for an elegant experience or a night out or whatever and so forth and so on would be attracted by this sort of thing.
John Williams: And they wouldn’t flinch at the price.
Paula Williams: And they wouldn’t flinch at the price, exactly. And she puts in some very careful wording of how the price was discussed, some very specific wording about how the services were discussed and other kinds of things. The young ladies that she employed expected men to open doors, expected men to take their coat and other kinds of things because.
If you set those expectations and you do the sales choreography in an inappropriate way, it’s going to attract a certain type of customer. Now, I’m not saying that any of us are in that business.
John Williams: [LAUGH] Good, good.
Paula Williams: But there are some things that you could apply.
If you were trying to attract high-end customers and if you are wanting them to behave in a certain way, you can handle that really well with sales choreography, where do they come in? What does the lobby look like? Are they greeted with a beverage? Are they kept waiting too long or not long enough?
Do you have specific ways that you talk about your products and services that make people feel really comfortable with what they’re buying, and so on. So there’s a lot of really good stuff in that book as well. Especially for if you’re selling a product at a higher price, how to step up your game and make that sales choreography match and not cause that cognitive dissonance.
John Williams: Precisely.
Paula Williams: Okay, cool, so, methods to implement. You want to look at your branding and design, is it high end or is it mass market? If it’s mass market, what can you do to reduce the design points that are going to give people cognitive dissonance, if they’re looking at paying a high price?
Personal branding is another thing that people want to look at for cognitive dissonance. How am I dressing for this sales presentation? What am I carrying for the sales presentation? What kind of documents am I providing for the customer? Are they in a folder, are they in some kind of presentation binder, all of those things.
If somebody looks me up on LinkedIn, is it going to throw them for a loop, because it looks like I’m not the same person as the one I’m presenting myself to be. Lots of things like that that can cause that cognitive dissonance, which doesn’t mean that you shouldn’t be yourself.
You just want to be the best possible version of yourself and maybe if it doesn’t fit at all, maybe you’re in the wrong business.
John Williams: Exactly.
Paula Williams: Okay cool, content marketing. Once again are you communicating your value really well? Or are you causing a conflict in people’s mind when they hear the price and then they don’t see the value that matches?
So another thing that you can do is use our office hours to run your sales presentation by John, who’s a fabulous Mr. Skeptical customer on the phone. And we’ll give you some pointers on how to make that work, especially for our members who have office hours. So those are lots of ways that we can help you with some of these things to make this make more sense, and to reduce some of that resistance that you may be getting if you’ve raised your prices.
Or reduce your anxiety if you haven’t raised your prices yet and are thinking about doing it.
John Williams: So, what makes you think I’m a skeptical customer?
Paula Williams: You are a very skeptical customer.[LAUGH]
Paula Williams: [LAUGH] At least, especially for aviation products you’re exactly the perfect demographic and you do a very good job of pointing out some of the wrenches that you can throw into people’s sales presentations, and teaching them how to overcome them.
All right, so, download our pricing tip sheet, if you haven’t already. It’s at ABCI1.com/Pricing and you may also want to see more about pricing strategies in Episode 19. More about qualifying prospects in Episode 17. Using a pricing strategy to qualify your prospect in Episode 43. And all of those things are available on our website and on iTunes.
So go sell more stuff!
John Williams: Yep, Zig Ziglar says America needs the business and I agree with him.
Paula Williams: [LAUGH] Absolutely and subscribe to our podcast on iTunes, Stitcher or Google Play and please do leave us a review. We’ll see you next week.document.currentScript.parentNode.insertBefore(s, document.currentScript);..