How to uncover your pricing cheat codes
Pricing Strategy: How to get customers to pay a premium for your product.
Think your product might be too expensive? Before you lower your price, read this short story:
A company we worked with had a $350 product with a confusing home page. We re-wrote the copy to be super clear using the “now you can” headline formula, and their conversion increased by 40%.
For the second experiment, we bumped up the price to $499, and guess what? It made absolutely no difference in conversion. I’ve never been so happy to see an inconclusive A/B test.
The punchline: Once people clearly understand the impact a good product will have on their lives, they become a lot less price sensitive.
How to conduct the “door-in-the-face” pricing test
But how do you unpack your customer's pricing psychology and find out exactly what they’d be willing to pay extra for? I call this the “door-in-the-face” pricing test.
Next time you’re pitching somebody on your product or doing a validation interview try this:
Go through your normal sales pitch or customer interview process until it’s clear they understand the product, are excited about it, and ready to buy.
Then, instead of offering them your normal terms, keep it light and friendly, but suggest a surprisingly high price, like “What if I told you it cost $1,000 per month?” (They’ll probably say “no.” That’s perfect).
If they say “no,” again keep it friendly and say: “Fair enough, that’s a high price, we’re still figuring out the actual cost. But tell me, what would our product need to do to be worth $1,000 per month?” Then just be quiet.
Stay cool and give them a moment to think about it. Listen carefully because they’re about to give you the cheat codes to premium pricing. They may say something like:
“It would have to replace ___ software”
My team would need to be able to do ____”
“If it meant we could stop paying agencies $50K per month to do ____ by hand, that’s a no-brainer”
If your product already does those things they mention, happy days – rewrite your home page! If not, start bringing your Head of Product to these pitch meetings.
By the way, sometimes they just say yes. Twice now, people have heard my super high price and just said “that’s fine.” In-fact, they even explained their business case to me. They mentioned other comparable services in their budget that cost them more than what I was asking, so the amount I proposed seemed fair in comparison. (Naturally, I added those comparisons to my pricing page.)
I hope that’s helpful! But it’s a teeny little idea – less than 1% of the insights we share in our coaching program.