Pricing Lessons

My first job in sales was selling client server software to CIO’s that were punch drunk from a world class executive seminar put on by my CEO. Before he went down hard in a made-for-tv family drama, John Donovan was the best salesperson that I have ever met, much less worked for. But his lessons were tough. Right around my 5^th week, we were having dinner with a group I called the Boeing Computing Gods (they looked the elder counc

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il in Shazam!) and the president leaned over to me and said “so how much is all this magic software going to set us back this year?” Fresh from dueling lectures by my product manager, who of course got out the spreadsheet pivot tables for every scenario, and my sales VP, who said “never talk about price,” I mumbled something about special discounts and per node variables. John quickly interjected that “with all the mainframe money we will save your engineers, you will be stealing our software out of the barrel for a  million bucks!” Like everything he uttered in front of customers, that comment delighted everyone at the table- so much so that they didn’t hear the “you idiot!” that he hissed toward me out of what I assumed were his poisonous eyes.

Every sales maven in the world talks about strategies for pricing: when to tell the customer, what to tell the customer, how to present the numbers, aim high and discount, pull your pants down early and blast out the competition, blah blah blah. The one thing that I can add to the conversation is that you need to be prepared with a money answer for all customer types at all stages in the sales cycle. Whether you sell B2B software that is so customized that no two proposals look the same (that might be redundant), or rice out in front of a world commodities price ticker, always be ready with an answer for the guy who blurts out some version of “How much for the little girl?"

My favorite answers are all semi-serious (imagine that) and pretty witty if you ask me. When people ask the price with their first breath, finance guy style, I ask them how much money they make. (Hey, we’re crossing boundaries here, let’s all get into it) When someone yells out in front of a large group ( usually an IT dork with vendor muscles) I ask what the budget is of the highest ranking person in the room (they are never the same person).    When asked at a more appropriate time, or by someone that might well end the discussion if I smart talk them (or hang up the phone), I have something ready that hits all these criteria:

1. Short. 30 words or less in under 10 seconds.
2. Simple. If you have to re-explain the product by naming the price, you lose.
3. Non-specific. Anything  precise you say is the price to be whittled down later or run away from now.
4. Balanced. There should be a very low number and a very high number- let the customer gravitate to one of them.
5. Be firm (yet friendly). Don’t grovel- everything costs money.

I answered this question twice at a presentation last week- once to the CIO of a Fortune 500 company that I am helping to pitch and once to the proprietor of a one- person home shop that sells eco-friendly lunch boxes. “At Jigsaw, we prefer to exchange data, but if you insist on paying we’ll charge you anywhere from $1 per contact to $1 million for the whole barrel.”

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