5 Keys to the Art of Price Conditioning
Originally published: 08.01.13 by Keith Mercurio
How to Close More Sales and Increase Average Tickets
Our industry has a long practice of discussing the price of a job at the end of the service call, after the technician has built value for the customer. However, my experience shows that discussing price earlier in a call is more successful in getting customers to do business, which means higher tickets and more sales. This practice is called Price Conditioning and is one of the most challenging, but impactful, aspects of training I deliver to technicians.
The idea of price conditioning is based on the fundamental premise that a confused mind tends to say “no”. For every call, the customer has a budget or price expectation in mind on what he or she will spend that day. In most instances, that expectation is unrealistic, and the actual cost to make the repairs can be two or three or even four times greater than the customer’s expectation. So, no matter how well we build value, if we don’t set a realistic price expectation before asking the customer to make a decision, we will have a confused customer at the end of the call. The potential for losing this sale and customer is very high.
Introducing a realistic price range earlier in the call allows you to:
- Alleviate stress for the customer, who is worried during the entire call about how much it is going to cost them.
- Build trust by candidly providing a realistic expectation earlier in the process.
- Make a direct impact on the customer’s willingness to spend by giving them time to adjust their expectations.
- Engage in a low-pressure discussion of price that is definitive but not defensive since there is no decision hinging on the discussion.
I recall one customer who decided this was the year she was finally going to have air conditioning installed in her home. Once on the call, as we were casually exploring her options, I asked if she had received other bids. She admitted she had already received three other bids, but had not selected any of them because they were too expensive. The lowest previous bid was $9,000, and that was more than she was ready to spend.
At that moment, I realized she and I were working from significantly different budget numbers. I knew the lowest option I could offer would be more than her budget. Industry standard would direct me to wait and give her my price, which I already knew was out of her budget, at the end of the call. Instead, I chose to use price conditioning.
I told the customer systems for a home like hers could run as high as $20,000, that I had a system for as little as $12,000, but that she was probably looking at around $15,000. I could tell she was frustrated with the process and disappointed, again, with the budget issue. I told her half of my job was keeping my guys working and installing systems, while the other half was educating my customers. Since I was already there that day, I wanted to at least educate her on the systems that would work best for her, so she would have the information she needed to make the right decision down the road.
That approach immediately took the pressure of budget off her mind. She was able to focus on learning about the different systems and had time to process their value with a clear mind. At the end of that call, she asked me to give her a quote. She ended up purchasing a $15,000 system for her home and was thrilled.
What made her change both her decision and her budget was my ability to change her price expectation upfront through price conditioning.
Five Keys to Price Conditioning
There are five key steps to remember when introducing price to customers on a call.
1. Establish Trust
In my example above, I established trust by talking with the customer and not just her husband, by acknowledging and understanding her budget, by asking her about her experience so far in shopping for a system and by making sure she knew more about the process once I left than when I walked in.
2. Know Your Numbers
Price conditioning is meant to set accurate and realistic price expectations. It is NOT price gouging or hard selling. Our job is to help educate and guide our customers on the right purchase for their homes, not just to sell units to make a quota. If you give the customer a price estimate that is too low, you will still have confusion at the end of the call; and if you give them a price estimate that is too high, you may not build enough value for them.
3. Feel the Timing
Like many sales concepts, price conditioning is not a science; it is an art. You can’t introduce the realistic price too early because you may not have all the information you need. At the same time, you can’t introduce it too late. The timing needs to be just right so customers have ample “soak time”. This is time customers need to let the new price range sink in and to come to grips with the fact that they may spend more than they originally planned.
4. Present the Price in the Right Manner
Tone is critical when you present the new price expectation. You want to make sure you are confident, yet sincere; empathetic, yet unapologetic. If you are running your business ethically and efficiently your services are priced appropriately, so be upfront and honest with your customers. Just remember: in most cases, you are delivering a higher figure, so understand the emotional impact of your discussion.
5. High, Low, Typical
When you present the price range, make sure you are providing a true range. That way, as you continue to explore the call and you discover things need to be added or removed, you have the flexibility to do so. Always state the high end of the range first, followed by the low end, and finish with what’s typical for homes similar to your customer’s situation.
It is critically important to our continued success as independent service providers that we evolve our thinking and training to be more effective for our customers and productive for our businesses. The things that limit sales, that limit service, are very rarely the customers themselves.
Articles by Keith Mercurio
5 Keys to the Art of Price Conditioning
Discussing price earlier in a call – a practice called Price Conditioning – can be more successful in getting customers to do business. Here are five key steps for implementing Price Conditioning
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