As simple as it may sound, the profit in a project is the amount that you charge in excess of what the goods cost you. With printed catalogs displaying pricing you may feel that you are not ultimately in control, but if you plan ahead the printed catalog can be an asset. For example, anticipating that a client might try to negotiate a lower unit price near the end of the sales process, have an alternative item ready to present at a lower price rather than dropping the price of the goods you have already proposed. The key is to preserve your profit. A $1,000 order on a "C" is exactly the same profit as an $800 order on and "A." Your customer will see it as a 20% savings! He has the choice between two promotional items that will successfully deliver his message and you did not devalue your proposal or your profit.
When a different item is introduced you are able to reinforce the client’s decision to use promotional advertising. You get to sell the "good night’s sleep" rather than the mattress! Whatever the objective – generating sales, improving safety, employee retention, etc. – retelling how the selected alternative item will effectively deliver the message to the intended group builds value to establish the "even trade" the client is looking for. You will be surprised how often the client decides to go with the higher priced item.
Remember, Promotional Advertising is Not Retail
Retail transactions generally are independent individual buying decisions. One golfer buys balls that cost $5 each and another buys the $2 ball. Why? To cut a stroke or two off the game? No. It is the belief and desire for the better game that drives the buying decision. Same for pots and pans, cars, beer and every other retail transaction. The individual buys based on a personal desire.
Promotional specialty advertising is a service business that delivers messages for client companies. Since our media typically is able to be held in the hand, unlike TV or radio ads (or even printed ads or online), we all get caught up in the object the message gets attached to. This thinking pulls our focus away from what "expert service" helps create the balanced trade. Therefore the "price," the "budget component" should be the last thing you mention to your customer. Your "pricing" should be discussed throughout the process so that your customer knows that the price you eventually quote will include all your expert services - product selection, imprint message recommendations, factory coordination, compliance issues, production scheduling needs, drop shipments and anything else that brings value to your customer.
When the Pricing Needs to Go Up
Using price as the "comparative gauge" to measure one promotional specialty item to another must be tied to the effectiveness of the item to deliver the message. A client who states a budget of $5,000 to reach 1,000 people may get better results by sending the message to 500 of the best prospects and doubling the available budget for each contact. Your expert service to your client requires you to analyze the project and recommend what will have the greatest likelihood of success. In this example, the quality of the respondent will be greatly increased by selectively choosing the best prospects. The response rate will be increased due to the more impressive promotional specialty delivering the message. The overall perception of your client will be increased due to a more impressive presentation of the message. And the better than expected results will guarantee that your customer will do business with you again.
So increasing the price but remaining within the established budget and again indicating that the pricing you are quoting includes your expert services, will go a long way to build the relationship you have with your client. It may also increase your profit as the relationship on a lower quantity and higher price many times also has a better margin.
Visual Pricing or How to Show the Price
In business today most communication eventually ends up as printed words in documents or emails. Quoting projects therefore takes on a visual aspect that also will have an impact on selling. A quote totaling One Thousand Three Hundred Ninety-Nine Dollars can be expressed in several ways - the worst way is spelled out as was just done. Going from worse to better other ways of expressing this price are: $1,399.00 - $1,399 - $1399 or the best way - 1399.
The goal it to have the number be a statistic rather than money! As silly as this sounds, we are all programmed, hard wired to respond to information about money. Mentally our reaction to $5.99 is that it is much less than $6.00. When was that last time you actually thought that the 9/10 of a cent on gas prices was almost the next full cent? The simpler the visual representation of price is, the less emotional impact it has on your customer.
If you are not required by the customer to itemize – don’t! Since your pricing includes all your expert services the price shown should be the total. This can eliminate the transaction becoming a price per unit sale at the last minute.
Exclusive to Identity Marketing Readers
As mentioned in the first article in this series, the topic of pricing fills hundreds of books and provides great income to an army of consultants, I being one of the soldiers! I realize that many of you encounter situations involving pricing that were not covered here. So if you have a specific circumstance you would like to discuss free of any consulting fees, please send me an email and thank Identity Marketing.
Gregg Emmer is chief marketing officer and vice president at Kaeser & Blair, Inc. He has more than 40 years experience in marketing and the promotional specialty advertising industry. His outside consultancy, providing marketing, public relations and business planning consulting to a wide range of other businesses, has been a useful knowledge base for K&B Dealers. Contact Gregg at gemmer@kaeser-blair.com.