One of the easiest ways contractors can increase their sales numbers is so easy to implement it’s almost mind boggling that it’s not used more frequently. What is this magical sales technique? Package pricing.
It sounds simple enough, and it is. Leveraging price to your advantage during the purchase decision is well known to have a powerful impact on closing sales. Think about it. What’s the best way to sell a $2,000 watch? Offer an even fancier watch for $5,000 first.
As a seller or service provider, if you have the first option to influence the buying decision, you have a strategic advantage from “anchoring” which essentially means that people tend to place more emphasis on the first information they get when making decisions. Drawing clear distinctions between two items is good marketing and it should pertain to pricing as well. If consumers understand why the items are priced differently you’re giving them the ability to feel educated on premium and standard pricing options without having to resort to shopping around with your competition.
Survey Says…
Research backs this up. In one study, when consumers were presented with two items priced the same, 46 percent made a purchase. When the items were given two different prices, 77 percent made a purchase. If there isn’t a clear pricing difference, consumers are more likely to delay their decision, reducing your likelihood of closing that sale.
So, in our original example, a consumer is motivated to buy a watch and is interested in purchasing a quality time piece. For this shopper (and many others) the more standard pricing level of $2,000 may not seem like much of a bargain when presented on its own, but when that customer is presented with the premium priced $5,000 option first, it sets the psychological starting point for the perceived value of the product. While they may love the watch, it’s obviously too expensive. When a more moderately priced watch with many similar features is presented at the price point of $2,000 it is seen as a much better value since the buyer has set their mental starting point for pricing and value with the first option.
As a contractor armed with this knowledge you can begin offering multiple pricing packages for your customers where the first quote provide is the premium priced option, followed by a more standard option. Depending on your industry, this can be anything from offering different levels of material such as offering a pergola made from cedar (premium) vs. pressure treated pine (standard/bargain) or it can be adding additional labor or services like demolition, waste removal, etc. on top of what are normally your standard array of services. The important thing is that you provide the end customer a clear choice in terms of pricing via packages and that you create an initial anchor that helps your standard service appear as an excellent value.
Be Careful Expanding Your Pricing Packages
Now, it does take a bit of savvy to maximize how well you utilize package pricing. If you begin offering three or more packages, you can actually hurt your sales if you’re not careful. In a study on beer pricing, William Poundstone discovered that offering two beer options of standard and premium led to sales of 80 percent of the higher priced premium beer. When adding a third bargain option that was less expensive than the standard option it decreased overall profitability as the standard option was seen as higher quality with a lesser option to compare it to. Interestingly, when a super-premium option was added in place of the bargain option, sales of the premium beer skyrocketed to 85 percent and maximized profitability.
JobFLEX Is Designed To Offer Pricing Packages
Because we’ve seen just how effective this selling technique is with contractors, we built the JobFLEX app so you can create multiple options (or packages) in your quotes and estimates and start closing more sales.
With just a few taps, you can start closing more sales and increasing your average sale amount just by including multiple packages in your quotes and proposals. Go ahead and give it a try and see why JobFLEX is one of the most popular contractor apps on the market.
