This week I attended a Masterclass. Amongst the discussion was an exploration of how rich people think.
Of course they aren’t called rich people – that would be crass. They are called affluent, high net worth or high value, but whatever they are called they have one thing in common – a lot of money.
But it was how they think that was an eye-opener for me; for example when faced with a purchasing decision they don’t ask ‘How much is it?’ Ever.
Now we’ve all heard the saying ‘If you have to ask the price you can’t afford it’ or been to a restaurant and given the menu with printing errors (the one without prices), but for many people the question ‘How much is it?’ is so ingrained it is almost automatic.
Like most people, for me it all hails from my childhood. I remember as a teenager needing to buy a new pair of trousers to enter the sixth form. In those days there were very few national department stores, most purchases were from local businesses, so I went to the gents’ outfitters in the small town where I lived.
The problem was that I couldn’t afford anything the owner offered me. My mum had given me a little money and I’d saved some from my paper round, but it still wasn’t enough.
‘They look like a good fit’ the outfitter would say. ‘How much are they?’ I’d reply, followed by (when I heard his answer) ‘Do you have anything else?’. I could see he was getting frustrated but he agreed to search his stockroom once more.
Eventually he appeared with a pair of trousers that must have been left over from the 50s. Baggy, with turn-ups (cuffs if you’re in the US) and as far from portraying the image a cool teenager was looking for as you can imagine. ‘How much are they?’ I asked. At last! Something I could afford (and wore 5 days a week for the next two years).
And pretty much for the 50 years ever since that time I’ve asked ‘How much is it?’ when faced with a purchasing decision.
Because unconsciously my programming is ‘I better find out how much this is because I may not be able to afford it and don’t want to embarrass myself.’ It’s my default position. I do it even when the item is clearly affordable or I’m going to buy it anyway.
Which for most readers of my blog is how it is today. Price is rarely the determining factor in our buying decisions.
And yet when we are pricing our goods and services – or are faced with the automatic ‘How much is it?’ question – we assume the buyer is price sensitive. We assume they are looking for the lowest price. In fact research shows that this is only the case 20% of the time. The other 4 out of 5 customers want good value (that goes without saying) but are less concerned about the price.
How often do you wish you could increase your prices but are put off from doing so by comparing your prices with a competitor? But how often do you also say ‘We are nothing like [competitor], our service is far superior to theirs’.
So next time you realise you should, or need to, put up your prices, ask yourself what would your affluent customer say? Are they still getting exceptional value at the new, higher price?
If so, what is really stopping you?