This three price point pitching process is a method I use a lot with clients to help them to make sure that they win work and maximise value.
Over the years, it’s been responsible for putting hundreds of thousands of extra pounds into the pockets of my clients, so you might want to give it a go too.
Why three price points?
Most of the time when we have to price up a piece of work, we have very little information about what the client is prepared to spend. Sometimes they’ll tell us their budget, but often people either don’t know or want to keep it secret because they think that they’ll get a better deal. So we have to guess.
A lot of work I do with clients is helping them to guess what level to pitch their service at because I’ve worked with so many businesses and so many of their clients. This means that I can have a good shot at what might be an acceptable price.
Using three price points means that we can spread the guessing about the budget over a wider area. In particular, if we’re way out, the lowest price point means that my client can still pick up the work, even if their prospect’s budget is a lot less than we thought.
The three price points
In every proposal you send out, you should include three options for them to choose from. You need:
A basic, low-cost option. This is the one that means that they can buy from you even if they don’t have a ton of money. You include it in order to make the sale and get the client on board, but don’t discount or give the whole shop away. It still has to be profitable for you and provide value for money for them.
A good solid option. This is actually the one you want to sell, and about 60-80% of people will buy this one.
A fancy option with everything they could possibly want, just in case they’ve got more budget than you think and/or they get very excited about the possibilities you’re offering. This is the one that you’d ideally like them to buy because this one would be super cool to do, and very valuable for them.
Sometimes the three price point pitching process makes people spend more
Sometimes a prospective client will think that they want X. They want a video made for their website, they want you to write some marketing copy or whatever it is that you sell. They’ve got a rough picture of what they think they want to buy.
It’s your job to paint a more enticing picture for them. I don’t mean sell them a lot of extras they don’t need, that would be unethical and unnecessary.
But because you know more about making videos or writing copy than they do, including more creative or effective ways of doing this, you can suggest things which they didn’t know they wanted but would be a much better solution for them than what they thought they wanted.
This is usually your top tier offer. You can tell them how video marketing works much better if you do a series of videos. You can write about how they’d be better off with a complete rewrite of their website, plus a series of blogs to go out over the next 6 months.
The top offer makes the others look reasonable
When we see three options with one a bit more expensive than the others, we then see the others as cheaper. It’s a phenomenon known as anchoring bias, where your top price anchors the others, and they are judged relative to that price rather than on the client’s internal sense of what it should cost.
That’s where the three price point pitching process really comes into its own because it makes people see the option you really want to sell them as being very reasonably priced. So they no longer have any objection based on price.
Let me know how you get on with using the three price point pitching process. And if you want any more help with pitching, negotiating and getting more money into your business, that’s what I help people with every day. Here’s how it works.
Would you like to feel more confident about setting the right price for what you sell?
If you think that your pricing isn’t quite right, then you’re in good company. It’s the number one challenge which holds business owners back.
It’s also one of my specialist subjects, so I’ve written a book about pricing for small businesses. Sweetspot Pricing gives you everything you need to get clear about what you should be charging, and how to encourage people to pay you the right amount. Take a look…