5 ms·

Perhaps you live in a world different from mine, but what you describe as "cartoonishly foolish" behavior I consider completely standard. Customers refuse to sp

by gizmo 10y ago

Perhaps you live in a world different from mine, but what you describe as "cartoonishly foolish" behavior I consider completely standard. Customers refuse to spend 5000 to make 20.000 all the time, or they're willing to waste weeks finding a different vendor that can offer the same for 3000. Others are willing to walk away from a great deal unless they get a discount, but are content with a tiny discount. Because a discount to them signifies a moral victory, or that they're not being taken advantage of, or they simply want to believe they're great negotiators or something like that. I don't get it, but I have seen it often enough for it not to be unusual. We don't live in a world of rational agents. And even if we did we don't live in a world where most business purchases are made with people's own money. People have complex and contradictory goals and in my experience pointing out the value customers get for the price they pay is the least effective sales strategy.

chrisabrams 10y ago
I live in the same world as you. My business has a proven model for digital publishers that generally increases their yield 2-4x yet they refuse to spend the percentage needed to make the deal happen. Sometimes pride can be so large...spend 5k to make 50k? No thanks..lol
- softawre 10y ago
  > generally increases their yield 2-4x > spend 5k to make 50k I'm sure it has nothing to do with people making numbers up.
- josho 10y ago
  Have you had success overcoming that? I suspect a rational counter won't win over an irrational objection. But will an irrational plea (eg play to their ego) work?
- inthewoods 10y ago
  As someone who has operated in the world of digital advertising, this may have more to do with the fact that so much bullshit has been slung at both advertisers and publishers that there is an incredible amount of skepticism about advertising products.
- deleted 10y ago
  [deleted]
- dsacco 10y ago
  I understand that I don't have the same insight into your customers as you do, but to give a counterpoint, I charge significantly higher than $5k for my services and my customers don't receive any tangible improvement to their revenue as a result. I have not found that they are incredulous about my rates, let alone due to pride. Maybe there's something other than pride at play here, such as market dynamics or your product? Your customers' pride could be one reason why they refuse to spend that, but have you considered that this is an uncharitable perspective? Don't you think it could also be because they have honest reservations about your product or better alternatives for their business than that they are obstinately refusing to just hand over their money to make $50k? I think it's much more likely that the situation is actually quite nuanced with competing incentives, priorities and perspectives on either side. An information asymmetry is not the same thing as irrationality.
- m1sta_ 10y ago
  1. They don't believe the benefit will be realised in their circumstance. 2. There is both opportunity cost and hidden cost for trying your solution.
  - dsacco 10y ago
    And to add, these are reasonable things for a consumer to believe that are not evidence of irrationality.
RandomInteger4 10y ago
Well, much of the customer doubt has to do with companies promising things they can't deliver. The phrase "If it's too good to be true, then it probably is [too good to be true]." exists for a reason.
mcphage 10y ago
> Because a discount to them signifies a moral victory, or that they're not being taken advantage of, or they simply want to believe they're great negotiators or something like that. I don't get it, but I have seen it often enough for it not to be unusual. Then why not raise your price to $99, and let them negotiate you down to... $35?
- ithinkinstereo 10y ago
  Because most customers don't like, or don't know how, to negotiate (yes even B2B customers where you would think this is the norm). So if the initial price is too high, they won't even bother to talk to you. The conversation literally dies.
  - dsacco 10y ago
    Alternatively, they know how to negotiate, or don't mind it, but given the bigger picture it's not worth their time to go back and forth through the intro emails -> demo conference call -> pricing negotiation loop with every company that has high prices, and they are faced with an information asymmetry as to which ones are worth it.
    - angry_octet 10y ago
      When I think of how much of my life sales people have wasted on meetings and calls and blah blah it makes me want to cry. Just tell me the goddamn price. I'll tell you if it's too much.
    - vacri 10y ago
      Oh, yes. When exploring a new domain, the "call us for pricing" people get put at the end of the line. We're not an enterprise, and we're not going to waste our time with sales small-talk before we've even seen what the product can do.
- harperlee 10y ago
  If you can get such a big discount, that's a red flag: the price was bogus, I'm being conned (or, more charitably, a communication error might have been made). It's typical for enterprise purchase of software or IT services, for example, to either discard or put in question offers that are quite below their competitors in the RFP. But on the other hand, again, when dealing with enterprise purchases, the purchases department needs to demonstrate that they bring value to the table by lowering costs. So it is typical to make what you suggest and account for a commercial discount of 3-10%,depending on purchase size, etc. You need to fight for it, but you are safe to grant it in the end. This might happen even if you don't know about it, if your boss sets the prices and you can request a special discount for special clients.
tominous 10y ago
Too true. I had a potential client who had already spent months and a bunch of money on external consultants regarding an intermittent identity management integration issue. They heard about me through word-of-mouth. I offered a fixed-price "no win, no fee" rate equal to about a week of my normal hourly rate. I thought it was a great deal given how much they'd already spent, plus it gave some certainty to them around something could have been very messy and open-ended. The client got hung up on, "What if Tom only takes an hour to solve it? What an expensive rate! What a rip-off!" They were more concerned with seeing me put in time and effort than actually getting results.
- busterarm 10y ago
  I've seen this so many times...
- dsacco 10y ago
  Forgive me if this comes across as patronizing, but I think you might avoid this in the future by doing the following: * Charge daily or weekly, not hourly. * Don't anchor your results to "free" (this includes not getting paid unless specific results happen). * If a customer has been repeatedly burned by other consultants and believes this problem could be solved in an hour, consider either 1) avoiding those customers or 2) working on an agreeable scope that precludes an absurd amount of time. I'm not saying that will fix all your problems, but if it helps, I've never encountered this issue with this formula.
  - tominous 10y ago
    That's good advice, but I don't think getting paid to produce a specific result is anchoring to "free". I guess it depends on how precise the scope is. If it sounds vague and up to the client's discretion, that they just want free work on spec, then run away. But if it's easy to define and measure, then it's a useful way to signal competence and avoid anchoring to a rate instead of the business need. Anyway, I'm happy to say that I avoided this customer (and others that care excessively about timesheets) and I have no regrets.
m1sta_ 10y ago
The blame also needs to fall on those who came before us. Everyone has been burnt to some degree by benefits being poorly forecast.
flukus 10y ago
A bit of business advice my sister got for her hair salon recently was to double the prices overnight. They were skeptical but were out of options so they gave it a go. Now they have less customers but they can give they ones they do have more attention and a better experience and the ones they lost were the troublesome customers anyway, so now they make more money from less customers. It was an interesting example of how it's best to not try and please everyone.

by gizmo 10y ago

chrisabrams 10y ago

I live in the same world as you. My business has a proven model for digital publishers that generally increases their yield 2-4x yet they refuse to spend the percentage needed to make the deal happen. Sometimes pride can be so large...spend 5k to make 50k? No thanks..lol

softawre 10y ago
> generally increases their yield 2-4x > spend 5k to make 50k I'm sure it has nothing to do with people making numbers up.
josho 10y ago
Have you had success overcoming that? I suspect a rational counter won't win over an irrational objection. But will an irrational plea (eg play to their ego) work?
inthewoods 10y ago
As someone who has operated in the world of digital advertising, this may have more to do with the fact that so much bullshit has been slung at both advertisers and publishers that there is an incredible amount of skepticism about advertising products.
deleted 10y ago
[deleted]
dsacco 10y ago
I understand that I don't have the same insight into your customers as you do, but to give a counterpoint, I charge significantly higher than $5k for my services and my customers don't receive any tangible improvement to their revenue as a result. I have not found that they are incredulous about my rates, let alone due to pride. Maybe there's something other than pride at play here, such as market dynamics or your product? Your customers' pride could be one reason why they refuse to spend that, but have you considered that this is an uncharitable perspective? Don't you think it could also be because they have honest reservations about your product or better alternatives for their business than that they are obstinately refusing to just hand over their money to make $50k? I think it's much more likely that the situation is actually quite nuanced with competing incentives, priorities and perspectives on either side. An information asymmetry is not the same thing as irrationality.
m1sta_ 10y ago
1. They don't believe the benefit will be realised in their circumstance. 2. There is both opportunity cost and hidden cost for trying your solution.
- dsacco 10y ago
  And to add, these are reasonable things for a consumer to believe that are not evidence of irrationality.

RandomInteger4 10y ago

Well, much of the customer doubt has to do with companies promising things they can't deliver. The phrase "If it's too good to be true, then it probably is [too good to be true]." exists for a reason.

mcphage 10y ago

> Because a discount to them signifies a moral victory, or that they're not being taken advantage of, or they simply want to believe they're great negotiators or something like that. I don't get it, but I have seen it often enough for it not to be unusual. Then why not raise your price to $99, and let them negotiate you down to... $35?

ithinkinstereo 10y ago
Because most customers don't like, or don't know how, to negotiate (yes even B2B customers where you would think this is the norm). So if the initial price is too high, they won't even bother to talk to you. The conversation literally dies.
- dsacco 10y ago
  Alternatively, they know how to negotiate, or don't mind it, but given the bigger picture it's not worth their time to go back and forth through the intro emails -> demo conference call -> pricing negotiation loop with every company that has high prices, and they are faced with an information asymmetry as to which ones are worth it.
  - angry_octet 10y ago
    When I think of how much of my life sales people have wasted on meetings and calls and blah blah it makes me want to cry. Just tell me the goddamn price. I'll tell you if it's too much.
  - vacri 10y ago
    Oh, yes. When exploring a new domain, the "call us for pricing" people get put at the end of the line. We're not an enterprise, and we're not going to waste our time with sales small-talk before we've even seen what the product can do.
harperlee 10y ago
If you can get such a big discount, that's a red flag: the price was bogus, I'm being conned (or, more charitably, a communication error might have been made). It's typical for enterprise purchase of software or IT services, for example, to either discard or put in question offers that are quite below their competitors in the RFP. But on the other hand, again, when dealing with enterprise purchases, the purchases department needs to demonstrate that they bring value to the table by lowering costs. So it is typical to make what you suggest and account for a commercial discount of 3-10%,depending on purchase size, etc. You need to fight for it, but you are safe to grant it in the end. This might happen even if you don't know about it, if your boss sets the prices and you can request a special discount for special clients.

tominous 10y ago

Too true. I had a potential client who had already spent months and a bunch of money on external consultants regarding an intermittent identity management integration issue. They heard about me through word-of-mouth. I offered a fixed-price "no win, no fee" rate equal to about a week of my normal hourly rate. I thought it was a great deal given how much they'd already spent, plus it gave some certainty to them around something could have been very messy and open-ended. The client got hung up on, "What if Tom only takes an hour to solve it? What an expensive rate! What a rip-off!" They were more concerned with seeing me put in time and effort than actually getting results.

busterarm 10y ago
I've seen this so many times...
dsacco 10y ago
Forgive me if this comes across as patronizing, but I think you might avoid this in the future by doing the following: * Charge daily or weekly, not hourly. * Don't anchor your results to "free" (this includes not getting paid unless specific results happen). * If a customer has been repeatedly burned by other consultants and believes this problem could be solved in an hour, consider either 1) avoiding those customers or 2) working on an agreeable scope that precludes an absurd amount of time. I'm not saying that will fix all your problems, but if it helps, I've never encountered this issue with this formula.
- tominous 10y ago
  That's good advice, but I don't think getting paid to produce a specific result is anchoring to "free". I guess it depends on how precise the scope is. If it sounds vague and up to the client's discretion, that they just want free work on spec, then run away. But if it's easy to define and measure, then it's a useful way to signal competence and avoid anchoring to a rate instead of the business need. Anyway, I'm happy to say that I avoided this customer (and others that care excessively about timesheets) and I have no regrets.

m1sta_ 10y ago

The blame also needs to fall on those who came before us. Everyone has been burnt to some degree by benefits being poorly forecast.

flukus 10y ago

A bit of business advice my sister got for her hair salon recently was to double the prices overnight. They were skeptical but were out of options so they gave it a go. Now they have less customers but they can give they ones they do have more attention and a better experience and the ones they lost were the troublesome customers anyway, so now they make more money from less customers. It was an interesting example of how it's best to not try and please everyone.