Pricing almost always comes up at the end of a demo. That’s just how these conversations naturally flow; opening with a little rapport (which yes, is still important, a topic for the future), an intelligent discovery, you walk someone through the platform and justify the need, then get to the investment. The problem is, if the only number in someone’s head by that point is a guess, you’re negotiating against whatever figure they made up on their own, and that number is rarely going to work in your favor.
This is where “anchoring” comes in. It’s one of the most useful things to do in a demo and it happens long before pricing ever gets mentioned…yet rarely done.
An anchor is simply a reference point you plant earlier in the conversation so that your actual price, when it finally comes up, feels small by comparison.
Let’s say I’m walking someone through a portion of the platform that builds out a analytical model of their best-fit potential clients, essentially telling them their most valuable markets to pursue. Instead of just showing the feature and moving on, I’ll make clear the fact that a consultant doing this manually will routinely charge over $50,000 and take at least a month to deliver something far less complete than what they’re looking at on the screen right now in real time. $50,000 + lost time is now the figure is sitting in the room.
Moving forward into time for another example: If the data surfaces 600 target individuals, I would state the fact that “each of these 600 tagets could make a purchase of over $10,000, with a worst case scenario converstion rate of 10%. (Which would be about $600,000, which the client has calculated for themself) Add another $600,000 to that number in the room.
When pricing comes up later and I say the investment is $16,000, it’s being compared to $650,000 plus alot of time and hassle. Suddenly it sounds like the deal it actually is.
The key is that the anchor has to be true, factually-based and it has to be relevant, not just a big, unrealistic number thrown out for effect. If a prospect can tell you’re inflating a comparison, you lose the credibility you spent the whole demo building.
Try to anchor against something concrete as you’re actually showing them in that moment. The real cost of doing it manually, the real cost of a consultant, a real cost of the staff hours it would take internally, and the lost new business of potentially $600k. That way the anchor takes care of two things: it justifies the price and it reinforces the value of the feature.
The other thing I’ve noticed is that anchoring works best when it’s dropped naturally, in the middle of showing value, not as a hard sell. In the consultant example, I’m not saying “this is worth $50,000” I’m saying “this is the kind of thing people pay consultants over $50,000 for,” and letting the prospect do the math themselves.
By the time we actually talk numbers, the price isn’t the shock. It’s the fact that it didn’t cost more.
Love these posts…Very informative, insightful and well written!