For many entrepreneurs, price is a sensitive and difficult topic. From selecting a price point and worrying if it’s too high or too low, price is always a tricky issue. Then there is the issue of communicating your price. In other words telling customers what you think your product is worth.
In the past, this conversation took place when a customer walked into your store but with the advent of the Internet and the introduction of e-commerce, this conversation has also moved to the online space as well. This means that small business owners now carry the additional responsibility of deciding whether or not to list the price of their product or service upfront., This decision might be an easy or difficult one to make depending on what industry you find yourself.
Not too long ago, I overheard two women discussing, excitedly, about a new product that had just been introduced to the market. Lady A had not heard about the product in question and so Lady B logged into Instagram to show her. On getting to the vendor’s page they saw the product with I guess ‘email, call or text for price’ written underneath and one of the ladies immediately ruled that vendor out saying, ‘that’s how you will call and they will tell you it’s 50K.”
Listening to them, I thought to myself, what if the product is actually far less than they were thinking and what an opportunity the vendor had lost! Their conversation got me thinking about why small business owners often ‘hide’ their prices. After some research and discussions with other business owners I found the following to be some of the reasons why they are reluctant to display their prices.
1. To leave wiggle room for negotiation: Some business owners and vendors assert that listing the prices of your products can discourage prospective customers. This is especially true of products that have high competition and can be gotten from the market where prices are generally known to be cheaper. There is also the fact that allowing customers to negotiate gives them more power over the transaction and leads them to eventually buy.
2. To help eliminate unserious shoppers: Some business owners also claim that hiding your prices and requiring interested persons to contact the seller eliminates window shoppers and other vendors who are not really willing to buy but just looking for a way to compare prices.
3. To have an edge over the competition: This is closely connected to negotiation as hiding your prices will enable you give a price cut or match the price of your competition.
4. Industry practice: As an unwritten rule, prices of products may not be displayed and as such you follow the trend.
Indeed the factors above are compelling reasons why you may decide not to list your prices. The question however is, does a business have anything to lose by not listing its prices? The answer is yes, in some cases. And so here are some reasons why you should have your prices listed:
1. Consumers these days are constantly bombarded with a wide array of choices have a limited amount of time to make their buying decisions. Whether in store or online, they want to transact business in the shortest time possible. Having to email, call or text places a demand for extra effort, which they may not be willing to expend.
2. Price is a strong determining factor in the purchase decision. Not having your price listed can eliminate you from the possible options. In addition, not listing your price gives the impression that your prices are very high which may not be true thereby costing you potential customers. Indeed there are some customers that might see an item with a seemingly high price tag and even if they do not have the money at the time, will budget and plan to make that purchase in the near future.
3. Hiding your prices because of the competition may not also be a great idea. For one, being in the same industry, you most likely sell at about the same prices and there is a minimum price beneath which you will not sell anyway. And no matter how much you want to keep it secret there is a high chance they already know your prices. Rather than competing on the basis of price, you can gain an edge over your competitors by focusing on other elements such as packaging or better still service delivery.
Having your price listed also saves you time and energy as you can be fairly certain that anyone who contacts you has made up their minds and is ready and willing to buy therefore helping you automatically weed out time wasters.
Although these suggestions might not be applicable to some service based businesses as each client has a unique set of needs and requirements, it will definitely favor retail based businesses to list their prices.
As a business owner, do you have your prices listed or not? As a customer, does the price listing affect your decision to buy?
Please share your thoughts in the comments below.
Photo Credit: Dreamstime | Sam74100