I can’t even count how many times I’ve heard phases like this over the course of my career:
“We’ve never sold anything at list price.”
“Customers always ask for discounts anyway.”
“All customers care about is their price.”
And while these statements might be factually accurate, they are often made as a way of rationalizing that a company’s list prices are largely irrelevant and unworthy of much attention or critical thought.
But as a case study in the Journal makes abundantly clear, we shouldn’t be so quick to dismiss the importance of our list prices. In Suffering from a Costly Case of Sticker Shock, an indifferent and cavalier attitude toward its list prices cost the company in question untold millions in sales, over a span of many years.
List prices are a signal. Whether intentional or not, our list prices…and our behaviors relative to those list prices…communicate things to our prospects and customers.
For example, when our list prices are not even in the competitive ballpark, customers and prospects can write us off as a viable option before even giving us a shot at their business. Unrealistic list prices can also send a message that we’re out-of-touch with the market and clueless about the business environment we’re operating in.
Of course, some companies try to justify setting overblown list prices as a means of communicating greater value or superior performance. But then they go ahead and offer massive discounts on actual deals in order to be competitive.
So in effect, their list prices are saying, “We’re more valuable,” while their discounting behavior is adding, “But we don’t even believe that and we’re just playing games.”
The point is that your list prices do actually matter. In fact, anything and everything you put into the marketplace matters and warrants a thoughtful approach. Because, everything you put into the marketplace communicates something about your company…something good…or something bad.
And you need to be deliberate if you want to avoid the latter.
Suffering from a Costly Case of Sticker Shock
In B2B environments where discounting is habitual, it's easy to think that your list prices don't really matter all that much. But before you conclude that list prices are inconsequential in your business, consider this case of a B2B reseller who just couldn't see what they were missing.