Business, Life and Business Life. Real Talk.

Putting Your Price Where Your Customer’s Mouth Is

In the great debate over price transparency, who comes out on top?

Price Transparency

Should you include the pricing of your products and services on your website, or not?

Marcus Sheridan responds with a resounding “YES.” In fact, he claims that transparency, including price transparency, is the greatest sales technique of the information age.

He even went out of his way to create a list of reasons why you should discuss pricing on your website.

A Personal Experience with Transparency

The other day I personally encountered a situation where price transparency, or lack thereof, lost potential customers for some restaurants. Operative word here is potential. There’s no guarantee that these people would be customers.

After encountering the situation a light-bulb went off in my head. I instantly thought of Marcus’ article about price transparency and shot him an email.

But Marcus insisted that since it was my experience, that I should be the one to write about it. Touche!

These lost potential customers were my girlfriend and me.

Lack of Transparency Equals Lack of Customers

After running some errands, my girlfriend and I were walking in TriBeCa looking for a place to get some dinner. We were walking through an area that was packed with restaurants. One after the another, after the next.

We would stop by the window of each place to take a look at the menu. We wanted to quickly gauge the price range and the type of food the restaurant was serving.

On a side note: This is often what happens when there are too many choices. We just walk around in circles waiting for inspiration to hit so we can finally make a decision. The circle-walking is only exacerbated when we are hungry and can’t think straight. Oh the irony!

Some restaurants decided to make our decision easier for us by instantly disqualifying us as customers. There were so many options in the area that we instantly skipped any restaurant that didn’t display a menu in the window. It wasn’t worth the hassle to come in and ask for a menu when there was another restaurant right next door.

Eventually we even started skipping the restaurants where there were hostesses with menus standing outside. Again, it wasn’t worth the hassle, especially if the hostesses were already talking to someone else.

Price Transparency

The Consequences of Lack of Transparency

So what did these restaurants accomplish by not being instantly transparent with their menus and prices? They instantly lost us as potential customers.

If we were walking by and there was a menu in the window, we would be potential customers waiting to make a decision. But the restaurants that were lacking menus didn’t even get that potential.

If they displayed the menu and we didn’t like it what would have changed? Nothing! We would have moved on to the next place, but that’s what we did anyway.

They wouldn’t have converted on a potential customer. But isn’t it better to have something to potentially convert to begin with?

What Does that Mean for Your Site?

Now let’s take this lesson and apply it to the internet world.

Faced with a decision between two websites, which do you think a customer would chose: the one that is fully transparent and clearly provides information to the customer or the one that makes it a hassle for the customer to get the information they need to make a decision?

And again, what’s the worst that happens if the potential customer doesn’t like your prices? You go on about your day without converting a potential customer. You also save  yourself a lot of time talking to a customer that doesn’t want to pay your prices.

 

Your Two Cents:

Where do you stand on price transparency?
Have you ever made a decision based on whether the price was readily available or not?
Would you choose the business that readily provides information important to your decision or the one that makes you take extra steps to obtain it?

 

48 Responses to Putting Your Price Where Your Customer’s Mouth Is

  1. Peggy Baron says:

    Hi Eugene,

    I’m firmly in the transparency camp! When I see a sales page online that doesn’t show the price, I immediately get suspicious… they’re spammy internet marketers, they’re trying to hide something (is it really a forced continuity or something?), they’re really annoying to me, they want to be IM gurus when they grow up, or some similar thought.

    It’s true that many people don’t read sales pages word for word. They hit a few H2 tags, bolded print, and scroll for the price tag. I’m like that and if they make me work too hard, I’m outta there.

    Now, I’m sure in your restaurant example (loved it, btw) they weren’t trying to scam you, but they were not making themselves “scanner-friendly”.

    Peggy

    • Eugene says:

      You make an interesting point Peggy. That most people DON’T read sales copy word for word. This is very interesting given that there are people that claim that the long-form sales pages are the ones that convert better. Go figure!

      But I think you’re right. People just want to see a high level overview of products and services. At least at first. And if it sparks their interest, they’ll either buy right away or go back and read in more detail. And price just happens to be one of those big decision-maker points.

      I don’t think the restaurants were trying to rip us off by any means, just an oversight on their part. Maybe I should talk to them about it :).

  2. Hey Eugene,
    I am a big fan of transparency. It’s like those real estate listings where they have a picture of the home, and all of the details, yet they don’t display the price.

    • Eugene says:

      Yeah, I know the ones you’re talking about. They just don’t even seem legitimate because it seems like they’re hiding something. Price is pretty important when doing real estate research.

  3. Eugene, I think that price transparency depends largely on the results you want to generate or the situation.

    I’ll give you a perfect example.

    In my primary business opportunity, I have 2 kinds of potential customers.

    One kind is the customer who is only focused on receiving and obtaining the product.

    The other kind of customer is interested in the product and the business opportunity OR just the business opportunity, itself.

    I market these opportunities very differently and I am more transparent in the price point of one, right away, and not so much on the other.

    Can you guess which one and why?

    OK so you might have guessed it right but just to be clear, I am more Price transparent for my customer who is only interested in the product and not so much so for the customer who is also interested in the business opportunity.

    The reason is simply. Each customers has a different object in mind.

    The customer who is only interested in the product, will only want to consument the product and if they feel that they product is right for them it really won’t matter how much it costs. I can clearly display the price for them to see and use as one of their deciding factors.

    However, the customer who is interested in the business opportunity has a different objective in mind. He wants to consume the product (or not) and also start a business by selling the product.

    Well, I don’t wan this person to make a decision based on price point simply because I’ve learned that most “would be” entrepreneurs who judge business opportunities based in price are , more often than not, interested about becoming entrepreneurs and not serious about becoming entrepreneurs.

    If I am going to spend and devote my time to help someone succeed as an entrepreneur partner with them to help them build a successful business, then I want to know that they are in 110% percent.

    In the end, if the business opportunity meets their aligns with their values and has the potential to help them reach the destination of their life, it wont really matter what the price is.

    I rather have, 10 business partners who are in 110% percent about obtaining the results they desire than 100 business partners who are curious and not sure if entrepreneurship is the right thing for them.

    • Eugene says:

      Hmm, I kind of get what you’re saying. As far as selling the product goes price transparency is EXTREMELY important. That’s one of the main decision points in a purchase like that, so it needs to be made clear up front. Otherwise it just seems little illegitimate I think. It’s like when you go grocery shopping…the prices are right there in front of you, you don’t need to go to the cash register to figure out how much tomatoes cost.

      As far as the business opportunity, I guess I can see the difference. And if you do a good job convincing someone that the biz opp is worth it, then maybe price shouldn’t be discussed up front. But I think that it can still be an important piece of the puzzle. Some people just can’t afford certain opportunities, whether they are worth it or not. For instance, I would love to own an apartment building in NYC…but let’s face it, that’s just not going to happen (at least for a little while :)).

      I think being up front with the price right away may qualify people. And you know that those that are going for it are REALLY serious at that point. But it’s an interesting debate, and maybe one worthy of an experiment (I love experiments :)).

      • Stan Faryna says:

        I have had people come and ask me if I can replicate an online business that can compete with ebay, iTunes, etc. Every time, I told them unless they could play ball with an initial run of 20 million, there wasn’t anything else to talk about. Moral: it’s smart to acknowledge the elephant in the room.

        • Eugene says:

          If you could replicate a business like eBay or iTunes you probably wouldn’t be available for them to ask :)

          • Stan Faryna says:

            I agree that being able to replicate the success and market command of industry leaders would be as cool as having the power of a superhero.

            Replicating the service, usablity, infomation, and trust of an online leader is not rocket science, but it does require huge amounts of capital. [grin]

            One of my start ups created a killer app (that I envisioned) that was 10 times the app that Groovepoint could ever hope to be (Groovepoint sold to Microsoft for 100 million). However, I wasn’t willing to play ball with the same VCs that handled the Groovepoint sale. Because, of course, their terms for playing ball were not unacceptable.

      • I definitely agree with you that price transparency is important for the customer looking to just buy.

        However, I believe the parallels in your example may be a bit off, reason being – you wouldn’t invest in an apartment building you are going to live in and expect to make money off of it.

        I’ll give you a better example to think about.

        Think about the millions of student who invest in college every year.

        Most of them know what university they want to g to before they even know how much it costs. In other words, they already know that the level of education they will receive will meet the requirements or expectations of the job or career they hope to be able to pursue when they graduate.

        Do most care how much it cots?? no really.

        If they do or if they cant afford it the cost of the education, they cut back on spending, they get a job, they apply for scholarships, etc.

        The point I am trying to make is that if the opportunity is right for them and they truly believe that it can help them achieve the level of income they desire, money will not be the problem. If someone is motivated enough, they will do what it takes to find the money.

        It’s all about perspective.

        What do you think about this reasoning?

        • Eugene says:

          Well, you know how I feel about the whole college education :).

          The problem there is that from day one everyone drills into your head that you NEED to go to college and NEED to get a job to be successful. People are conditioned to want to go to college.

          People aren’t necessarily conditioned to want to be entrepreneurs or take control of their lives in the same manner.

          • Ha! And that is exactly my point!

            I am looking for people who need little to no conditioning that entrepreneurship is what they “need” ( I don’t like using that word too often) to be able to live the life they desire.

            I simply cannot spend my time re-conditioning their mindset that they should become entrepreneurs because if that was the case, I would likely spend all of my time doing that.

            Mental reconditioning and entrepreneurial education is what I strive to accomplish via my blog but ultimately the decision on “whether becoming an entrepreneur is right for them”, is their decision to make and not mine.

            My goal is to attract those that believe what I believe and not to convince people to believe what I believe.

            I know this can be debated in many ways and other may have a different opinion.

            The great thing about business is that it’s an Art and not a Science!

            Thanks for sharing your awesome insight with me too, Eugene!

  4. Stan Faryna says:

    Yes and No.

    What I love about your post is that you are thinking for yourself. And that’s awesome, Eugene.

    In my experience, there is no such thing as a one-size-fits-all marketing strategy. The exception being the free lunch. [grin] Otherwise, the customer profile determines much.

    Another thing is that the menu told you more than price. It told you what was being served. In fact, a lot of websites fail to make their offer and services obvious on page one. This is a keeper.

    Regarding price, there are classes of customers and scales of products and services that require different approaches. The more consulting and choices involved in a decision, for example, the less fixed prices are relevant.

    • Eugene says:

      The consulting and flexible services are a different story, completely agree. But even then I’ve seen sites explain that they can not display the price up front because the services are customizable thus the prices vary.

      Very good point about the menu telling more than just price. Obviously that factors into the decision of where you ultimately eat. And some businesses really do have a problem with describing what they offer. …Maybe my own too :)

  5. Eugene,

    Great point man! I think in this day and age it is essential to be as open and honest as possible, and pricing transparency is a huge part of that.

    I think many people are sick as hell of slick hucksters and they really desire open honesty.

    If anyone is not willing to lay out the costs and what value of a product has up front, why should people waste their time these days; since another offer is only a few mouseclicks away.

    • Eugene says:

      That’s the funny thing about the “slick hucksters” as you describe them. They get so prominent that they kill their own methods off. And in the end a solid, honest approach comes out on top.

      And yeah, there’s such an abundance of information available that there’s no reason to settle for anything you aren’t completely happy with.

  6. Jk Allen says:

    Hey Eugene,

    This is a hot topic! In the last two weeks I’ve read at least 4-5 post on it.

    And it’s important for an important reason. The legs of social media demands transparency. As a consumer, I want to see pricing so that I can associate what I see as value towards that product or service. Without understanding the price I can’t really associate a value to it.

    There are instances for custom services when providing a price would cause confusion. These instances are rare.

    I loved your take on this topic. Thanks for sharing your angle.

    PEACE

    • Eugene says:

      It’s funny how blogs work. Someone sparks a topic and everyone else runs with it. This post, for instance, was completely inspired by Marcus’ post(s).

      The custom services solutions should still make clear that prices can vary based on the package you go with. That makes it clear to the consumer that the options are customizable and they have some control over what they get – this can actually work in favor of the seller.

      I like your take on the value aspect of it. That’s what prices are supposed to signal – value. I’ve read countless articles about how increasing service prices actually increases profits not just because of the higher prices, but also because of the higher perceived value. It’s an interesting topic all on its own.

  7. One thing that I LOVED in Japan was the shops where you could go in, use a button press menu and have your food in about 5 minutes.

    There are these kinds of shops all over the place. There are about 50 choices in a lot of them but they all have pictures and pricing next to them. Also, there are plastic replicas of the dishes outside WITH the pricing and number (for the machine).

    You can literally walk up, find something delicious looking, walk in, pay and eat in about 15 minutes.

    I LOVED this. I wish more restaurants in the States would do this.

    I don’t want a place that is trying to be an end all. If I want pizza, I’m going to a pizza place; not an eatery with hundreds of items.

    Things need to be simple, ya know?

    If I know the price, right away, and what I’m getting, I’m probably going to shop with that business.

    • Eugene says:

      Simplicity really is the solution to so many problems. I just recently got back from Vegas where I finally got to try in’n’out burger. Simplest menu I’ve ever seen…but people go crazy for that stuff!

      This Japanese thing sounds really cool. I think I’ve seen it on TV before. I’m going to have to go over there to actually see it in person :).

  8. Another one hit right out of the park (it’s fantasy football season so the sports metaphors are going to be rehashed.. I apologize in advance *wink*)!

    This is something I’ve been working on doing more of myself. The thing is, I don’t do the hourly rate thing (it’s a trap, IMHO) and I charge project rates… but I don’t do much that is flat rate… So it’s tough.

    Does it mean it’s not doable? Not at all.

    Certainly, when you are more open about what you deliver, how you do it, and what you charge, it makes people more inclined to ask more important questions. Admittedly, I’ve been spoiled by having a strong referral network and friends that rock my socks!

    That said, it’s time to step things up.. Lately, a few folks in our blogosphere circles have asked for help with their Inbound Marketing/SEO and SoMe stuff, so I am working on making price lists and other selling tools to make it easier for those that wish to outsource the stuff that keeps them from focusing on their core business.

    This here is a good reminder for all of us. Let’s face it: either we’re scared to share our “trade secrets” or we just get caught up in other stuff.. but the urgency is there TODAY. I better get cracking!

    I heart you, Eugene. Just thought you should know, bro! =o]

    • Eugene says:

      Lol, I’m touched Yomar. And I’ll be coming to you for fantasy football advice.

      I feel like creating a price list is just the smart, and efficient, thing to do. That way, when someone inquires about pricing or options you already have something ready to point them towards.

      Like these restaurants, they obviously had a menu (I hope :)), they just needed to take it one stop further and display them openly.

  9. Hi Eugene – I’m a fan of price transparency. The main reason is that it saves me a lot of time talking with people that can’t afford or won’t pay my rates for my services. As they say, there are many fish in the sea.

    Interesting that you use your experience with restaurants as an example. What would be even better than having a menu to look at it a screen displaying images of the meal you could be having. If I was walking around with my wife hungry it would make my choice easier. Much easier if no one else is doing it.

    • Eugene says:

      Yep, price transparency is a win-win I think. Saves everyone time. So many costs come from imperfect information (there goes my accounting degree oozing out again :)), price transparency makes the information a little less imperfect.

      Now there’s an idea! They should stick a few iPads in the window showing how great the meals look in high def, and maybe a few pictures of people having a good time at dinner. I bet that would work.

  10. We’re doing something about this problem before the epidemic of hiding prices gets even worse. Please check out, like, and share this page.

    Ross Mitchell

    • Apparently the link to the Facebook Page “Price My Menu” is activated when you click on my name. So, please click on my name above to see the scope of the no-pricing problem, and how we are addressing it. Thanks!

      • Eugene says:

        I’ve noticed the drink price thing…it’s more and more prevalent. And of course you’re not going to inquire about how much it costs when you’re out with others. In fact, I cringe when I hear others asking how much something costs at the bar. But it does make decisions more difficult and unpleasant.

        • Eugene: That’s exactly what they’re counting on. I hope you’ll check out, “like” and “share” our Facebook page. You can read a number of posts already outlining the scope of the problem. I’ve begun taking action is Massachusetts, and will be proceeding in other states shortly. We’ll stop this, and come in line with the rest of the world, which doesn’t tolerate this kind of unfair practice.

          • Eugene says:

            As much as I dislike the practice, I dislike getting involved in private business affairs even more. It is your choice, as the customer, to decide where you will go out to eat and drink. There are still plenty of places that openly display prices, and if this practice continues, those are the places that will get a more loyal clientele. It’s really the business’ choice to decide how they want to operate, and we as customers can decide not to patron their establishment.

          • I understand and appreciate that position. However, the same logic applies to the sweat shop practices of the 19th and early 20th Centuries: Businesses offered jobs that required a certain number of hours of work, and employees were free to accept or reject the jobs. No one forced them to go. Sometimes, however, the market doesn’t do the job, and that’s when government (i.e., the collective “us”) steps in, as in the above example.

            Even you “cringe when [you] hear others asking how much something costs at the bar,” so it’s clear that no one wants to broach the topic on-site. And since no one is broaching the topic, the bars don’t know if they’re losing business because of the policy, and they’re not because no one talks about it. As more and more bars and restaurants adopt the practice, there won’t be sufficient “priced menu” choices to take your business elsewhere. Hence, the need to step in. Check out the page, and you’ll see how other countries deal with it. Even New York City has a rule (so far for Cabarets only) requiring a printed menu with the prices of food and drink to be given to a patron prior to taking the order.

            Sorry for the long response, but I think that here, as in the labor environment, the market cannot address the issue because of the social stigma attached to it.

            Thanks,
            Ross

  11. Shery Chive says:

    Thanks for the realizations you have given to us…I hope this will serve as a lesson to all the readers and bloggers…

  12. This is a good post showing the importance of letting your customers know the price up front. Even places like car dealerships, where negotiating is expected, have prices posted on the cars, and (hopefully) no one pays the price posted. It’s a way of letting the customer know “this is the highest price we will ask you to pay.” Otherwise, who would want to buy a car that doesn’t have a price on it? How would you know if you got a deal, or paid too much?

  13. Christopher McCarthy says:

    Eugene,

    Seems your encountered more of an issue with “placement” or “promotion” rather than price transparency.

    Not only was your decision based on price but also on the type of food being served and my guess also the atmosphere. “We wanted to quickly gauge the price range and the type of food the restaurant was serving.”

    The restaurants without easily accessible menus were making it difficult for you to buy, or at least become a potential customer. I think it had little to do with the prices they were charging for the meal and more to do with their possible strategy of luring you in and then keeping you there, or just plain stupidity.

    Most marketers believe their job is to make buying easier. By placing the menu where a prospect can preview the product, a restaurant would be both promoting their fine foods and putting the fare on the “eye-level” shelf in the supermarket isle.

    Of course you can argue “placement” is where you put the restaurant and a “promotion” is “Tuesday’s draft beer for $1,” however, our marketing expertise tells us elements of marketing are important at both the macro and micro level.

    Seems like the restaurants in Tribeca could use your help.

    Chris

    • Eugene says:

      Hi Christopher,

      Thanks for stopping by and leaving an awesome comment.

      “Most marketers believe their job is to make buying easier. By placing the menu where a prospect can preview the product, a restaurant would be both promoting their fine foods and putting the fare on the “eye-level” shelf in the supermarket isle.” …I wish I would have came up with that line for this post :).

      I guess it was more of a placement/promotion issue because they weren’t necessarily “hiding” the prices, all I had to do was go in and look at a menu. But they weren’t making it instantly available to people trying to make a quick decision. Either way, sticking a menu in the window is a quick and simple way to probably get a few more customers through the door.

  14. I’m at a cross-roads on this one. I’m all for transparency and openly disclosing prices. Yet, that’s not what we do on our company blog. Instead, we have prospects call in. And so far, that seems to work out just fine. If I had to guess at why that’s so, I would say it’s because we’re an established company – going on 6 strong years.

    • Eugene says:

      Hi Ricardo, thanks for stopping by.

      As far as making prices readily available, is that one of the first questions that potential customers ask when they call in? I’m just wondering if it would be more efficient to put pricing information on your website. Then if the price isn’t a barrier, only qualified customers will be making phone calls – saving time for both your customer service and the potential customer.

  15. Lenny says:

    Hi Eugene…I was really impressed with the post you have for us…Thanks to you…

  16. Don’t really agree with Marcus Sheridan. And this just by placing myself in the shoes of the buyer. First thing i do when i look at a product is search for the price. If i don’t like the price, i leave. That’s a lost customer.
    But what if you make the potential client love the product first, and then show him the price? Sound much better to me.

    • Eugene says:

      But how much convincing are you going to have to do to make that person love your product so much that an unacceptable price isn’t going to be a factor anymore? Price is usually one of the most important factors in a decision, and usually one of the first (if not THE first) questions people ask. So why not give it to them up front?

  17. Anjieline says:

    The things you have in this post are all helpful and actually, useful too…Thank you for being so generous…

  18. Id definitely go for price transparency. When I see ads that interests me, I usually click on it but I get really suspicious when it says that I should shoot an email to this contact person for a discussion. I feel like Itll definitely be a rip off. haha There are also ads that would say that the price is just this and when you become really really interested in getting it, theyd just tell you that you need to pay extra to get this, this, this. They were made to mislead.

    • Eugene says:

      Just saw a presentation like this yesterday. The set up was ONLY $130 the first year! Then he snuck in the fact that there’s a $20/month management fee involved too. Not sure how many people caught it.

  19. This must be a very interesting topic Eugene. If you ask me, I really want price transparency with the same reason as yours. If we apply it on our website, think of a potential customer who have stumbled on an online store and couldn’t see the prices of the stuffs that are being sold! You might lose that customer for sure as he won’t spend a time contacting the owner of the site.

    • Eugene says:

      Absolutely, and if they see the price but aren’t prepared to pay it…you save yourself time talking to someone who won’t turn out to be a customer anyway.

  20. Crissy says:

    Hi…Thanks for the great post and this gives me a lot of information about business too…Anyway, sometimes we have to place the price of the items in the internet too so that people who are interested to buy will have an idea about how cheap or expensive it is…