At the moment, I’m two-thirds
of the way through a pricing roadshow for a large business-to-business company
that plays in the industrial market. One of the most frequently asked questions
by attendees in these workshops is “How
do we know we’re charging the right price?” The latest Richard Gere movie
offers an answer.
In Arbitrage, Richard Gere plays a businessman who is in the process
of selling his company. Eventually, the negotiation leads to a one-on-one
meeting with his suitor.
Over a meal, they agree a
price. Richard Gere takes the restaurant menu, writes down the agreed price and
both parties sign the document.
Gere gets up to leave and asks “What would you have paid?” The buyer
replies with a figure much higher than the one just agreed to. The buyer in
turn, asks Gere what price would he have accepted, to which he replies a price
figure much lower that that agreed.
This insight is of no use to
the now concluded, one-off transaction. But for Leading Companies selling
products and services day-in day-out, it is a question well worth asking.
Just like this scene in Arbitrage, companies have a tendency to
over-estimate customers price sensitivity, and under-estimate their willingness
to pay. But the question should be asked in every Win-Loss analysis that a
company completes: what would you have been prepared to pay?
Posts
1 comment:
100% same as in Pretty Woman with Richard Gere and Julia Roberts :) A favourite which I've also heard many times in pricing trainings and workshops :)
Post a Comment