Who should name the first price?

Lesson Details:

Video Transcription: In this video I want to address a false common wisdom that you should not be the first to name a price in a in a negotiation this video is brought to you by Appy Pie’s Academy because naming a price has some advantages and we're gonna go over them it is of it is admittedly very complicated to name the right price because every potential person you talk to has the has a different ideal price point so it's a science and an art to name the exact right price and I'll walk you through how to get as close as possible to it so even though it seems bad like maybe the fear is that you price you know you shoot yourself in the foot that's at what everyone's afraid of one name in the first price they're afraid of you know giving themselves too little okay so the thing is that if you name the first price it gives you an advantage because you get to lead the conversation and you get to draw the parameters of the conversation the parameters are the limit ranges of the price points so if you name a high price that's the start of the negotiation and you have a lot of room to come down that's your advantage essentially you get you get to draw your own lines in the sand first and you get to create psychological barriers that only challenge with that is even though you want to price high you in because you want to leave room to come down which you don't want to do is price too high so sticker shock as they call it when people see a big price maybe you know on a price that the sticker price that that's what it's called you want to create sticker shock but you don't want to create excessive sticker shock if you leave the give the person is too dejected after seeing your price and it's way out of their range then they just gonna most likely they're just gonna give up they're gonna wow this is really out of my range they're gonna look for something else they might not even tell you that that just might be their psychological process so you won't have a way to fix that so this is where the science and art comes from is that before naming your price you need to get a sense for who you're talking to, as much as possible you can ask them some qualifying questions so you need to have as much conversation as possible without giving the price first okay because when you for example have a conversation let's say you're selling something for $5,000 which is a difficult thing for an individual to afford but a reasonable thing for a company to afford so the first thing you want to figure out is are they just starting or are they maybe in their third or fourth year of doing business they can those two kinds of personas can afford very very different things the person starting will probably have a very hard time making that decision the person with an with an established business that has revenue and profit has room in their budget for stuff so you don't have to play play the price dance as much with them so sometimes they'll tell you their price range sometimes they'll tell you what they like and sometimes they'll be completely oblivious they're like well I'm just starting to look so all of these are excused for you these are signs in the road for how right so as they're talking you're in your mind calculating what price you should name to them okay what's the if they wants you to name a price okay fine and everything they tell you you sort of adjust your price accordingly little lower a little higher depending on if they say they're they have money if you can or if they're then then you kind of raise keep the price high if you see that okay this person is broke and they're really price conscious then you bring the price a little lower as long as you are able to have the price flexibility of course and then you're a star you're able to establish ranges and also you're gonna be able to know if this sounds like a sophisticated potential customer then they'll know to negotiate but some unsophisticated potential customers they don't even know that they can negotiate in different points they'll just think oh I can or can't afford the price I'm told but you need them to get into the negotiation so that they can come to a price where you don't lose the deal so if they're not sophisticated you want to hint to them that hey you know just for you I can bring the price down or different phrases like that just to give them a sense that the price is not set in stone because every once in a while people really think that the price is set in stone where you're ready to negotiate but they're just not and so that they leave because you might have priced them out so you want to be careful of that so the takeaway is you get to dictate the terms.

If you set the price first but just don't be wild with it and don't be random with it be smart with it by listening to what the person tells you about themselves and anything that they tell you like where they're from you know because some countries like $1 but that same dollar in a different country might be very expensive right so you know different prices are you know work for different countries so every possible detail they tell you you have to if you can you have to adjust and the price that you name them so the business over time you'll get better at that and of course knowing your competition also helps you to know how to name the price because probably you're not the first company they've talked to so they probably have heard some prices so these are all the parameters that like I said it's a science and an art and you kind of have to really have an educated guess to get as close as possible to the price that will really work or that person and if they really have a low ball range that they can only afford that then you really have to have secondary options for them so you say well the thing that you want you can't have for this price but here are other options for you so you don't lose that sale and you still get something from that client so this is the strategy for naming your own price and leaving the conversation of the sales conversation and negotiation.