This morning’s announcement of the Apple iPad (and the stock market reaction) got me thinking about the whole idea about prices. Prices, like, why don’t you just tell us the price?

Here’s a stock chart that demonstrates why knowing the price of an item is so valuable.

At 1:00 pm, Steve Jobs starts talking about this wildly anticipated new product. By 1:15, it becomes clear to investors that the specs alone are not compelling for a device that is rumored to have an MSRP of between $700 and $1,000. No one knows, so the stock price drops.

But look what happens after Steve finally reveals the price of the iPad about 45 minutes later. The value of AAPL stock rises $9 billion (!) as analysts and investors recalibrate the earnings potential of this new device based on a MSRP that is well below what was feared anticipated.

The importance of price as a context for a purchase decision is so powerful and yet so stubbornly ignored by the savviest marketers.

Case in point: I’m playing ‘tag’ with a demented sales rep from an on-line web information service. (I won’t mention the name because, a) it isn’t important, and b) he may be reading this.

The basic storyline: while I actually inquired about the company’s services several weeks ago, I am now reluctant to spend time talking on the phone with this guy.

So, why, you may ask, did I bother inquiring in the first place? And why dodge his calls?

Glad you asked!

The product itself is (was) interesting – an XML feed that would allow my client’s web-site to host a “find-it-local” service provider. There are four basic configurations based on the list you want. Not much to decide upfront. The website is self explanatory, except there is NO pricing information.

In my experience, no pricing info = too expensive. It is the basis of the phrase “…if you have to ask (the price than you can’t afford it.)”

This following sounds a bit twisted, but I think prospects might impugn the motivations of a company that doesn’t advertise its prices. If I were transcribing customer thought bubbles, they’d look like this:

If we tell you the price then you’d quickly see our value proposition is weak and you won’t even make an inquiry to buy.
Therefore, we won’t show you the price and we’ll force you call or write just to find out.
And, just to maintain our advantage, we won’t answer your questions even when YOU call us. We’re just too darn busy to drop everything and speak to YOU.
But we assume you’re never too busy to talk to US, so, to maintain our power position, we will call YOU when we feel like it. And only then will we answer your questions. This is better for us since we will (hopefully) catch you off guard…and not prepare all your questions.

[hint: that’s why we don’t talk to you when YOU call US!] If you’re too busy to talk (or you try to screen us with CallerID), don’t worry. We’ll call YOU back when it’s convenient for US.
And we’ll relentlessly hound you until we close you.
When we finally talk, we’ll quickly work down OUR list to determine just how much you have to spend. (Don’t worry, we won’t waste too much time trying to understand what YOU need…). Not surprisingly, your budget will seem inadequate.
I’m convinced potential customers like me are not alone in jumping to these “Costanza-like” conclusions. Rationally or not, I think customers choose not to even bother calling when they don’t see pricing information. They will assume the worst (it costs too much; the process is too much of a hassle, yadda, yadda, yadda) and just move on.

To me an outbound phone call (without warning or permission) in response to a web inquiry is an old-school failure. Today when marketing generates an inquiry, it is typically well informed and further down the conversion tunnel. People can do so much to educate themselves these days that every prospect is (or should be) much easier to close.

Sales calls are expensive. If you absolutely need a rep, why shouldn’t you do everything in your power to make sure that that rep is closing virtually 100% of his or her calls. Why can’t you answer a prospects basic questions (i.e., ‘how much does it cost’?) first without subjecting me to the ABC call process?

This probably seems harsh (and perhaps a bit paranoid) but I think I’m onto something here. Return phone calls from quasi-intelligent, native-English speaking reps cost money and delay the close. It also signals that you have to pay a rep, which (in my mind), inflates the price.

So, instead of $50 per month for simple, self-configurable XML feed, I’m assuming the cost is going to be $1,000 to $2,000 per month for a “solution.” And 95% of the cost of the “solution” is to pay for the sales commissions for this guy to call me back because the price wasn’t on the website.

I’m no interested in wasting my time with the rep., and I certainly don’t need the hassle of answering “profile” questions, simply because I want to know ‘how much?’.

Old School vs. New Age

Today I think anyone in a marketing function should apply some common sense and use the website to signal at least some information about price. If you are selling highly customized services like, ahem, marketing consulting, then I can understand a certain reluctance to post standard, commoditized prices.

My rate, by the way, is $225 per hour. If you think that is a good value, please call me. If you think it is too expensive, there’s no reason for either of us to call.

Selling a standardized product or service (like a user-configurable XML feed for my website) is different. If you provide a product or service that can be standardized or self-configured by the customer, then it should be. If not, ask why not.

You could get change the game and rid yourself (and us) of the wasteful, old-school “always-be-closing” salesguys, endless unwanted phone calls, needless “profiling” and high commissions.

Think about it from a financial viewpoint: salespeople should be about leverage. A sales & marketing program should add margin by reducing incremental sales expense. Sales people that sit in judgement and withhold vital information from customers probably cost more (in lost sales and heft commissions) then they’ll ever add in value.

Yes, old school sales reps might filter *out* undesirable business (from people like me who are cheap), but that business is “undesirable” only because of the high-cost sales process. Let your website inform on everything (including price) and let customers qualify themselves by drilling deeper into conversion tunnels before they’re ready to buy. Then speak with them only if they can’t configure and buy themselves (with a credit card).

Inquiries will thusly be more valuable (easier to close), which will shorten sales cycles and improve marketing ROI. Less commissions = less overhead = lower prices and (potentially) higher volumes or at least better margins. Plus a nifty entry barrier since your old school competitors can’t match your prices with their high-cost sales process!