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.