How to Price a Quotation

How to Price a Quotation

How to Price a quotation, is not a blog about pricing strategy or how to arrive at a price, it’s about how to present your price to win the business and avoid negotiation. However, since we’re on the subject of pricing, I’ll say one thing about pricing strategy. You should bear in mind;

PRICE = Materials + Overhead + Labour + Profit

Also bear in mind;

• Challenges & opportunities
• Competition
• Vary profit to position yourself in the market or build market share
• Is it possible to get your material at a cheaper price (negotiate)
• Marketing;
  • Customer acquisition cost
  • Look for free marketing opportunities

A Maxim

– The more niche your market offering the bigger you can make your profit

This blog, ‘How to Price a Quotation’ is how to present your price in order to elicit a decision quicker and so as to avoid negotiating over price, or failing that to minimise the discount.

 

As Is Now

Let’s take as an example, something in the region of 10,000, the currency doesn’t matter. This is about the psychology of price presentation. Let’s say the price you would normally present was €10,000.00 a nice round figure.

Most of us present this as a round 10,000 but there’s a better way!

 

 

To Be

1. Be Precise

In other words don’t say €10,000, say 9,873.37

2. Blocks of Four

Think in terms of ‘blocks of four

3. Colour

 

Why? – Ever notice that credit cards are now in blogs of four digits 1234 3200 9030 7686. Well that’s because research shows that the average person can process numbers in blocks of four

How? – Due to basic maths education, when presented in a column, the average person reads numbers from right to left, . The origin is long division so a price of 9,873.37 will be read as

As such the negotiation has a higher probability of been centred around the 73.37 not the 8973.37

Colour – Most of us put our prices in black or worse again red. Put your price in GREEN; green is a calming colour but more importantly, green means GO or proceed. So now your price should read

€8973.37 NOT €10,000

So now you know How to Price a Quotation – Q.E.D.

Original work on this topic by Peter Turley of Sales Talk