The hidden psychology of pricing
Price is not just a number. It's an emotion.
Let me explain.
Imagine going out to dinner with your family and the bill comes to $75. You were expecting it to be lower, and now you're feeling grumpy. The price isn't really $75 - it's the emotion of grumpiness that the price evokes in you.
On the other hand, let's say your heater broke and your family was freezing at home. You call an HVAC guy, and he fixes it for $150. You're overjoyed and feel like it's a steal. The price isn't really $150 - it's the emotion of happiness that the price evokes in you.
The same applies to accounting firm services.
Let's say you're a new client and the monthly fee is $1,000. You think it's pricey and are afraid to share the price with others. The price isn't really $1,000 - it's the emotion of fear that the price evokes in you. Now imagine you have a client who always tries to haggle and you end up pricing a project at $3,000 when it's really worth $5,000. You feel like you're not being valued and your self-esteem takes a hit. The price isn't really $3,000 - it's the emotion of lower self-esteem that the price evokes in you.
But what if you do a project for a client and charge them $10,000? You feel proud and accomplished, like you're really delivering value. The price isn't really $10,000 - it's the emotion of good feelings that the price evokes in you.
When you understand how emotions and numbers drive pricing, you can improve the value you offer. You'll stop over-serving clients and start building true advisory relationships.
So next time you see a price tag, remember that it's not just a number - it's an emotion.
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About the Author:
Shannon Vincent has dedicated his entire career to working with accountants in various capacities. He has consulted with Top 100 firms to Sole Practitioners, helping them create sustainable and profitable businesses. A member of the California Society of CPAs, he received a Bachelor’s Degree in Economics with an emphasis in accounting from University of California, Santa Barbara, and now resides in the San Francisco Bay Area. Shannon is passionate about helping accountants and accounting firms move past typical barriers to improving pricing and profit.
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