Tuesday, February 28, 2012

Seller Beware—When You're Being Shopped for a Price

I got an email last week asking how much I would charge to mix 5 songs for a band's EP. I wrote back asking whether I'd be recording the original tracks, or just mixing tracks that someone else has already recorded for the band. Both, came the reply, and how much would it cost?

I wrote back to ask about the band, number of players, what instruments, etc., so that I could price out the job using the appropriate recording facility, and asking for a couple of possible dates when the band wanted to start recording. This is an important question, because in sales, there's a strong relationship between price, availability and delivery. You can sometimes get a better deal on studio time that would otherwise remain unbooked.

At this point, the answers started to get vague. What was clear, however, was that I was being shopped for a price. In other words, the prospect (not yet a client) had no intention of coming to me for the job, but was only trying to get a handle on the price of a job that most likely he was bidding on himself.

This happens to everyone from time to time, and is one of the reasons why it's not a great idea just to shoot out a price in response to an inquiry. Every job is different in some way, and a big part of the sales process is asking questions to qualify the buyer.

Asking questions not only keeps valuable business intelligence—your pricing policies— out of the hands of your competition, it also saves you from wasting time with tire kickers who would otherwise take up a lot of your time, but never end up buying anything.

The 80-20 rule seems to apply here: 80% of your business comes from 20% of your prospects. This is further refined so that in turn, 80% of your income comes from 20% of them. In other words, 4% (20% of 20%) of your potential clients are responsible for about two-thirds (80% of 80%) of your business.

Asking questions is your best line of defense here, and a genuine prospect will appreciate that you're drilling down in order to provide the best possible service.

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