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1.18.2010

Undercharging the customer

Whenever we're deciding what to charge for our new product or service, it's easier to get the price wrong than right. When we dwell on how much work we've put into our innovative offering, we're inclined to charge more than the market will bear. We try to amortize our initial investment on too short a schedule. We flip-flop from a slow development process to a "get rich quick" scheme. Our minds have fallen into an "I - it" mode that dehumanizes the paying customer while we do the wrong thing correctly. We let our greed lead us away from our better judgement. We assume those who can afford our high price are our preferred clientele and those who cannot are unworthy.

When we're cautious about going into excessive greed, we fall for under-charging the customer. Our minds are functioning in an "I - Thou" mode that humanizes the customer with our empathy, compassion and perceptions of common interests. We feel their pain from previous rip-offs and anticipate their apprehensions about getting their money's worth from this added expense.

There are several ways to avoid this pitfall without going to the opposite extreme of overcharging the customer:

  1. Developing a range of alternatives that offer different amounts of value at different prices so the customer can choose for themselves.
  2. Helping the customer compare your prices to competitors with opposing considerations like "getting what you pay for" vs. "not getting more when you pay more".
  3. Explaining the amount of work and expense that goes into the offering which deserves a fair price in return -- that customers can decide for themselves.
  4. Factoring in the customers' "ability to pay" with a sliding scale of prices adjusted for different economic conditions.


In each case, we avoid setting a firm price and hoping we get it right on our own. We create a transparent process which customers find useful for trusting us more than before. Rather than prices becoming a sticking point or source of misunderstanding, the process of finding a price together deepens the basis for future collaborations.

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