Posting prices can help you beat the competition, but it could also hurt business.
When it comes to pricing, there are a lot of questions entrepreneurs must ask. What are my expenses? What's my target profit margin? What is my competition charging? These are important and valid questions, but sometimes they overshadow an even simpler, but still important, consideration:
Should I post my pricing on my website?
While it seems like a basic question, the answer isn't always clear. For some companies, posting pricing could be a great way to gain a competitive edge or better inform potential customers, but for others it could harm business. How can you know whether posting your pricing online will be good for your business? Business.com is here to help you figure it out.
It could depend on your line of work
One way to decide whether you should post pricing or not is to simply consider what it is your business offers. If you sell physical merchandise, you'll likely want to list your pricing, for example. On the other hand, if you offer copywriting services, you might want to have a conversation with prospective clients before offering a quote.
"If your product or service is anything related to a consumer level good, with consistent prices, you should post them to your website," said David Van Veen, director of digital strategy at GOAT. "However, if there are many variables, such as when working with B2B clients or solutions providers, pricing acts against you. Instead, you want to ask for budget of a user when they convert in to a lead."
For consumer facing products, it's generally a good idea to post your pricing. The benefits of a B2C, product-based company posting prices include:
- Demonstrates voluntary transparency
- Boosts competitive advantage when prices are lower
- Fewer consumer inquiries before purchases
When it comes to service-based companies or those selling large, customizable enterprise products, posting prices could be counter-productive. Posting pricing is difficult for a few reasons:
- Exact costs are fluid and hard to pin down.
- Higher prices could be justified, but scare off potential clients.
- Set pricing undermines a consultative relationship.
- Restricts companies from flexibility in tailoring services.
"Customers have little patience these days when browsing websites. They scan quickly and decide whether to keep reading within the first five seconds," Jimmy Chan, a wedding photographer for Pixelicious, said. "This means businesses need to lay out the benefits and how we address the pain points immediately. If the business competes strong on pricing, then make this clear to retain the customer's attention."
The nature of your business might lend itself toward posting pricing, or it might suggest that a case-by-case negotiation is a better tactic. It's also wise to consider the standard practices of your industry. If your close competitors are posting their pricing, maybe you should as well. If they don't, that's an indicator that you might not have to.
It could hinge on brand identity
Whether you post pricing or not could also be a matter of brand identity. Have you ever gone to a very high-end products website? Even if much of their industry posts their pricing, brands that want to cultivate prestige and build a brand on high quality regardless of price might not list their pricing at all. This lends a sense of exclusivity and class that could appeal to a wealthier clientele.
"Businesses that serve affluent customers should avoid posting prices primarily because the affluent demographic is driven by something other than price – namely prestige, exclusivity and quality," said Isha Edwards, a brand market strategist at EPiC Measures. "Their purchase habits warrant negotiation as a value-added option. Posting a price 'cheapens' both brand perception and value, and is a bit of an insult to affluent shoppers."
For more common consumer goods, transparency and affordability are often brand goals. In this case, it's wise to post pricing, especially if you're able to undercut your competition. Not only is this a good market move, but it reinforces your brand as an affordable source of essential products.
"Consumers trust transparent companies more, with the belief that they have nothing to hide," Alisa LeSueur, founder of healthcare pricing website DocCost.com. "Consumers don't want the runaround when it comes to getting prices."
Knowing who you are and who you serve is essential to branding strategies, and whether you post your pricing or not can contribute to that strategy. Understand if your customers expect pricing or not, and decide what image it gives off to withhold pricing information. Do you appear shady, or prestigious? Will it be difficult for customers to obtain pricing information, or is that unlikely to be their primary concern? These are critical questions to consider.
There is no clear answer
Even considering the guidelines above, there is no right or wrong answer for any company. While many of your competitors might not post their pricing, maybe it would benefit you to do so. If you think withholding pricing information is leaving potential conversions on the table, test a site that displays pricing and see if your conversion rate improves.
Here are a few more ways to determine if you should post your pricing, if you're still on the fence:
- Conduct A/B testing and see which site leads to a higher conversion rate.
- Survey your target audience to find out what is their preference.
- Monitor your competition and decide whether posting would give you a competitive advantage or undermine your position.
- Consider how many customer inquiries you are receiving about pricing.
Deciding which course to take is a personal decision that should be based on your brand identity, position in the market, price point, and the wants of your target audience. Like all business decisions, your choice should ultimately rest on what gives you the best strategic advantage to generate more leads and then convert them into customers.