How high up is up?

"So," says a potential buyer of your product, "How much do you charge?"

No doubt you've been asked that. Often we are quite sure of the price we want but just saying it causes palpitations because we really want the sale.

Here's a tip on how to make this less painful and more profitable.

Remember that prices are just numbers and with numbers there is no such thing as a big number. No such thing as "priced too high." It's a matter of establishing value. If you value high, and the customer highly values you or the product, then a high price is just the right price.

One way to get there from here is to use "the big number." Here's an example:
A singer sang her heart out every day in the subways of New York. Not a very glamorous place, but, she had a spot the subway system reserved for her, people came to listen and they left paper money, not coins, in her tip box. She was making pretty darn good money and the experience helped her in many ways. But that's beside the point. The point begins when a rather dapper fellow who'd been listening through a number of arias introduced himself. He was the personal executive secretary for a wealthy gentleman out of Boca Raton, Florida. One of his many duties on this trip to New York for his boss was to find a wonderful singer who could organize and produce a production of La Boheme at his home in Florida.

The singer said she'd staged operas and would have no trouble. Then he asked, "How much do you charge?" Fortunately this singer had learned some of the things I teach on negotiating and made sure she 1) established her value 2)asked lots of questions about what would be expected, 3)didn't say a price but instead, 4)stated, "Operas are not cheap to stage. You know the Metropolitan's budget for an opera begins at $4 million." She stopped and let there be a poignant pause.

"Oh," he said, "I can't spend nearly that much..."

Of course not and the singer had no intention of getting that much. But, what she did was determine how high "high up" is. Everyone has a price in mind when they're negotiating to buy something. Your job is to break that ceiling and establish a new ceiling. She had taken a ceiling of probably $20,000 or so and raised it to $4 million. NO... it doesn't mean the person thinks the price is going to be in that neighborhood, but, in his mind the ceiling was $4 million and everything he was now going to pay would be less than that. Now you're discussing value on your terms.

Someone asked my brother how much it would cost to buy a corporate jet. I know the person who asked had in mind that $3 million would be a high price, but could accept a price of $2. My brother began by saying a new jet, fully loaded could exceed $10 million. "Ouch. Wow. Whew. That's a lot of money," said my friend. But in saying so his ceiling of $3 million was broken. When my brother showed the guy a plane for $8 million he still thought it was too much for him, but, understood the ceiling. When my brother showed him a very good jet, that because of the bad economy the company was selling for less than $2 million, the friend thought it was a steal. In a matter of minutes the price he considered unreasonable had become reasonable by using a high ceiling.

If you figure a 50-50 split is reasonable and desirable, begin with an example of someone who did well with a 90-10 split (you get the 90 and they get the 10). Chances are the person will be very thrilled with a 50-50 split when all is said and done.

It's a matter of understanding the human mind. Wal-Mart understands it perfectly. They advertise "cutting prices" and show a number like $9.57 and slash the price to $5.01. Wow. What a slash. Never mind that the object has changed. The perception of price has so we, as the consumers, believe we're getting a value. And you probably are. But now you're leaving the store, with the product, and feeling very good about it because the high ceiling price was smashed.

Thought for the day: Because all prices are based upon PERCEIVED value, the first thing you must do is establish your value. The second thing is show more value. The last thing to discuss is price... and only have value has been established.