I couldn't handle the emotional issues of pricing - I like my customers so I made my rates low.
One of my employees saw the problem and started to handle the pricing - he quotes stupid high rates that leave a lot of wiggle room to delight our customers by going above what was expected.
Both we and the customer are happier.
TLDR: Perhaps let someone else price for you because they're not emotionally attached to the number.
Funny enough my worst experience with selling stuff on Craigslist is the items I've tried to give away for free. I had a nightstand once, it had some damage and I didn't think it was worth anything so I put it on Craigslist for free.
First response I got asked if I had the second nightstand, because it was a pair and it doesn't make sense to have just one nightstand. I did not. They weren't happy about it.
Second response asked if I could deliver it because it wouldn't fit in their car. It's free. No, I'm not delivering it.
Third response complained about the damage and said they would take it if I sanded it and refinished it. I offered to cut the price by 50% (from $0 to $0) to account for the damage, which they were not amused by.
Finally I just put the nightstand on the sidewalk and someone came by and took it away.
I think part of it is what others have said, cheapskates are just worse people to deal with in general. But also I think you run into the issue of people get really suspicious when they're getting a too-good-to-be-true deal and are on the lookout for any sign they might be getting scammed. If they're paying premium, they're willing to let down their guard and wait for the results to prove themselves.
No one wants to drive to your apartment only to find out it's a bait-and-switch or (even worse), that they're going to get mugged.
I put "free" things at $20 for this reason. It's one bill, if someone is really cheap, they can negotiate it down to $5 if they want.
The free crowd is the worst, though. I put a tv up, got multiple responses in the first hour, and took the first one. More than one other complained (very rudely complained) that I should have removed the posting. It was only up for 2 hours total.
> The worst customers I've seen, everywhere I've worked, are the ones being under charged.
Totally agree, saw it over and over again. Worst customers are those that get something for free. They are also the most illoyal (not really surprising).
I made the following observations across multiple B2B startups:
- Paying a high price triggered a behavior à la "we're paying dearly for it, so we better use it properly and frequently", which meant that stickiness (# of seats, hours of daily use) increased.
- Down the line, the customers who paid the highest price were the most loyal (in terms of churn & avg. contract period signed during renewal -- often signing for 5 years with a small discount when minimum was 1 year).
- Customers paying high prices had less support inquiries.
- Customers paying high prices were overall friendlier on the phone (don't have hard evidence for that).
Question -- in which direction is the causality working? E.g., when we assume that less support inquiries means that the users are more knowledgeable:
- Do high prices overall attract more knowledgeable people?
- OR are knowledgeable people better in estimating the true value of a product for their business, and thus are willing to pay a higher price?
- OR do knowledgeable people rather work in businesses that have higher margins, and thus are able to afford a higher priced product?
It seems for me that charging premium pricing had overall pretty positive effects on all businesses I've been working in.
We charge for the project fixed cost and hours. Anything over that by the hour. So if the customer wants to keep making changes, they are free to do so - for a price.
I am not sure it's because they are charged more, but because they are willing to pay more to have it done properly. In my experience, those coming to you looking for a minimum price to get something done, will always be the ones who end up screaming at you and making demands.
I'd completely agree with you, except that some of the customers were actually the same people. As soon as we upped the ongoing costs on a couple of the accounts, both clients changed their behavour and the relationship became a whole lot better for both sides. It's a truly bizarre thing to watch.
I am still (scientifically) curious what the explanation for this is. Perhaps paying more indeed does something in their minds, or perhaps it does something in yours and you deliver slightly more or go the extra mile. Or some of both.
This is a great idea. I haven't done it myself, but a friend who is an artist got an agent for exactly this reason. You always undervalue the work you do because to you it's easier than to everyone else.
Worked in the Park Service for four years. Worst days for most visitor conflicts was always, always, the free entrance days. Everyone dreaded having to work on one because everyone was super expecting.
One of my employees saw the problem and started to handle the pricing - he quotes stupid high rates that leave a lot of wiggle room to delight our customers by going above what was expected.
Both we and the customer are happier.
TLDR: Perhaps let someone else price for you because they're not emotionally attached to the number.