Of all the questions I hear what should I charge is one of the most
frequent. Our industry allows many small independent, MLSs (merchant
level salespeople) to offer a variety of different products or services
to merchants. Most of the time we are given these products and
services with a certain cost structure and allowed to mark them up to
earn a profit. Ahhhhhhh
I like the sound of the word profit.
Well I have some good news and some bad news. The good news is that
wanting to know the industry retail pricing is a very good question.
The bad news is no one else can or should tell you exactly what to
charge for any given product or service. Thats why they call it
suggested retail, because its only a suggestion or a guideline. So,
try to get an answer in the form of a range? For instance Ive seen
the Nurit 2085 sold in a range of $400 to $1500. Ive seen an ACH
transaction sell for .10 cents each up to .50% plus .35 cents. Ive
seen credit card processing sold to a brand new merchant with no volume
for dead cost, while Ive seen a larger merchant written with a nice
profit.
Now Im sure your interested in knowing when to charge the low and when
to charge the high. Well there is no concrete answer for that however,
I will give you list that will help you determine and then hopefully
get the most you can.
First, you should AWAYS start with your highest price because you can
always come down. I recommend doing it in a way that allows you to
back peddle if you need be. For example how much is your terminal?
Sir our standard pricing for the terminal I showed you is $899.00
then, watch for the response. If its positive then keep going, if
its negative tell them about your special rebate.
Next, how confident and savvy is the sales representative. Do you
believe in your product and company? Do you believe in the solution
youve just presented to the merchant? When thinking about this I
recall a car buying experience. I was purchasing a car for my mother
and we were at a friends dealership. We knew exactly what we wanted
and just to keep them honest Id called a few other dealers to get a
quote, telling them I was going to buy a car that day. So my friend
was about $200 higher than one of the quotes Id received from a dealer
up the road and I told him so. He responded around here profit is not
a dirty word and we need to make a little money so we can take such
good care of our customers! He reminded me that he was the closest
dealer to my moms house and that my poor old mother shouldnt have to
drive and extra 8 miles to have maintenance and serviced done on her
car. He was right, the very reason we were getting a new car is that
I wanted my mom to have a car that was a little bigger and had more
safety features! You know what they say about those senior citizen
drivers in Florida. I dont think a day goes by that one doesnt drive
through a storefront mistaking the accelerator for the brake. But this
sales manager held his ground and I bought the car. So ask a lot of
questions, find out what the customer wants/needs and then set you
pricing based on what youve done for the customer.
Last and most important, determine what exactly you are doing for that
customer and determine what it is worth to them. Yes Im going to say
that again. Something is worth only as much or as little as that
individual customer thinks its worth. When you walked through the
door what was the customers biggest problem? Did you solve it? If you
did maybe you could raise their rate? Lets take an ACH example. You
go to a self-storage facility that has 200 units that recur bills on
credit cards. Theyre paying 2.30% for a MOTO transaction with a .30
cent transaction fee. They also have charge-back risk for 6 months.
You show them how they can bill the customers checking account with
less risk for 1% and .20 cents. Now you just saved this merchant 1.30%
and .10 cents on 200, $75 transactions a month and they love you.
Forget about the fact that if they went to their bank they could get a
.25 cent flat fee. The bank didnt come knocking on his door and help
him, you did. Now this is an extreme example, and I normally wouldnt
go quite that high but were not talking about what I think. Were
talking about what the customer thinks.
To finish up DONT inject your personal opinions and beliefs into the
pricing game. Just because you know what things cost dont feel that
anything is too much. You dont know what the situation was when the
deal was made and you dont know what the sales rep. did for the
customer? I hate it when I hear an MLS say oh they leased that person
a terminal for $59.00 per month and ripped them off. Well maybe it
was an attractive sales rep. and the owner was more than willing to pay
a premium just to get a personal visit now and then. The point is dont
impose your own decision making criteria, use your customers. Plus we
all purchase and use stuff everyday that if we knew what it cost might
feel ripped off. If you bought a shirt at Nordstroms for $75 and the
same shirt is a Marshalls for $25 did you get ripped off? If you
buy an item at the supermarket and the next day its on sale for _
price, did you get ripped off? Do you go storming back with your
half gallon of milk and call them thieves? I say no thats the
market. Its capitalism. In its most basic form its survival of the
fittest, natural selection! Normally those who make smart,
well-informed decisions through research and good negotiation do
better. Everyone has a hot button. Find your customers and push it
today. As long as youre not misrepresenting what the customer is
going to get for their money, you are a good salesperson, not a crook.
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