by Steven Pavent
What Should I Charge?
Suggestions on Getting the Most!

by Steve Pavent

   Of all the questions I hear “what should I charge” is one of the most frequent. Our industry allows many small independent, MLS’s (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. That’s why they call it “suggested” retail, because it’s only a suggestion or a guideline. So, try to get an answer in the form of a range? For instance I’ve seen the Nurit 2085 sold in a range of $400 to $1500. I’ve seen an ACH transaction sell for .10 cents each up to .50% plus .35 cents. I’ve seen credit card processing sold to a brand new merchant with no volume for dead cost, while I’ve seen a larger merchant written with a nice profit.
   Now I’m 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 it’s positive then keep going, if it’s 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 you’ve 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 friend’s dealership. We knew exactly what we wanted and just to keep them honest I’d 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 I’d 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 mom’s house and that my poor old mother shouldn’t 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 don’t think a day goes by that one doesn’t 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 you’ve 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 I’m going to say that again. Something is worth only as much or as little as that individual customer thinks it’s 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? Let’s take an ACH example. You go to a self-storage facility that has 200 units that recur bills on credit cards. They’re 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 customer’s 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 didn’t come knocking on his door and help him, you did. Now this is an extreme example, and I normally wouldn’t go quite that high but we’re not talking about what I think. We’re talking about what the customer thinks.
   To finish up DON’T inject your personal opinions and beliefs into the pricing game. Just because you know what things cost don’t feel that anything is too much. You don’t know what the situation was when the deal was made and you don’t 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 don’t 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 it’s 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” that’s the market. It’s capitalism. In it’s most basic form it’s 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 you’re not misrepresenting what the customer is going to get for their money, you are a good salesperson, not a crook.