Total Click Solutions

Tag: pricing strategy

  • Who Names the Price First Wins

    Who Names the Price First Wins

    Whoever names a number first in a B2B negotiation tends to win more of it, and that’s not a sales myth. People hang on to the first figure they hear and use it as a reference point for everything that follows. That reference point is the anchor, and if you don’t set it, your buyer will.

    Why buyers try to anchor first

    Professional procurement teams understand this perfectly well. A common opener is to ask for your “best price” in the first or second meeting, before there’s been any real conversation about scope or value. The logic is simple: get the seller to name their floor, then anchor 15-30% below it. Once you’ve disclosed your floor, the negotiation starts there, not from your ideal outcome.

    Sellers who give away pricing before completing discovery close deals significantly below their initial ask. The gap compounds across every deal in a pipeline. It’s not a rounding error.

    Setting the anchor without inflating it

    The instinct when you hear “anchor high” is to quote a wild opening number and negotiate down, but that approach tends to backfire. Opening with your value-based reference price is the right move, not an artificially inflated one, because a buyer who feels they’re being played will stop engaging with your logic and start digging in on principle.

    What does work is framing your number in context. Rather than stating a flat price, you reference what comparable clients invest, which is both honest and conveniently higher than the specific number you’re about to propose for this buyer’s scope. If you’re selling a SaaS solution at £50,000 a year, you might note that clients in a similar sector typically invest between £60,000 and £80,000 for a complete solution, then propose £55,000 based on the scope in front of you. Your actual target suddenly feels like a considered concession rather than an opening gambit.

    Word choice matters too. Saying you “invest around” a figure rather than “it costs” implies return and suggests some flexibility, without committing to a specific discount. Small distinctions, but they shape how a number lands.

    Anchor the value before you anchor the price

    Price anchoring works best when it isn’t really about the price, at least not initially. Drop a big number too early and it sounds inflated rather than strategic. The sequence matters: value first, then the number that reflects it.

    A useful discipline is to quantify the cost of the problem you’re solving before you ever mention what you charge. By the time your price appears, it’s being evaluated against the cost of inaction rather than against a vague sense of what software “should” cost. That’s a fundamentally different comparison, and a considerably more favourable one.

    When the buyer anchors low anyway

    Even with good preparation, buyers will sometimes open with a number that seems designed to make you wince: a competitive quote from a supplier you’ve never heard of, or a budget figure that’s been through several rounds of internal trimming before it reached you. The temptation is to immediately justify your price, which is usually the wrong move.

    A calmer response is to question the anchor rather than accept or reject it outright. Asking open-ended questions about why they’re suggesting that number does two things: it buys you time to think, and it often reveals that the buyer’s position is softer than it seemed. Budget figures have a funny habit of becoming more flexible once someone explains how the problem is costing them more than the solution.

    Price anchoring isn’t a single moment in a negotiation. It’s a posture you maintain from discovery onwards, consistently tying your number back to the value that justifies it, and never letting someone else’s opening figure become the centre of gravity for the conversation.

  • You’re Probably Charging Too Little (And Ignoring It)

    Most businesses that know they’re undercharging carry on regardless. The price was set years ago, it hasn’t caused a walkout, and raising it feels like a confrontation nobody is ready for. So it quietly stays where it is, whilst inflation, rising supplier costs, and the extra hour you now spend on every client eat into what was never a fat margin to begin with.

    The clearest signs you need to raise your prices

    You’re winning nearly every piece of work you quote for. That sounds encouraging until you realise what it probably means: you’re the cheapest option, and price-sensitive clients are gravitating to you for exactly that reason, which isn’t the client base most businesses actually want to build. Charging too little compresses margins and can signal lower quality, and if you’re winning nearly every deal on price, you’re leaving money on the table.

    Your costs have risen but your prices haven’t moved. Supplier invoices, software subscriptions, energy bills, payroll: it’s easy to focus on the cost of goods whilst forgetting that overhead creeps up too. If those costs have risen over two or three years and your prices haven’t, you’re effectively cutting your own pay in slow motion.

    Your best clients keep telling you that you don’t charge enough. That one should be embarrassing, and it usually is. It means the people who understand the value of what you do have already done the maths on your behalf.

    How to raise your prices without drama

    Small, regular increases are far easier for clients to accept than a large jump every five years, which is what happens when businesses avoid the conversation for too long and then have to scramble to catch up. At a minimum, prices should be revisited annually. Even a 1% increase can lift net profit by around 12% on average, which is not a figure to scroll past.

    Give clients 30 to 60 days’ notice, explain the reasoning plainly, and resist the urge to apologise at length. A straightforward note saying that your prices are changing, when, and by how much is genuinely sufficient for most established relationships. Four hedging paragraphs don’t make it easier; they just make it weirder.

    If you have a mixed client base, it’s worth thinking about which services are most underpriced and starting there, rather than adjusting everything at once and giving people a reason to shop around.

    The psychology of what low prices actually signal

    There’s a widespread assumption that cheaper always means more appealing, but in many service categories, consultancy, design, legal, health, coaching, a suspiciously low price reads as a warning sign rather than a bargain. The market has absorbed enough dodgy-cheap experiences to be cautious. Set prices too low, and clients may quietly question whether you know what you’re doing.

    Pricing is a message. And if the message you’re sending is “I’m not entirely sure I’m worth more than this,” your clients will take you at your word.

    The businesses that wait longest to raise their prices tend to be the ones most anxious about losing clients, which is understandable. But the clients most likely to leave over a modest increase are usually the ones who take the most time, pay the latest, and push back the hardest on everything else. Losing them, whilst uncomfortable, is often quietly useful.

    Frequently Asked Questions

    How much should I raise my prices by?

    There’s no universal figure, but a small annual increase in line with your rising costs is far better than a large, infrequent jump. Review your actual costs first, then look at what comparable businesses charge. Even a 5-10% increase, applied carefully to your most underpriced services, can meaningfully improve margins without triggering significant pushback from established clients.

    What if I lose customers when I raise my prices?

    Some businesses have built a base of clients willing to pay a premium; others attract bargain hunters who’d switch to save a small amount. A modest, well-communicated increase rarely loses you the former group, and losing the latter often improves your margins anyway.

    Is there a good time of year to raise prices?

    Timing does matter. Business clients are often more receptive at the start of a calendar or financial year, and raising prices just before a busy season can work well. Avoid doing it immediately after a service problem or during a period when a client is already under pressure.