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Good Better Best Pricing That Wins More Deals · Modularity Podcast

• 0:00
  When you hand a prospective client a proposal with just one single price tag on it,
• 0:04
  what are you actually asking them to do?
• 0:07
  Well, you are asking them if they want to hire you or not, right?
• 0:10
  Exactly!
• 0:11
  It is a pure yes or no decision.
• 0:14
  A binary choice.
• 0:15
  You are forcing them to ask, is this company too expensive,
• 0:20
  or are they worth it?
• 0:21
  But if you give them three structured choices instead, the entire psychological
• 0:26
  question shifts completely.
• 0:28
  Right, it is no longer whether we work together, it becomes...
• 0:33
  um, which way do we work together?
• 0:35
  Spot on.
• 0:36
  That is the core of what pricing strategist Rafi Mohammed and research from places
• 0:42
  like HubiFi call the Good Better Best pricing model.
• 0:46
  When you give someone a basic option, a solid middle option,
• 0:50
  and a top tier option, you trigger what psychologists call the Goldilocks Principle.
• 0:55
  Ah, the Goldilocks Principle.
• 0:57
  Not too cold, not too hot, just right.
• 1:00
  People naturally gravitate toward that middle option, don't they?
• 1:04
  They do!
• 1:05
  Most buyers instinctively avoid the extremes.
• 1:08
  They do not want the bare bones budget package because they worry it lacks key
• 1:13
  features, but they also hesitate to jump straight to the most expensive one.
• 1:17
  So that middle...
• 1:19
  that Better tier...
• 1:21
  becomes the logical sweet spot.
• 1:22
  Wait, so...
• 1:23
  if everyone buys the middle option anyway, why even bother putting the premium Best
• 1:29
  tier on the page?
• 1:30
  Ah!
• 1:31
  Because that premium tier acts as a psychological price anchor.
• 1:35
  Even if only ten or fifteen percent of your clients buy the top package,
• 1:39
  its sheer existence makes the middle tier look like an incredible value by
• 1:43
  comparison.
• 1:45
  Man, I have fallen for that so many times as a buyer.
• 1:49
  I remember when I was getting estimates for some work on my home back in Erie.
• 1:53
  One contractor handed me a napkin with one single number written on it.
• 1:58
  Eight thousand dollars.
• 1:59
  Take it or leave it.
• 2:00
  And how did that make you feel?
• 2:02
  Anxious!
• 2:03
  I had no idea if eight grand was fair or if he was padding the bill.
• 2:07
  But then another vendor came in with three clear options.
• 2:10
  Option one was basic repairs for five thousand.
• 2:13
  Option two was full replacement for eight thousand.
• 2:17
  Option three was premium materials with an extended ten year warranty for twelve
• 2:22
  thousand.
• 2:23
  Suddenly, spending eight thousand felt totally reasonable because I could see
• 2:26
  exactly what extra value I was getting for the money.
• 2:29
  That is the magic of it, Dave.
• 2:31
  It moves you away from haggling over cost and puts the focus squarely on outcomes.
• 2:37
  In revenue management research, like Armin Kakas wrote about recently,
• 2:42
  shifting from single offer quotes to structured tiers can raise your average deal
• 2:46
  size by ten to twenty percent without any high pressure sales tactics at all.
• 2:51
  It gives the customer a sense of control.
• 2:53
  They are choosing their own path rather than feeling backed into a corner.
• 2:57
  Now, setting this up is not just about throwing three random numbers on a page.
• 3:02
  You have to build proper fence attributes between your tiers.
• 3:06
  Fence attributes?
• 3:07
  What do you mean by a fence?
• 3:09
  A fence attribute is a specific feature or service level that lives exclusively in a
• 3:14
  higher tier to draw a clear line between packages.
• 3:17
  The biggest mistake businesses make when trying this is making their entry level
• 3:21
  Good tier too good.
• 3:23
  Wait, how can an option be too good?
• 3:25
  Shouldn't you want to give people great value?
• 3:27
  You want to solve their core problem, yes.
• 3:30
  But if your basic Good tier gives away all the high value features,
• 3:36
  you cannibalize your middle tier!
• 3:38
  Nobody will upgrade to Better if Good already solves ninety percent of their desire
• 3:42
  for half the price.
• 3:43
  Right, right.
• 3:44
  So Good solves the baseline need, Better adds efficiency or automation for the
• 3:49
  majority of the market, and Best is reserved for high touch support,
• 3:54
  speed, or complete customization.
• 3:56
  Exactly.
• 3:57
  Dedicated account managers, same day response times, custom integrations...
• 4:02
  those belong in Best.
• 4:03
  Okay, so if someone listening wants to apply this to their business this week,
• 4:07
  where should they actually start?
• 4:09
  I have two quick wins for you.
• 4:11
  Step one: go back and audit your last ten lost proposals.
• 4:17
  Look at how many of those deals fell through simply because the prospect balked at a
• 4:22
  single flat price tag.
• 4:24
  I bet a lot of people will find that those lost prospects were not saying no to the
• 4:28
  company, they were just saying no to that one specific price point.
• 4:32
  Precisely.
• 4:33
  And step two: pick just one core service line you offer today and sketch out a
• 4:39
  prototype Good, Better, Best menu for it.
• 4:42
  Define what goes into each tier and make sure the price gap between them reflects
• 4:46
  real jumps in value.
• 4:48
  At the end of the day, pricing architecture is not just some clever marketing trick.
• 4:52
  It is a fundamental leadership tool.
• 4:55
  It forces you to get clear on what your value actually is.
• 4:58
  It really is.
• 4:59
  When you build structured choices, you build customer trust,
• 5:04
  and you protect your profit margins for the long haul.
• 5:06
  If you want help building a stronger digital strategy or structuring your business
• 5:11
  offerings, go check out modularity.us.
• 5:14
  Good stuff.
• 5:15
  Catch you next time.