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A festive lesson in pricing structures

By Taskmaster
Tuesday, 11 December 2012

taskmasterYou can tell we’re in the weeks leading up to Christmas by the number of tin-rattlers out on the streets. With the spirit of the festive season in the air, Old Taskmaster is a sucker for a good cause.

 

For example, last weekend, the Salvation Army brass band was out in force at the local shops. When a grandmotherly figure in full Salvation Army regalia walked past, rattling a tin for the Christmas Appeal, I was more than happy to donate.

 

A short distance down the road, a different kind of Army veteran was rattling the tin for Legacy. Judging by the silver streaks in his otherwise ginger hair and beard, I’d guess this gentleman served in Saigon, although I could be mistaken. Nonetheless, I again gave to a worthy cause.

 

Then earlier today, filled with the Christmas spirit, I came across a couple of sandwich boards covered with stock images of cute baby animals. As per routine, Old Taskmaster reached for the wallet, only to be accosted by a “chugger” (a professional "charity mugger") in a green t-shirt.

 

“Oh no, we don’t want a donation upfront, we want your voice,” the chugger exclaims abrasively.

 

I suggest to this chugger that they leave me some literature to peruse. Assuming this particular band of animal lovers isn’t really a front for some extremist group, I’d be more than happy to have my secretary write to the local MP about why the world needs more cute bottle-fed animals.

 

“Well, we don’t actually want your voice. What we want is a small donation of $19.95 per month every month for the next 12 months! It’s completely tax deductable” was the automaton-like response of the chugger.

 

In the end, the chugger succeeded in talking their cause out of a donation. It’s not that endangered animals are any less worthy a cause than homeless kids at Christmas or the families of war veterans who made the ultimate sacrifice. In fact, Old Taskmaster is a big supporter of dangerous and delicious animals.

 

Rather, the “business model” of this chugger was wrong. As a consumer, I’d rather buy self-righteous gratification with an upfront donation rather than with 12 easy repayments.

 

Now take a look at your pricing structures. Are there situations where entrenched business or pricing structures are leading to your potential customers walking away?

 

If you’re experiencing a slowdown in the lead-up to Christmas, it might be time to review your pricing structure for the new year. More importantly, make sure you and your sales staff make a note of potential customers who ask about pricing or payment options you don’t currently offer.

 

Get it done – today!

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Hi Taskmaster, this is an interesting one. I must admit I signed up for a monthly donation to oxfam years ago. I can't remember how long ago and I can't bring myself to ring up and say 'I don't want to support you anymore' (Well, I do still support them but if I wanted out I can see the barrier in having to do that). Lock in is a great business model and the lifetime value of that one sign up is worth an absolute fortune compared to catching me in the street each year. Recurring revenue as a business model is amazing as long as you give value and don't put people off side (as they did with you). They only need 1 hit in a day or week to absolutely out earn the competition. I would love to see the inside stats for some of these orgs!
Thanks for your words of wisdom this year. Have a great Christmas.
Dan8 , December 12, 2012
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