This is how to get past 'You're too
expensive' on a sales call.
I'm Alex Berman from Experiment27. I got
this as a comment on one of the last
Youtube videos you saw. How do you
justify your price if you reveal it on
the first call? You guys might know. I
recommend always being very upfront
about your pricing even as an agency and
trying to get a budget on that very
first call. This guy pushed back. He said:
-How do you justify that if you reveal it
on the first call? There might be
people who think, there might be many
people who do it cheaper, but compromise
on the quality. And then he says: -Without
showing the value first we can't give
away a price because we'll be out of the
league completely. Now, that is a
misconception. And I'm going to show you
why his logic is flawed.
Not that he's seeing it wrong,
but he just hasn't practiced enough and
I'll show you exactly how to get through
this guy's misconception in this video so
that you'll never be laughed
out of the room for being expensive
again, after watching this video. That is
my goal.
So let's accomplish it together. Fair
price.
Means that you just have to justify
the quality delivered.
What this means is: a broken app even if
it costs $400 is
expensive because you wasted $400.
A working app that
drives real business value and grows a
company could be worth millions of
dollars even if it's a similar type
of app. And that is the justification
that you need to go through during these
sales calls and in a few minutes
I'll give you the 3 reasons or 3
examples that you'll be able to use on
those specific calls in order to get
that quality justification. In order to
get that piece correct. So on a sales
call this is normally how it's going to
flow. You're going to say, you're gonna
give the budget. 'You know, okay this app
is going to be $500,000.' Wait a second.
They might say something, they may not.
Then you say: 'Is that what you had in
mind?' That will kind of open the
floor for them to give feedback and then
either they'll say: 'Yeah that sounds
about right.' Or they'll say
this: 'I was thinking something
more around 300k.' He said 500k,
they want 300k. And then you can ask
them about their mindset. 'Interesting,
where'd you get that number from?' And
basically what you want to try to get
from that question is how are they
thinking about pricing. Have they
been in the app development business for
20 years, app development business for
5, 6 years as long as it's been
around. And building software so they know
that price.
Are they BSing you? Why are they
thinking that the price is a lot lower
than it is?
Are they talking to their competitors
or to your competitors? What is it?
If your competitors prices are way
too low and they say they're talking
to their competitors you have to tell
them why you think that is. So here are
the 3 common reasons that you can
use to justify your price. 1 is a
higher cost upfront means lower risk.
That goes back to one of the very first
things we talked about in this video. You
can spend twenty thousand dollars on an
app from a very cheap developer and you
can be eight months in and have a pile
of crap that doesn't work or something
that doesn't match the business
value that you're trying to deliver with
your application. Even because this
chief developer just built what the
customer asked for instead of what the
customer needed. So higher cost upfront
means lower risk. If you're paying, you
know, 150 an hour vs. 50 an hour
you're going to get developers that have
built similar apps to yours in the past.
You're going to get developers that
understand build vs buy. What parts
of this application are we using from third
parties vs. what are we building
ourselves and what does that actually
mean. And all of that goes into higher
cost. The next one is they've never
developed an app before so they don't know
what it costs.
This is the second reason a customer
might be pushing back on price. They
don't know what an application should go
for. In this case, you have to explain
to them the complexity of an app. So let's
say they want an Instagram clone and
they come to you like: 'Hey, I want to
build an Instagram clone and I've got
five thousand dollars for it.'
Well, you can sit them down and actually
make it more complicated then they're
seeing it. -So okay, for an instagram clone
is that iOS or Android? And then they'll
probably say both if they're new to this.
-Ok, so that's a custom native development
on iOS and it's custom development on
Android plus you're gonna need an API so
that both can pull the same data set
that's going to be linked to a database
that we're going to have to custom build
and that's ui/ux designs on both of them
to make sure that they both look native
to their operating systems because you can't
really use, you can use similar designs
but not the exact same designs on iOS
and Android so that's extra design work there
plus we want to do some research upfront
with users so that's going to increase
the value of the app as well. I'm doing
research on users is going to help make
sure that all the features we build are
features that people actually need in
the application. So now you've taken a
five thousand dollar app and you've
grown it. You've added all of
these layers that they're gonna
need for a successful business anyway so
it's not like you're bullshitting or
you're upselling them on nothing. That's
stuff that they actually need and it
also increases the value. If you
sell, if I sold an Instagram clone like that.
That is a 25 to 50 or even a
100 thousand dollar app vs. a
5 thousand dollar app that the
customer is presenting. So if they don't
know what an app costs you can help them
see it by expanding and showing them a
little bit more of what's going to go
into the application itself. And then the
third one is they might just have too
many features. They're coming to
you with a full flesh out app when
really they just want an MVP. One of my
friends was asking me for an intro to a
developer recently and I asked him what
the app was and he showed me this
application that had artificial
intelligence capabilities, it had
all of these features. It was like a 350
thousand dollar app maybe even more some
of the stuff might not even have been
buildable. And in that case he went to my
dev friend and my developer almost
laughed him of the room. Gave him this high price,
my friend ended up pissed off because he
couldn't get a price for the app he wanted.
So in that case what we did is we
sat down with him and what I did at Dom&Tom
and what you guys should do with your
clients if they're coming in crazy.
Ask them about why they picked each
feature. Pick the feature that
you know in your heart is going to cost
the most money. For us it was the AI
platform. And ask them why they have that
in there. What's the business value of
that feature? And they'll come back they'll
say: 'Oh yeah, the AI needs to be there
because XYZ like these customers need it.
I've talked to like 10 customers they
all want to build this app, this specific
feature.' And then you can say: 'Okay, if
these 10 customers want to build it and
they're willing to pay then you should
be able to to pay for development on it.
To build the app.' And then if
he's, or if he says something like: 'Oh,
yeah that's just something I think would
be cool. I think it's going to be very
necessary for the business, but haven't
really tested it.' Then you can tell them
to go out and talk to customers and
test it or out you can dig into other
features and try to figure out what's
higher priority. You can do this in
like 15-20 minutes. It's better to do it
over like a week or two in a discovery
session, but quickly you'll find if you
dig in that not every feature in the app
is necessary. And from this let's say you
pitched that the entire app is 500,000
and he only has 300,000. You can pretty
quickly figure out what features need to
be pulled out of an application to
reduce the price by two hundred thousand
dollars. Sometimes it's eliminating
android and only building on iOS.
Sometimes it's removing an artificial
intelligence feature or image
recognition or something crazy that
clients like to throw up.
So reducing the feature set. If you need
marketing support for your digital agency
check out Experiment27.com! Like this
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