A tiered pricing strategy may just be the key to closing more deals and increasing your average job size.
Good, Better, Best pricing – also known as tiered pricing – is a pretty straightforward concept.
Essentially, product or service options are presented to consumers at gradually increased prices over each tier, with each option adding a new value or feature to it to account for the increase in price. For example, a window replacement company may offer 3 types of glass: an inexpensive glass designed for energy-efficiency (the ‘good’ option), a mid-priced glass designed for higher energy-efficiency (the ‘better’ option), and an expensive glass option designed for maximum energy-efficiency (the ‘best’ option).
Outside of the home improvement industry, Good, Better, Best (G.B.B) pricing isn’t difficult to find. We see it when picking what level of coverage we want in an auto-policy, when we choose between unleaded, plus, and premium fuel options, and even when we decide between a small, medium, or large Coke at the movie theatre. MarketSharp, an industry-specific CRM system built for home improvement pros, also just came out with a new quoting tool that allows you to leverage G.B.B quoting. And considering that G.B.B is so widely used, it’s safe to say that it’s an effective pricing strategy – but why? Let’s consider how it works:
Why the Good, Better, Best Approach is So Effective
1. Targets a Wider Audience
With G.B.B pricing, you can create and market options that cater to different customer needs and thus expand your sales opportunities. If you handle bathroom updates, for example, you could use a standard bathtub installation as your ‘good’ option and then include additional non-slip or safety features to create ‘better’ and ‘best’ options. In this scenario, your ‘better’ and ‘best’ options would be more suited towards a different customer audience, like the elderly, disabled, or those with young children.
2. Doesn’t Pose an Ultimatum
Offering one single price to your customers can pose a risk, especially when it’s out of their price range. When presented with one price, your customer really only has two options: take it or leave it – and who really likes an ultimatum? By leveraging G.B.B pricing, you can steer away from saying “buy this service at this price or don’t buy it at all” and instead say “if our ‘better’ option exceeds your budget, consider our ‘good’ option.” Ultimately, being more accommodating with your pricing can show prospective customers that you actually care about their business and increase your chances of making a sale, even if it’s not as large as you would have liked.
3. Minimizes the Need to Compare Pricing
When you quote one price, it’s normal for your customer to compare it with other companies to ensure that they’re getting a good value. By leveraging G.B.B pricing, you’re naturally offering your customer a handful of comparison points, replacing their need to search elsewhere to compare prices.
4. Eliminates the Search for a ‘Perfect’ Price
If you’re only offering one price, you’re likely to get caught up in how to define that price perfectly. You’ve got to consider the demand for the product/service, what your customers are willing to pay, and what your competitors are pricing similar products/services at. And regardless of what price you end up picking, that single price won’t account for consumers that are WILLING to pay more. G.B.B pricing, on the other hand, is designed to entice your customers to up their spending.
How MarketSharp Can Help
MarketSharp, an industry-specific CRM system built for contractors, remodelers, and other home improvement pros, comes with a suite of business management tools – including an effective new quoting feature. This tool not only makes it easy for you to build multiple quotes to offer Good, Better, Best pricing, but also enables you to turn your quotes into professional proposals that can be sent to your customers.
To learn more about MarketSharp’s quoting tool and other powerful business management features, schedule a discovery call with one of our team members today!