A tale of two price mentalities

life lessons

Thursday June 27, 2024

life lessons

I’m thinking about Three cold calls and what I learned.

One guy hears my pitch and in 5 minutes he’s nodding his head. Then he asks, “Why do you charge $650 but people in India tell me they can do it for $225?” He says he gets these calls all the time.

Another guy says, “I paid $250/year for my website. There’s no way I can justify your costs. I’m a simple guy and I don’t need anything fancy.” This second guy raked me over the coals an I know I shouldn’t give in but I took it as a learning experience to see what might happen.

He gets me to basically offer my services at cost, but I tell him I can only keep the deal open tonight. He responds:

That may work for me, but I always avoid making decisions under pressure, such a false urgency. Give me a few days to think about it. What do you have to lose?

I thought a lot about this. It’s an interesting question. I know from $100M Leads, This is Marketing, and Emotional Intelligence for Sales Success that when you concede, you regret it. And it’s a race to the bottom on price.

At his rates, someone would need to maintain 500 websites per year to support a family. That’s an insane amount of overhead. He should just use squarespace for $20/mo. I told him this.

The first guy hears my pitch and says, “see what I like about this is you’re here in San Jose. I could come see you if I want. I don’t want some random company in India that doesn’t care about me.”

The thought of “I could never justify this” is fascinating. It tells me this person is transaction focused. It’s quite easy to “justify” when you consider operating your business quickly. I could get him the site today. Instead he’s taking people over the coals until he works with someone desperate enough to take his offer. The justification is: does this service get me more leads?

But he didn’t see it that way. He only saw, “I can get this cheaper elsewhere.”

Those two mentalities are two I’ve struggled with. Most of my life I’ve focused on getting things done more cheaply and feeling like I’m being robbed. Or, focusing on solving the problem.

Per Thinking, Fast and Slow we have two sides of our brain. If we lose $100 bill on the way to buy $100 worth of tickets we’re likely to buy the tickets with a new $100. If we lose two pre-purchased tickets on the way to the show, we’re likely to walk away rather than spend $100 to buy two new tickets. The cost is the same, but the mental and emotional accounting is different. This is sunk cost.

Person 1 is relationship and growth focused. They want the problem gone so they can focus on other things. They also say “yea I could get this cheaper somewhere but there are several costs like time, energy, and dealing with India I don’t wanna deal with.” He says “if it gets me two customers a month it’s worth it.” He’s value focused. He doesn’t think: “can I get this cheaper somewhere else?”

Second guy is not value focused but transaction and price focused. Maybe he does this with everyone he meets. It’ll slow him down. As a home builder he could get $10000 clients from a well built website. That’s not worth $100/mo for him so he’s going to get a crappy site with no traffic (I’ve built many crappy sites that don’t get traffic. Good sites require work!)

Do business with value-based customers. They grow faster. They’re deal oriented. Relationship oriented.

Don’t do business with transaction/cost-oriented customers. They’ll take you up front and throughout your journey, costing far more in time and energy, which allows your momentum and hurts your growth.


Bryan lives somewhere at the intersection of faith, fatherhood, and futurism and writes about tech, books, Christianity, gratitude, and whatever’s on his mind. If you liked reading, perhaps you’ll also like subscribing: