Peter Krišťák, 13.03.2020

Effective price list = simple price list: 5 tips how to make your price list more effective

The most common mistake of all price lists is their complexity. Companies often omit one important fact - the price list is created primarily for the customer to simplify purchasing decisions. The company often creates a complex overview of all the benefits and features available, rather than create a simple material to motivate a customer to buy a preferred product.

The large number of advantages, the description of advantages by long sentences, repetition of the same advantages when comparing different variants - all this makes the purchasing decisions incredibly difficult. Let's look at an example of a price list from one of the world's largest IT companies. Can you identify at first sight which product variant is the best and why?

This price list is one of the extreme examples of complicated communication - each advantage is described by a long sentence, the complete price list contains over 30 different functions to compare and most importantly, the description of benefits is repeated in each column. In this example, however, we can show you 5 basic ways to simplify the price list.

1.   Describing the benefits in short sentences

Each advantage can be described in different ways. The price list should include the shortest and most appropriate form. A detailed explanation of the advantages should take place on the product page, where there is much more space.

2.   Do not repeat a description of benefits

One small solution allows to simplify the price list - all functions should be described in one column and the checkmark should indicate whether a particular variant contains the given function or not. Ideally, to avoid any repetition. For example, it is not necessary to say below each price that it is “a monthly price per user with an annual commitment and without VAT”. This information can also be moved to the first column, it is obvious that it applies to all prices.

In the picture below you can see the price list of financial products, where the benefits are described only once, but this price list is still complicated.

It is not clear from the price list which product variant is the best. The checkmarks "fly" around the page. The middle Gold package has only 3 checkmarks and the Standard package, which should have the least benefits, has a total of 6.

3.   The best option must have the most benefits

A simple rule will help simplify communication - the best option must always have the most benefits. If the basic variant has 3 advantages, the more expensive 4 and the top variant 5 advantages, the customer will know at first sight (without even reading the description of the benefits) which variant is the best one.

4.   Reduce the number of benefits

The ideal solution is to have a maximum of 5-6 benefits based on which customers can compare individual product variants. If the variants differ in more parameters, then make sure you have a well-built segmentation. You don’t need to have all functions in the main price list, for this purpose you should use a product page or a special detailed price list. Besides, there is often space for creating several price lists for different product groups/customer segments (small, medium, large companies).

5.  Reduce number of common features in the price list

The purpose of the main price list should be an easy comparison of the key differences between product variants. If different variants contain several of the same functions, these functions should be removed from the price list and described separately as the common advantages of the offered product.

Remember, the price list should not complicate purchasing decisions for the customer. The effective price list communicates the benefits of products and the differences between individual variants in the simplest way. There is no space for long sentences and duplicate information in the price list.

Peter Krišťák

Author is partner and founder of Pricewise

He specialises in pricing and revenue management

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