3 Ways To Head Off Complaints About High Prices

If your prospects are too darn price-sensitive, stop blaming them. It's your responsibility to educate them about the difference and value of your stuff. Use these common-sense techniques to do just that.

Yesterday I spent three hours as part of a volunteer "Crop Mob" at a local farm, helping to bring in the sweet potato harvest. I learned a lot about farming, but the most significant lesson had nothing to do with growing or harvesting. My main thought was: "Sweet potatoes are a damn bargain at the farmers' market. I don't care how much they cost, the farmer didn't get paid enough.” Once you realize how much work goes into them, lots of things seem like a damned bargain.

What Don’t You Get Paid Enough For?

What goods or services do your prospects and customers take for granted? Which ones get the most price resistance? If you find yourself constantly competing on price or justifying your prices, you've got a buried sweet potato problem.

If your prospects walk past the overflowing baskets at the farmers' market or farm stand, perhaps they just aren’t educated enough to know the intense work and costly inputs that go into producing that bounty. So they wonder why it isn't cheaper.

As you can imagine, a farmer working his ass off to bring in $24,000 a year can get pretty upset by an upscale suburban professional who just got out of a Lexus SUV professing shock and outrage at sweet potatoes at $3 a pound.

But it’s the farmer’s responsibility, not the consumer’s, to make the value clear.

What’s Your Big Difference?

If you offer a premium product or service, then it's even more important to educate your market about the differences. After all, I can get industrial genetically modified sweet potatoes, loaded with pesticides and herbicides and synthetic fertilizers, for about 79 cents a pound at my local Kroger.

But the organic, pesticide-free, sustainably grown heirloom sweet potatoes available from my local farmer cost four times that. Until yesterday, I wasn't all that clear on the reasons.

Now I see how much effort goes into preparing the beds with hand tools and small tractors. Into propagating the slips ("seedling vines") in greenhouses. Into planting the beds. Into laying and monitoring thousands of feet of drip irrigation. Into protecting the growing plants from flea beetles, hornworms, leafhoppers, weevils, and rats. Into gently digging the beds to assess growth and harvest readiness. Into checking the weather hourly in fall to be ready in case of frost. Into digging out the harvest (or marketing to volunteers to help—and there weren't that many of us!).

Now I'll pay that sweet-potato premium gladly.

Three Ways to Communicate Value

How can you invite your customers and prospects behind the scenes, so they can vicariously experience and appreciate the efforts, costs, and sacrifices that go into the quality of your stuff?

You don’t have to literally engage your prospects in your work. But there are plenty of ways to demonstrate that your prices are fair.

1. Demonstration of Difference

Joel Salatin, lunatic farmer, shares his blow-by-blow sales technique at his local farmers’ market, displaying his eggs and chickens side by side with industrially produced eggs and birds.

The visual of the brightly colored yolk and the tactile experience of the firm flesh enable Salatin to make his point that his animals are healthy, and so eating them is better for your family.

How can you demonstrate the difference between your premium products and services and the competition’s shortcuts?

An accounting firm can anonymize and post two sample returns for the same household, showing the one done by their accountants generated 30% more deductions.

A tree service website could show videos of the owner meticulously taking care of his chain saw, using old fashioned Oregon chain saw files that are no longer in production.

You can post video and audio testimonials of clients telling their stories of how you went the extra mile for them.

2. Supply Chain Transparency

When the late, great Tom Hoobyar was selling valves to the pharmaceutical industry, he knew a lot was riding on the performance of those valves: Millions of dollars of pharmaceutical gloop in giant vats could be lost if a valve failed.

So he created a slide show that he called “The Odyssey of a Valve” that followed a hunk of metal from its birth inside an open pit mine to its final shape as a highly machined, highly polished, highly tested valve. (You can find the slide show here.)

Anyone watching that is filled with confidence about the manufacturing process, and clearly is not in a mood to quibble over a few dollars. The effect of this slide show is a little like the rant that my friend Michael’s father made in 1981 when I complained to him that the rate for a first class postage stamp had gone from 18 to 20 cents:

“Let’s get this straight: You want an organization to send someone to your house and pick up this letter, walk it to a truck, drive it to a post office, sort it into a sack, put it on another truck, drive it to an airport, carry it to a plane, fly it across the country, unload it onto yet another truck, drive it to another post office, sort it, put it in a sack, drive it to your friend’s street, and walk it to their mailbox for 20 cents—and you want change?!”

With this perspective, I never complained about another postal rate increase.

3. Teach Your Prospect to Do Without You

I discovered the potential of this means of communicating value when my book, AdWords For Dummies, was first published. At 408 pages, it was pretty comprehensive in its day (2007). And it laid out in clear detail, with lots of screen shots, exactly how I did what I did for clients.

I kind of figured that that $16 book had ruined my professional career as a consultant. After all, why would anyone pay me lots of money to do what I had just revealed in its entirety?

Naturally, the opposite happened. Once people read the book and discovered how complicated and time-consuming AdWords could be, they were happy to hire me to do it for them.

If you can teach your prospects to do without you, that’s one of the best backhanded ways of demonstrating your value. They’ll quickly see that they lack the experience, time, and desire to accomplish what you do at anywhere near your level of quality and efficiency.

(If this isn’t true, of course, then you don’t have a real business anyway, and nothing I’m suggesting is going to save you until you find a way to add real and enduring value.)

Now if you’ll excuse me, I’m going to make a sweet potato pie. Because ain’t nobody can make a pie like I can!

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23 Comments

  • Sean O'Keefe

    Love the article Howard... My company has been fighting this very issue with how to sell a premium service when the customer thinks cost is their number one objective.  I really like the idea of teaching your prospect to do without you and in doing so make transparent the complexity of our processes.

    Thanks!

  • Howard Jacobson

    Thanks, Sean. I appreciate the feedback. And I'm relieved not to have to defend my knowledge of agriculture practices ;)

  • Jon Greener

    Well then, Howard, perhaps you shouldn't have brought up cultural practices by saying "industrial genetically modified sweet potatoes, loaded with pesticides and herbicides and synthetic fertilizers".  I don't really see how this added anything to the article, other than your slant towards organics.

  • Howard Jacobson

    I admit to having a strong opinion about organics, one that I don't apologize for. 

    I certainly have a "slant" toward a healthy earth that my children can inhabit.
    My purpose in bringing it up in this context is to contrast a high quality product that commands a premium price with a poor quality and inexpensive alternative. It didn't occur to me that comparing local, organic, sustainably harvested produce to monoculture produce would be controversial. 

  • Jon Greener

    You would be correct, Michelle, in assuming that commercial agriculture directly helps to put food on my table the same as it puts food in your mouth.

  • Michelle_ku

    Jon sounds like a paid shill for big ag. I wouldn't even bother engaging with him

  • Avillo1

    The statement "industrial genetically modified sweet potatoes" is misleading. This suggests that a sweetpotato variety has been developed through non-conventional means, i.e., genetically modified (GM). A specific variety becomes a GM variety when a foreign gene, e.g., a gene coding for insect toxin, is inserted into that variety's genetic constitution.  All current sweetpotato varieties, whether commercially grown or raised in home gardens have been developed through tedious and time-consuming conventional breeding techniques. There have been sporadic efforts to develop GM sweetpotatoes but these have been limited to research and development only. 

  • Jon Greener

    So let me get this straight, you worked on a hobby farm for three hours and you feel confident stating that, "I can get industrial genetically modified sweet potatoes, loaded with pesticides and herbicides and synthetic fertilizers" but "organic, pesticide-free, sustainably grown heirloom sweet potatoes available from my local farmer" are better?  I might just briefly bring up the fact that your "pesticide-free" sweet potatoes were probably fertilized with animal manure.  This poses a much more immediate risk to your health (from e coli, etc) than the 7 parts per billion (or whatever) of pesticide residue on them.  Stick to what you know, buddy.  I hardly think one day on an organic sweet potato farm qualifies you to dismiss commercial agriculture with your mouth full.

  • Howard Jacobson

    Hi Jon,

    Sounds like this article hit a nerve. I'd love to discuss the issues of organic vs. industrial agriculture with you. I make no assumptions about your level of knowledge and familiarity with the topic; so I'd respectfully request that you do the same of me. Let me know if you'd like me to share some of what I do know about commercial agriculture and the threat it poses to our planet; information that comes from much more than 3 hours on a farm.

    Warmly
    Howard

  • Jon Greener

    The fact that you say "the threat it poses to our planet" indicates that you have no interest in seeing the other side of the issue.  In this issue, as with pretty much any other, the debate can rage on either end of the spectrum.  But, the answer lies in the middle.  I see no effort on the part of the organics to bridge this gap.  On the other hand, farmers everywhere and Iowa State University have been taking a long hard look at sustainabilty practices such as cover crops.  Besides, I can make the argument that GMOs and herbicides actually reduce the environmental impact by reducing tillage as a cultural practice. 

  • Howard Jacobson

    Hi Jon,

    An interesting assumption: the fact that I have an opinion means that I'm not open to those of others. I'm not sure that's true for me, but I'm willing to examine the possibility.

    I'm delighted that ISU is interested in sustainability, and I would welcome more information about that.

    I've seen the argument that GMOs and herbicides reduce tillage, but I haven't found anything convincing in it. Can you point me toward credible studies that compare true organic cultivation with conventional?

  • Trace

    Organic production requires the composting of animal manures before application. Conventional agriculture has no such rule or stipulation. A large portion of commodity crops such as sweet potatoes are grown using liquified animal waste and sewage sludge from municipal sources (that source is not allowed in organic production regardless if it is composted or not). If anyone should be washing their produce it is the person buying food grown in a "conventional" way. I also wonder why you would call the farm he writes about as a "hobby farm"? If the farm is the farmer's only source of income, that isn't really a hobby.

  • Jon Greener

    This may be the case, Trace, but I would maintain that there is next to no regulation of organics.  How would you propose we prove that the manure is composted? 
    Furthermore, it's highly unlikely that a large operation would use manure or sludge to fertilize, as the analysis would be fairly low.  Besides, where would you get enough "liquified animal waste" to fertilize 1000 acres of corn and how would you get it there?
    Two things lead me to believe it's a hobby farm.  Number one, this farmer allowed a "crop mob" of novices on his farm to help harvest his crop.  If he were a large operation, he would have the equipment to do the job and a "crop mob" would only get in his way.
    Secondly, "a farmer working his ass off to bring in $24,000 a year" isn't producing much of anything.  I don't see anyone working as hard as many farmers do for that kind of money.  Seems to me he might fall more in the category of "agri-tourism", which happens to produce a crop. 

  • Howard Jacobson

    The farm is a working farm; it's diversified, unlike most of commercial agricultural monocrop farms. It also produces biofuel, and seedlings and slips for other organic farms in the area.

    And $24k a year isn't a bad haul for a homesteader who doesn't have to buy much food, fancy work clothes, new cars every couple of years, and all the rest of the "necessities" of suburban and corporate life. I fervently wish that good farmers got paid at least as much as good doctors, but that dream's a long way off.

    Small organic farms are wise to keep their machine costs low and substitute labor; if he had an expensive piece of equipment for harvesting rows of root crops, the farmer would be locked into that product for a long time. Using hand labor - and community labor that comes from good direct marketing and goodwill - allows the farmer to be flexible and change with changing times and market desires.

    As far as I know, this farm doesn't go in for agritourism.

  • Jon Greener

    Trace, clearly the difference we have here is one of exposure.  My experience is with corn & soybean farmers (probably all over 1500 acres) that I don't see getting out of bed for $30K a year.  I don't think these farmers love it any less, they just happen to grow the most profitable crops.  I'm pro whatever kind of farmer you want to be.  I feel it's a noble profession and there's a lot to be said for being your own boss and working the land.  For me, personally, I wouldn't subject myself to the gut-wrenching ups, downs and uncertainty for $30K and I doubt many of the farmers I know would either.  I also wouldn't be a teacher or a cop, but I'm glad someone will.

  • Trace

    Take that $970k and do the following: Subtract your labor costs - figure you have a seasonal harvesting crew of 20 migrants plus your year round farm manager. Subtract crop insurance, liability insurance, plus insurance on equipment. Subtract loan payments on farm equipment. Subtract payments on leased land. Subtract main farm mortgage plus any mortgages on corn silos, barns or other infrastructure. Subtract maintenance costs on irrigation pumps, wells and lines. Subtract the down payment on the new harvester. Have any farm animals? Subtract vet bills, supplements and the purchase of new stock. Fuel to get to market? Subtract that as well plus the wear and tear on the vehicles that the fuel goes into. Anything left over goes into the bank to hedge against any problems next year.

    To go with your "corn farm" example, take all the above into account (you can probably get rid of the 20 migrants in favor of two combines) and then add a drought. That $30k starts to look really good that year.

    Why do people farm if they don't make a whole lot of money? I guess you might want to actually ask a farmer that question, but I know most would say that being their own boss, getting to work outside all day, interacting with the end user of the food, making something tangible and useful, all those things go a long way in filling in the places where the money doesn't. I couldn't imagine telling someone that their 17 acre farm isn't serious. Would you tell a microbrewery that they aren't serious because they aren't bottling a million beers a year? What does it really take to be taken seriously?

    I'll be honest - I work with farmers all day long, every day. I've been in and around agriculture since I was 11 years old working on every size farm you can imagine. There isn't much I haven't seen in agriculture. I've seen budgets of all sizes, good and bad farm plans, input and output schedules, you name it. I've been the buyer and the seller, the inspector and the harvester. I can break down the price of a head of lettuce into all of its components from the seed to the box it gets packed in to and tell you the probability of a single head of that lettuce going into someone's grocery cart.

    Unless you live it, it is hard to convince people of farming as a viable living. But for some people it is all they know how to do and all they want to do. I can't think of an argument against that; I doubt you can either.

  • Jon Greener

    Trace, if what you say is, in fact, true.  I may concede many of your points.  But what farmer in their right mind would continue to do business if they sold a million dollars of product for a $30K take home?  Are you trying to tell me that someone putting $970K into inputs only makes $30K?  That doesn't make any logical sense.  The corn acreage required to make $24K is around 17 acres.  I don't see that as a serious farm operation by any stretch of the imagination.  Even if I double that to account for some of the inputs, 34 acres is next to nothing.   

  • Trace

     The USDA NOP organic rule is the law of certified organic. A third party non-governmental inspector visits the organic farm once a year and looks over all the farms documentation. For a certified organic farm doing their own manure composting, detailed temperature logs are kept to verify that the correct temperatures are maintained. An organic farm has no interest in spreading uncomposted manure - that is basically a vector for weed seeds. The spread of E.coli is almost always associated not with animal waste but with poor hygiene by the workers harvesting the crop.

    You have heard of hog lagoons? There you will find enough animal waste to fertilize all you want to fertilize. Dairy farms? Yep, goes right in the manure spreader and out to the fields. I've driven a spreader and sprayer for a summer or two and I know that we never ran out of manure to use. It just doesn't happen. We had enough for 5,000 acres of potatoes, cabbage, onions and corn with plenty left over for home gardeners to come and pick up what ever they wanted. And if we ever did run out, there is always sewage sludge. We aren't making any fewer people, so that isn't going to run out either.

    In regards to "hobby farms", there are many large scale industrial farm owners selling a million dollars of product who make barely $30,000 in income per year. It is a matter of money in and money out - basic accounting. "Not producing much of anything" is not even remotely correct. I'm not sure how much food you think it takes to have a take home pay of $24,000 but it isn't a couple of rows of sweet potatoes especially if you have a small crew making a decent wage along side you.

    I'm not sure how much understanding of agriculture you have, but sweet potatoes are hand harvested no matter what the scale of production. They are turned up with a simple tractor implement - just like on this small farm - and then hand sorted and packed. Bin packing bad potatoes in with the good would not allow the common storage time of up to 2 years.

    You may also want to look into the idea of the crop mob. The one referred to in this article is actually made up primarily of other farmers. The crop mob is not about the farm it happens to be on that month but about the group as a whole and a model of labor reciprocity. In order for a crop mob to visit your farm you must have already participated on another farm.