Tuesday May 24, 2016
How do you feel when it comes to each of these three terms – cost, price, and fees? Can they be used interchangeably, or should you concentrate on using – or not using – one of them when communicating with your customers? After doing 3,000 in-person sales meetings from June 2008 to January 2015, a certain term stood out as the one NOT to use. In this article you’ll learn why your customers prefer either cost, price, or fees.
Estimated reading time – 4 minutes
Cost vs price – why they’re both easy for customers to understand
The term "cost” is something we all readily comprehend. We grew up knowing that if a pack of baseball cards cost a dollar, that’s how much we needed to save. Nowadays, if we ask, “What does the laptop computer cost?” or “What do these dozen roses cost?” we can easily find the answer by looking at a sign, searching the Web, or asking a clerk.
What about the term "price?” Same thing as cost, right? As kids, if we knew the price to play Pac-Man was a quarter, that’s all we’d need to play the game. Who didn’t ask their parents, “Can I please have a quarter?” Today, when we ask, “What’s the price of that television?” or “What is the price for a six pack of Coke?” that answer is readily apparent too, via sign, cashier, or Google.
Did you know that cost-related and price-related questions are some of the most often searched on Google? Let’s pretend your dog has been leaving presents on neighbors’ lawns, so you decide to bite the bullet and finally install a fence. Can you see yourself sitting down at your computer and typing something like, “What does a wood fence cost?” or “What is the price of a chain link fence?” into Google? Of course. So we know that """"cost” or "price" are both okay to use. What about the term "fees?"
Here’s where the 3,000 sales meetings I mentioned come into play. I worked in the investment industry during this time, and my specialty was 401(k) plans. What does the investment industry call the costs associated with their products? Fees. Management fees. Investment Advisory Fees. 12(b)1 Fees. Revenue Sharing Fees. Add all of them together, and you can start to figure out what something actually costs.
Any time the term "fees" was used in a sales-related presentation, I could see people get a little uncomfortable in their seats. Why? Fees usually occur in bunches. Think about it – do airlines have just one possible fee? Nope. There’s a checked bag fee, carry-on bag fee, overweight bag fee, ticket change fee, extra legroom fee, and on and on. What do bunches of fees require? Math. Customers don’t like math. Why would there be a dozen different tip calculator apps? People don’t want to do math…just enjoy their meal.
“The cable television industry ruined the term 'fees' for me. All I want to know is the cost for their service. How can I compare options with all the hidden fees? Now that they’re providing my Internet and phone service too, there are a dozen different fees that really add up.”