Discussing value and price perceptions almost always reminds me of the following line from the Ballad of the Old Man of Leningrad: “and where is the end? You’ll find that out when you get there.”
We can discuss value until we are blue in the face … but you will never know what you have actually constructed <in someone’s head> until you get to the end <wherever that is … oh … oops … sorry … you never reach the end>.
We so often talk about ‘value’ in the business world as if it is some nirvana space that once it is attained you can look around in wonder and live happily ever after.
Value is a never ending equation <quest, objective, whatever>. As easily as you can gain it <although it is actually not that easy> you can just as easily lose it … or have it diminished … and even increased.
It constantly puzzles me how often I get into business discussions where people bitch & moan about not winning a project or assignment because (a) I had the lowest price but didn’t have the relationship or (b) my price was too high.
And I could actually be having this conversation with two competitors in the same bidding process … who lost out to a third ;someone’ … who had neither relationships nor the lowest price and won.
I say that because this rant is about the fact that sometimes it isn’t about the price you are offering but rather how you presented yourself, or whatever it is you are presenting, and how that impacted the perception of the price you ‘should’ offer … which … unfortunately to many ‘bid losers’ … is not the one you actually do offer.
I used to think this was relatively basic business, if not sales, understanding that how you present yourself <what you actually show & say> creates a value perception in the audience … but then I realized it wasn’t as I kept getting caught up in this same discussion over and over again.
I have used a 5 page power point presentation <4 people each presenting one page> and won a bid process with highest price … and had a 50 page PowerPoint and won a bid process with next to lowest price.
Just to note … and I have lost both ways.
My point in noting the number of pages in the presentation is that … well … the number is irrelevant <as long as they are relevant & meaningful you can have a gazillion if you want>.
It is all what you say … combined with how you say it … which leads to a created perception for value <or an offered price> prior to actually providing the cost/bid … then when you actually provide the cost it either is all aligned or it’s not.
But … sorry … there is no formula.
The presentation matters.
People say “I had the lowest bid <but I didn’t win>.”
Others say “we were too pricey <our price was too high>.”
And when it happens <you lose> people want to dissect their pricing and the bid and gnash their teeth over how to lower their price “to be more competitive” or whatever.
Well … sure … you should certainly explore your pricing … but … typically your price is your price. And if you got the scope of work correct and can agree on how much time and effort it will take to complete the project scope <and that … by the way … can be a HUGE discussion and debate> … in the end … your price is your price.
But here is an unfortunate business truth … high prices win as often as low prices.
And I know this for a fact because I dislike being the lowest and am okay with being the highest <prefer upper high> and have seen more wins than losses.
Then what is it? <if I cannot blame my price!>
How about the presentation?
Because there is a presentation to price perception that needs to be factored in to any evaluation.
<note: this is often heresy to bring up … because typically the presentation has been fine tuned to a point where it is mind numbingly dull with no edges and therefore is flawless in all presenters minds>
The presentation has to meet the price delivered.
By the way … simplistically this means you can undersell yourself … as well as oversell yourself.
I say that because this is about alignment.
And, no, this isn’t about ‘first impressions’ because a presentation is a compilation/summary of impressions.
We all know this <but I will remind you anyway> … we are evaluating things all the time.
And even if we recognize that we are evaluating <like in bviewing a presentation> we still don’t even recognize much of the evaluation that takes place because much of it is actually usually automatic, subconscious.
There has been a boatload of research done on evaluation which I will not bore you with … but will share a cliff notes summary of key points:
This process of evaluation can be broken down into the rising and falling of two perceptions: Perceived Cost and Perceived Benefit. To be clear, the cost of something is not just money. Cost is the receipt of something negative or the release of something positive whereas Benefit is the release of something negative or the receipt of something positive.
Any time a value presentation is made, be it a candy bar in the checkout rack at a grocery store, a pair of earrings online, or a proposal to marry, there is an initial phase when you open your mind “file cabinet” and pull the “folder” associated with whatever value is being presented. As you open this folder, certain things will jump out at you, influencing your initial perceived cost and benefit of the value presented. What is in that folder, what items you pull first, and how much each item affects you depends on two things:
1. Your history with the value presented
2. How it is initially presented
It’s also important to note here that the point at which a visitor makes a commitment to the transaction is not the same point at which they complete the transaction. The time between the commitment and the transaction should be as short and simple as possible. The more complex and time-consuming it is, the more chance the frustration of the transaction process or the “cold feet” effect could keep it from happening.
I have gobs of practical experience with this <and the scars to prove it> presentation to value perception alignment issue … but I also have some other interesting research on my side:
‘The pricing practices discussed are highly prevalent in today’s society. While classical economic theory suggests that people will act rationally, using cost benefit analysis to make choices, scientific research shows that this is not the case. Humans do not have the capacity to recognise and evaluate all the available information in today’s complex environment, nor the time or motivation. Instead, people use mental short-cuts, or heuristics, to deal with this complexity.
- Whilst heuristics can usefully guide our behaviour and allow humans to function in the world, they are not perfect calculations and are subject to occasional and sometimes costly mistakes. Importantly, heuristics leave people exposed to external influences, including pricing cues. The literature on pricing practices suggests that pricing cues provided by retailers can affect consumer behaviour and value perceptions.
- Compared to presenting a total price partitioning prices into a base price and surcharge can significantly increase consumers’ positive evaluations and purchase intentions, and can lower search intentions. This is because consumers may fail to fully adjust from the initial (lower) price of the base good and therefore underestimate the total price of the product.
- Evidence suggests that people tend to stick with the default option, even when this option has major, long-term consequences.’ - University College London 2010
Like it or not … even our presentations are being evaluated through this wacky thing called heuristics.
Pricing cues abound within presentations <value cues certainly do abound> … and they scream at the top of their lungs even if you aren’t looking at them.
You can even be silent and be giving a price or value cue.
Bach was a master of ‘negative space’ … building masterful musical combinations … he also used silences that are as eloquent and thought provoking as notes, tempo and syncopation.
<I used Bach because I tend to believe most of us who have built a presentation kind of feel like a composer>.
By the way.
While you may be thinking I am only discussing big important presentations which have been rehearsed and rehearsed … but this discussion actually pertains to almost any size and quantity of project management discussions.
What do I mean?
I have seen 5000 project estimates generated for one business in one year.
And on that type of business I have seen a tendency to simply slide an estimate across the table <or emailed> and just ask for a signature for go ahead.
No presentation … just slide the estimate over to a client and look for the quick & easy ‘get it going’.
And the client customer slides it right back and says “nope … too <fill in value reason here>.”
And I have seen 5 project estimates generated for one business in one year … and even on these businesses a project can be mis-presented or not even presented at all.
And the client customer slides that one right back at ya too.
In the end.
Value is kind of like … well … the world and life
In fact … it reminds me of something I read:
“The world is not as simple as we like to make it out to be. The outlines are often vague and it’s the details that count.
Nothing is really truly black or white and bad can be a disguise for good or beauty … and vice versa without one necessarily excluding the other.
Someone can both love and betray the object of its love … without diminishing the reality of the true feelings <and value>.
Life <and business whether we like to admit it or not> is an uncertain adventure in a diffuse landscape whose borders are constantly shifting where all frontiers are artificial <therefore unique is basically artificial in its inevitable obseletion> where at any moment everything can either end only to begin again … or finish suddenly forever … like an unexpected blow from an axe.
Where the only absolute, coherent, indisputable and definitive reality … is death. We have such little time when you look at Life … a tiny lightning flash between two eternal nights.
Everything has to do with everything else.
Life is a succession of events that link with each other whether we want them to or not.” – Arturo Perez Revarte
That all maybe too poetic in discussing something like giving presentations and creating value but simply put … “everything has to do with everything else.”
That certainly encompasses that wacky thing called ‘value.’
Presentations are part of everything.
And if you are not careful … your presentation can send a different value, or price, cue than what you will actually offer as your price.
That is misaligned messaging <including non verbal cues into the messaging header>.
And misaligned is bad <that is a Bruce-sim>.