In essence, the incentive-based pricing model is a pricing structure based on potentially pressuring the potential consumer to make a decision right away by providing them with incentivized pricing.
The incentives can come in the form of discounts or throwing in other products with the catch of not providing them with time to sit on it by making that offer valid only for the duration of the sales call, pressuring the customer to decide right then and there.
This method of pricing is discouraged because there are many disadvantages associated with it. Let us discuss this in greater detail, highlighting the drawbacks of this pricing model and the solution to this problem.
Otherwise known as the fast-action discount, there are many reasons why this type of pricing is detrimental to a sales pitch and causes a drop in the conversion rates for any salesperson.
1. The Pitch Lacks Legitimacy
One of the biggest reasons a sales pitch based on incentivized pricing tends to produce negative results is that it fails to nurture a trusting relationship between the salesperson and the potential client.
Pitches made based on fast-action discounts lead to a conversation that does not seem authentic from the customer’s point of view, feels very sales, and does not sit well with most potential clients.
2. The Pitch Becomes Generic During Closing
Whether it is because they need time to come up with the investment or can only decide after discussing it with their spouse or family members. Whatever the reason, there is a high likelihood that securing a sale will take more than one call.
When faced with such a situation, it is discouraged to press further on the pitch, and the best course of action is to give the potential client some time.
However, with incentivized pricing, you do not have this ability, requiring you to further pressure the potential client, ruining the quality of the call and putting yourself in a corner.
3. Does Not Work With Seasoned Prospects
There is a chance that your pitch can work if you are selling everyday products to the public that is not aware of marketing techniques; there is little to no chance of an incentivized pricing model to work with sophisticated clientele such as those involved within B2B marketing who are knowledgeable of this pricing model and other tactics.
Conclusion: What Can Be Done Instead
Instead of incorporating such complex pricing strategies and discounts within your sales pitch, the preferred way is to simply provide them with clear numbers on the investment they will be required to make.
This eliminates the pressure factor used within the fast-action discount pricing model and provides them with the information they desire right at the beginning of the pitch.
Because you are not restricted to a 1-call close, this method provides behavioral flexibility during the closing, making it the perfect technique to sell your company and product on call.