That was the reaction after I sent a colleague a link to an ASP that, ironically, provides online billing services.

And what a tease it was.  The site even included this:

That’s why we offer a set of simple fixed price implementation packages to help you get started. Our team of experts can get your bills out on time and your cash coming in quickly.

There was no pricing information to be found online, just a phone number posted prominently.

For most online products and services today, the absence of a “Pricing” tab is a sure indication that a company’s products or services are expensive or confusingly priced.

In effect, the absence of clear information often equates to, “Our product is so expensive and complex that we have to employ sales people to get you to buy it.  As a result, we have to charge you more because we’ve got to pay for their salary, benefits, and commission, plus the additional overhead to manage them.”

“Please contact sales” also means, “I can’t buy it right now.  I have to wait for someone to get back to me and then I have to explain what I’m looking for and then listen to their sales pitch and then . . . ”

In all cases, the result is lost sales.

Some managers delude themselves into believing that their product or service is so compelling that potential buyers will put up with the inconvenience of having to contact sales to learn pricing.  Unless your business is a monopoly and your product or service has no substitutes, the response of a competitor to simply provide some pricing information online is the superior (and zero marginal cost) strategy.

If your company is trying to decide whether or not to post prices online, walk each member of your management team through this simple market research exercise: “What did you do the last time you were looking for something online and had a choice between a company that published prices and one that said, ‘Call for pricing?’”

Despite the obvious appeal to each of us when we’re buying products or services, some believe that when we’re a seller we shouldn’t publish prices.  These are some of these reasons heard:

• We don’t want our competitors to know our prices—Do you really think they don’t already know them?  How would you respond if one of your product managers or sales executives told you, “I don’t know what they charge and don’t have any idea of how to find out?”  You expect your folks to know what your competitors charge; they doubtless know what you charge.
• Our product is complex—Companies don’t have to publish prices for every configuration.  Instead, they can publish prices for a typical configuration.  We see this approach from car companies, among others.  If you believe that your product is so complex that you can’t do this, you have far-greater problems than just pricing.
• We don’t want to scare off potential buyers—One of the primary goals of publishing pricing is to enable the potential customer to self-select.  If you could get the potential buyer to contact you, what would your salesperson say that would cause a potential buyer to remain interested despite a price that’s higher than what he she wants to pay (relative to other similar products and services)?  If the salesperson has information that’s so compelling, why isn’t this information available online?
• Each customer situation is different—As noted above, this should not be an objection to publishing pricing for different configurations or bundles in order to give potential buyers an idea of what they might pay.
• We don’t set the price, our retailers do—Other industries have figured out that the way to deal with this is through quoting suggested retail prices or linking to the product on the sites of retailers.
• The price changes frequently—Stock exchanges, airlines, hotels, and many others have figured out how to keep online prices up-to-date.  This is a solved problem.
• We can charge more—This is a more logical argument and it’s based on the idea of price discrimination.  Specifically, that you can charge someone more if they value the item more (and are able to pay more).  Buyers, however, also understand this, and the suspicion that prices are significantly different undermines the credibility of the seller.  Confirmation that prices are substantially different can cause a buyer to terminate a relationship with a seller and to broadcast his or her negative experience.

Discussions on the floor of the Internet World tradeshow in London recently highlighted these and other behaviors in the offline world when we went searching for an e-mail ASP that made sense for the b-to-b supplier Zingzam.

We started down the aisle, stopping into the booths of some providers.  We heard them describe their service and we described our very modest needs.  Eventually the discussion turned to pricing and we quickly discovered it was more expensive than made sense for us.  After a few stops, we decided to simply start with, “What’s your minimum price?”  Invariably, this led to, “Why don’t you sit down and let’s talk about . . .”  We were able to cut these short by simply asking, “Is it less than £X ?”

A few times we were fooled.  Once we’d got past the minimum when one supplier said, “We can probably work with you . . .” only to discover that they wanted £100/month to use their API to transfer customer or lead information from our database to theirs.  Since the marginal cost to make the API available should be effectively zero, the only reason this charge exists in a competitive market is because buyers are ignorant.  Essentially, the attitude of the seller is, “We break this out so we can quote a low monthly charge and then add this back in later—and you’re dumb enough to pay it.”  Oddly, they didn’t charge for e-mail or FTP transfer, both of which would be much more expensive for them than using an API.

The other instance was at a booth with the sign, “E-mail as a service.  Only pay for what you use.”  Finally, we’d found the supplier with the business model and pricing for us.  Everything was going along fine until he added, “And there’s a £3,095 one-time set-up fee.”  As above, this is simply another pricing strategy that enables them to quote a low per-unit price in the belief that buyers will fail to compare total expected annual costs across suppliers.

All of which is a reminder that depending on your potential buyers to be and remain stupid is rarely a winning strategy (the high ratings of reality TV shows notwithstanding).

In food and now fiber, some growers have approached this problem by creating a brand for their products that consumers are willing to pay more for, and then limiting the ability of other growers to claim that their product is the same.  In many cases, the brand has evolved organically, with the name often initially associated with a geographic region and later codified into law through law or regulation.  Ultimately, by reducing supply and the threat of new entrants, these growers are able to earn a higher margin than they otherwise would.

Examples include . . .

• Vidalia onions—Defined in 1986 by the Georgia state  legislature as coming from a specific 20-county region; in 1989 the USDA extended this protection to the Federal level.

• Champagne—Only applies to what is produced in the Champagne region of France.  In addition to various international treaties, this designation is protected by the EU as a Protected Designation of Origin.  PDOs and related protections have been applied within the EU to several food products.

• Sea Island Cotton—This was the surprise, but as shown by the holographic label complete with registration number (pictured below), an association has been formed to certify the use of this cotton.  In fact, the West Indian Sea Island Cotton Association has, at times, gone to court to protect the geographic exclusivity of their brand.

The West Indian Sea Island Cotton Association holographic label on socks made in Germany.

There is a related approach: Forming a cooperative or marketing organization whose members pay a fee to market their commodity.  One example of a cooperative is . . .

• Ocean Spray cranberries—The organization is a cooperative owned by 600 cranberry growers and 50 grapefruit growers in North America an Canada.  In this case, the growers, by banding together, have created a brand for their product, which is a similar role to the one usually played by a traditional packaged goods company.

Some marketing organizations have been the closed due to the efforts of larger producers, which is what happened in the case of the state-chartered California Pistachio Commission.  Growers later formed the California Pistachio Board, which administers a voluntary program drawn up by the state department of agriculture and codified in the California Pistachio Marketing Agreement.

Elsewhere, some efforts to require all growers pay into a fund to support marketing of their commodity have been met with lawsuits.