We’ve become so used to marketers lying to us that we’ve simply grown immune to it. Just look around and you will find examples of this all around you – on the billboards you read, TV shows you watch and the radio spots you listen to. Is Bounty really the “quicker picker upper” or Coke the “Real Thing”. I can’t pronounce half of the “real” ingredients in a Diet Coke.

Have a mortgage on your home? Yeah me too and the junk mail that comes from solicitors trying to sell me a new loan seems relentless. The envelope is usually stamped with something like “Important Mortgage Information” on the front and the return address will read “Mortgage Processing Center”. Most homeowners have figured out that the letter is not from their mortgage company. But if something is so obviously deceptive, why do marketers still do it? They do it because people will still open it. People are more likely to throw away a blatant but honest solicitation, so marketers con homeowners into opening faux come-ons. Here’s the fundamental question: Why start off a business relationship from a position of mistrust?

Let’s take an example from a software company like mine. There are two classic ways to “show a discount” on a software quote. The sales person will typically say something like this:

“If you buy now I can give you a discount”

OR

“We are raising our prices in 2012, but if you buy now we can lock in the quoted rate”

Our strategy over the years, as is the strategy of most software companies and really any company selling a high ticket item is to opt for number #1. People by nature want to feel like they are getting a discount. There is this positive emotion that wells up within the buyer that simply makes them feel better about the purchase. But at a rational level we know that the seller is basing their gross profit on the discounted price. Sellers must make a profit to stay in business and invest in new technology. Why not just say this?

Jason Cohen of Smart Bear Software argues that #2 is actually the better choice. He believes that choice #1 “breeds mistrust”. If the retail price is over inflated to offset the discount, what happens next quarter when the customer needs more product or services? Will they be gouged with a higher price, or wonder why the “list” price is so low and feel slighted about the initial purchase?

With choice #2 the customer’s best interest is taken into consideration. The customer is put on notice that the price is going up. The increase may or may not come, but the customer’s best interest is being considered. Technique #1 implies that everything is negotiable and can even make the buyer feel that the seller is in trouble. Technique #2 demonstrates confidence and implies that the company is growing.

Enterprise software companies like Microsoft, Oracle and SAP are adept at using technique #1. If you catch them at the right time of year, when they need sales to meet management or shareholder expectations, you can strike a heck of a deal. On the other hand, the new crop of software companies with cloud-based solutions are typically very open about their prices. Check out the price page for SalesForce, Shopify, Zendesk, and MailChimp. These vendors publish their prices and typically the more features you need, or licenses you use, the higher the price. I like this model and as our cloud offering grows in demand, we will start to migrate to a published pricing model like this.

Want to be different? Cut out the deception NOW! Just decide in 2012 that you are going to cut the fluff and be an honest broker. Stephen Covey, author of the “7 Habits of Highly Effective People” encourages people to consciously make promises and keep them. In other words “walk the walk” and do what you say you are going to do. This is pretty fundamental and most dealerships and service centers that simply were not going the extra mile for their customers have been swallowed up in the recession.

However open, honest pricing at a dealership is a completely different matter. By nature dealerships are driven by gross profit. They are the critical link between the manufacturer and the consumer. Would the ”no haggle” model used in some car dealerships around North America work in a boat or RV dealership? The best known experiment of the no haggle model was Saturn. At a Saturn dealership the price was the price. That was good news for someone who doesn’t want to haggle. In theory you could buy a car at a fair price and the dealer was assured a predetermined profit. However this may not be a great deal for someone who likes to haggle. (NOTE: Saturn and Pontiac were officially dissolved at the end of October 2010).

Buying cars online has changed the game even more. With websites like CarsDirect and AutoByTel, you can research prices extensively such that when you walk into a dealership you have a very good idea how low the dealer may go. The controversial website SeeDealerCost.com sprung up in March of this year followed promptly by outrage from both marine dealers and manufacturers. J&D Acquisitions, makers of Larson and Seaswirl followed up that outrage with a lawsuit. The site still exists and claims to provide dealer costs. Whether they are accurate or not is anyone’s guess. Websites like this can be misleading because they can’t possibly account for all of the dealer costs associated with options, accessories, prep and rigging.  But would there be more trust and less consumer skepticism if prices were presented in a more open and honest way?

Are you a boat or RV dealer? We would love your opinion on this subject.