In “When Quoting, is Price the Only Thing?” I suggested one of the worst mistakes you can make is to assume that everybody makes buying decisions based solely on price.
The question tantalises all of us running our own business is; what is the right price for your product or service? While we might worry about the price we charge, it’s value that customers focus on. Sellers Worry About Price - Customers Worry About Value
MY friend Rashid Kotwal of Revealed Resources has a good tack on this. Take it away Rashid.
We all have a money thermostat. “What we’re willing to pay for something and conversely what we’re willing to charge our clients.”
When we’re buying something, it comes down to how much value we perceive and how much we’re willing to pay.
Ironically this is also true when we’re selling our own consulting services. We’re bound by our own perception of self-value rather than what our clients are willing to pay.
If you don’t believe me, look around at others in your field.
Think bell curve, standard distribution. Most will charge approximately what you would for a given service. But there’ll be a few people who charge considerably less (which frankly in not sustainable in the long term), and others who charge multiples more than you do.
Are the latter any better than you? Unlikely. So how come they charge what they do and get it?
Two things. Their own self value is considerably higher. And they communicate their value in ways that having their clients agree and hence are willing to pay for.
Couple of stories come to mind.
Years ago I told a couple of clients to raise their prices.
At the time one was charging $3,000 for a particular service and struggling to come to terms with charging more.
We played a game. I kept putting his price up while asking him what his internal feelings were at each jump. i.e. What could he feel his value was given what he provided.
We got up to $6,000 until he said “stop”.
A couple of months later, he did put his fees up to $6,000 and no one batted an eyelid! He lost no clients and added significantly to his bottom line.
Fast forward a few years and he commented he had a similar pricing/value issue with is new business partner. They went through a similar exercise and lo and behold, last I heard they’re charging over $9,000 for the same service and have become of Sydney’s leading consultants in their field.
Another client has gone completely against industry norms of free initial consultations and now charges a significant upfront fee.
We’d helped them realise the value they provided in an initial meeting should be paid for. And as with all our clients, they’ve steadily increased their fees over the years without losing clients.
In fact, they’re in the enviable position of having a waiting list.
And finally, a previous client walked up to me at a conference and the first words out of his mouth to the person standing next to me were, “One of the best things Rashid forced us to do was to massively raise our prices. It was the best thing we ever did.”
Notice the pattern here.
All value has to first stem from between your ears. Your mindset and personal money thermostat will determine your business posture and what you feel comfortable charging. That quiet assurance will rub off on your prospects and lead to higher profitability.
Now of course that’s only half the story. Your marketing and sales system has to reflect and communicate your value, or you’ll be the world’s best kept secret.
Wrapping up, we can help you.
Increase your personal money thermostat so you feel comfortable increasing your prices. Then helping you create marketing and sales systems which communicate that value so clients happily come on board.
Thanks Rashid, that’s very helpful.
When clients approach me for coaching, so often, they are not getting the clients they need, the right clients, or the sales they need at the margins they need. Eight times out of ten this comes down to not knowing what is working, and how to develop compelling offers for their customers.
For more than 30 years I’ve been helping small business owners use the right tactics to plug the profit leaks in their business and restoring their cash flows by assisting them understand how to use the 80-20 rule to determine their most profitable customers, and to determine the offer to bring them on board.
If you would like to discuss with me how you might do that, book a Strategy Consult here.
© Copyright 2018 Adam Gordon, The Profits Leak Detective Except for all those bits by Rashid Kotwal.
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?