Greetings from Forbes Park in the historic San Luis Valley of Colorado. Friends of ours bought a home here and promptly added two full-hook-up RV pads to accommodate visitors like us.
Last week’s conversation was about using a video FAQ library for would-be clients who are looking for someone like you to solve their problem and stumble across your website during their search.
On to this week. A true story about how a company that did not lead with its best price lost a long-term customer – me. What are the lessons to be learned?
And if you’re new here, welcome aboard. This is what we do!
Join me this Friday at 1pm ET on Practice Development INSIDER for my interview with Nancy Fannon. Nancy has run the gamut from solo to small firm to larger firm to really large firm, and she is going to share how she built and grew her practice as she made each jump.
Regardless of the size firm you’re in, there’s bound to be a nugget or two you can use in your practice.
Like many of you, Amy and I pay our bills at the end of a month. On our August credit card statement was a $305 renewal charge for Sirius/XM. For what it’s worth, I believe that price reflected “full access” to all of their stations.
The amount caused us to debate about the value we were receiving for our subscription (needs). We mainly listen to NPR and a handful of music stations … sometimes a Packers game if we can’t get to a sports bar. I would not describe us as “heavy” radio listeners.
Thus, we didn’t think the content we were paying for (needed) was worth $305. So Amy called to cancel. And you guessed it – Sirius started offering her other lower-price options to hold onto us.
Lessons to be learned
This experience caused me to think about the product/pricing lessons that could be applied to our BVFLS practices.
#1 – Always lead with your best price
Sirius tried to get away with charging us the non-objector’s, full-freight annual renewal price of $305. When we did object, a lower price suddenly became available.
Have you ever quoted someone a fee of say $10,000 for a project and then walked it back to say $8,000 when the prospect balked? I have. And what a schmuck I was for doing that.
Is the project worth $8,000 or $10,000? If I was willing to do it for $8,000 why didn’t I lead with that? I just told the prospect they would have overpaid by $2,000 if they had accepted the $10,000 price. Not the reputation I want to have.
Also, imagine if that prospect was the client of a referral source. Do you think they won’t go back to that referral source and tell them about their experience with you?
#2 – If there isn’t one price you can lead with, price with options
I imagine a company like Sirius has data on how much we listen to what kind of content over the past year, if not longer. Sirius could have used that information to offer us appropriately priced packages that were tailored to our actual usage (needs).
The reason I no longer backtrack on my price is that I take more time to figure out what the prospect needs and price based on that. And if there is more than one way to solve the prospect’s problem, I price with options. Pricing with options, moves the prospect’s question from Do I want to work with Rod? (yes or no answer) to How do I want to work with Rod? (pick an option).
#3 – There are substitute products/services out there
Don’t give prospects a reason to look into substitute products/services. We determined we could replace our Sirius usage with iPhone/iPad NPR and Pandora apps … and get for free everything we were paying $305 for (except the Packers sportscasts).
Our BVFLS substitute products out there range from BizEquity to other qualified appraisers who are extremely scrupulous about their pricing. Take the time to price your service right the first time.
When Sirius started dangling discounted pricing options in front of us, we felt taken advantage of. Ultimately, we canceled our subscription and a refund is in process.
At the end of the day, many of us price our services by multiplying the hours it will take to do the project times the hourly rates for the professionals involved. I’ve said this before: hours x rate is a price, not a value. It is our price to do the work, not the prospect’s value of having the work done.
In real life
Do you want to have a higher prospect-to-client conversion ratio?
Think about your pricing AND how you communicate it.
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