I hope you enjoyed last week’s conversation about the value-creation engine of specialization. And if you’re worried that the geographic area you inhabit is not big enough to support a specialty, keep in mind that none of my work is “local.”
On to this week. What we believe about our pricing is what our clients will believe about our pricing. Of course, it’s not THAT simple. But it goes a long way toward explaining why prospects and clients end the conversation quickly after discussing pricing.
And if you’re new here, welcome aboard. This is what we do!
The question I ask when I start every newsletter is the same: will this help you grow your practice in some way. That, and does it pass the “So what?” test.
So what issues or ideas are you thinking about right now? What’s keeping you up at night? What would you like me to write about? Email me and I’ll try to help … my inbox is always open!
When prospects or clients say, “You’re too expensive.” (and some inevitably will), we may have a problem. Because on the one hand, they may be telling us the truth (or their truth). But on the other hand, we think we’re worth it.
I can’t tell you how many times I had the price of $15,000 set in mind, but $12,000 came out of my mouth at crunch time.
So what’s going on? Two things, I think.
#1 – Clients have price expectations
Clients have price expectations when it comes to specific products and services. When those expectations are violated, they immediately think “we’re too expensive.” But those expectations might be wrong.
Clients might think an engagement should cost $5,000 (or less), and maybe they can get one for that price. But maybe they don’t know the difference between a $5,000 product and a $10,000 valuation.
That’s why it’s our job to SHOW THEM THE DIFFERENCE.
It’s our job to set client expectations.
Or maybe clients do know the difference and they just don’t care. That’s why they make a Kia and a Mercedes … we have to decide what car we want to sell.
Or maybe clients don’t believe we’re experienced enough. So they think we’re charging too much … we need to have solved their problem more than 4 or 5 times.
#2 – Clients can smell fear
Like animals, clients can smell fear. They can sense if we believe our prices are too high from our body language or hesitation in our voice.
If we appear uncomfortable discussing pricing when the subject comes up (as it always must), it can make clients believe that we don’t believe in the value of the service we’re providing.
That’s why it’s our job to SHOW THEM THE VALUE.
It’s our job to demonstrate confidence.
Why is our fee higher?
If our fee is higher than our competitors’, then it’s higher. We can’t be a trusted advisor and be afraid to “go there” with our clients.
So we could say to our clients: “Just like your business:
“Our pricing is a strategic decision.
“It allows us to invest money in areas our competitors can’t because of their lower prices.
“This includes quality staff and the best information resources available.
“Which allows us to produce better results than our competition.
The problem may go deeper
I would be remiss for also not raising this point. If we’re not charging enough, there may be something holding us back from believing in what we deliver and asking for what we deserve. It can result from messages we learned in our childhood about our own self-worth (e.g., see article #1 below). This definitely sounds familiar to me.
Reading that can help
There are many books on the ins and outs of pricing … Ron Baker’s Implementing Value Pricing is probably one of the best. But we may not have the time to read that bible right now.
So here are three good, quick-read articles that can help us embrace a new pricing mindset this week.
#2 – How to compete on value, not price (Inc.)
#3 – Understanding substitutes (Seth Godin)
– If you like what I write about, tell a colleague.
– If something resonates and you want to reach out directly, email me.
– If you think we share common interests, connect with me on LinkedIn.
– If you want a sense of how well your practice is working for you, take this Practice Self Assessment.