I don’t think there’s a single agency or business owner who doesn’t grimace a little when I mention pricing and ask when was the last time they raised their rates. There’s this mistake we all make when it comes to pricing. It’s getting to the end of a discovery process or lengthy briefing and pitch process and then focusing on the price last. All the while you’re preparing your proposal price, can they afford it, cash, money and scarcity are taking up bandwidth.
Ending a conversation or a pitch on price is an invitation to your client to use price as their deciding factor. I can promise you now that if you end your call or pitch meeting on the subject of price, that’s what you’ll be judged and compared on.
So Sian what do you want us to end on?
Great question, thanks for asking.
I want you to end your pitch or conversation on the opportunities that await when you work together. End on showing your potential client that you’ve fully understood their wants but also their needs.
That’s a great place to start, I want to talk about a few other principles to help you master pricing. This is by no means an exhaustive list and I have plenty more to share with you on this humongous topic.
Pricing Mastery Principles
Exchanging time for money
You are an experienced and talented agency or service provider who is going to create opportunity and results for your client. I understand that to create a quote you have to estimate how much time is involved and use that as your guide to give your client a price for work they have requested. Please remember that when people pay you they’re not really paying for hours. They’re paying for your education, your many years of experience and not to mention the ideas, solutions and value you bring beyond the hours of doing the thing.
I recall a story or a fable of a woman in a Parisian restaurant asking Pablo Picasso for a doodle he produced on a napkin. He said she’d have to pay a sum of money which was considerable. She says “but it only took you a few minutes”. He replied to say, “it took me a lifetime.”
I get the moral of the story but to me, it’s more about value. Plus that lady couldn’t produce that doodle herself.
Let’s say you’re an agency and you create a website for a client. First, you’re doing something that they can’t do themselves (or if they can the opportunity cost is not worth doing it themselves). Second, what if that website produces 2 million in revenue, what about 20 million in revenue? If you think about it, I bet you’re undervaluing your rates on this idea or principle alone.
Price and value and not the same thing
When you work with a client please understand that price and value are not the same thing. I’m not talking about Picasso drawing on a napkin. I’m talking about what clients value. Of course, they should value your skills, expertise, and experience and if they don’t it’s not a great start to the relationship. But clients value the truth, your honesty and integrity.
Imagine a client coming to you for a website and after a phone call and a lengthy discovery process, you could absolutely sell them a website. Instead, you’ve listened, you tell them what they really need is to sell their products on Amazon. I don’t know, for whatever reason they’ve come to you for one thing and you’ve been honest with them and presented what they need, a better solution that they didn’t think of themselves. That’s your value.
That’s one example, maybe not the best example but clients value truth. Can you think of an example in your business where a client has asked for one thing but it really wasn’t what they needed? Or maybe you gave them some advice on their business model and it’s transformed the project and now you’re a trusted advisor.
Always focus on value. Make it your goal to add massive value to clients beyond what the number on the bottom of the invoice. This way, you’ll never be questioned on price and only judged on value.
Pay per hour
If you focus on getting paid per hour your relationship will be dominated by time elapsed. Those kind of relationships are ones where clients query invoices and ask what they’ve gotten for your time! If clients have task that they want doing quick and cheap, send them to People Per Hour or one of those marketplace sites. You want your relationship with your client to be focused on the possibility of achieving a goal in their business. That future state that the client wants to achieve is really what they’re paying you for.
Whatever your clients has come to you wanting to do, get to the bottom of why. Let them describe that future state to you in great detail. Let your conversations be around what’s possible through the work you’ll do together.
And that’s how you close out a conversation with a client. End on what’s possible if you work together.
I hope this blog has given you some food for thought, it’s nothing new but it is an important subject that should discuss. Raising your rates is not that hard when you focus on the results your clients are creating with your help.
If you’d like some more help to raise your rates so clients will love it and master pricing strategies, then hop over to my mini course on Pricing Mastery. It’s jam packed and the exact content that helped one of my clients have the confidence to raise her rates by £50,000! The pricing masterclass comes with a bunch of useful scripts, tools and calculators.