First, I have a question to put to you. Jot this down and schedule some thinking time on it.
Q. What would you have to do to be more expensive and for your clients to not bat an eye about it?
When we ask better questions we get better answers. If you jot down that question and schedule some thinking time on it you’re bound to find opportunities where you can outclass and outmanoeuvre your competitors.
Pricing and value
Back to pricing, which as you might have guessed by now, I love talking about pricing and do so quite a bit (in fact, I’ve got some great resources for you to help you raise your prices with confidence). Before you get your calculator out, you need to really understand how to articulate your value. Pricing your services should absolutely be based on the value that’s delivered. It’s your number one job as a business owner to be able to articulate that value and weave it into all your marketing, content, and sales process. And I’m not talking about features and benefits but value. Price should never be an objection if you’ve been able to articulate value.
Of course, there’s a little more to it but there’s this fear of charging too much and losing clients. If the perceived value of your offer and the value you’re able to articulate is aligned with your client's pain or desires, then the money is just the exchange of energy. When you look at it that way, it’s not that scary.
This is another reason why when we start working with clients on business plan activation or in coaching, we often start with figuring out what their process for delivery is and what the promise is. The more clarity you have around the promise, your offer, what you achieve for your chosen niche, and the higher the perceived value, the more you can charge.
That’s quite a mouthful. Let me repeat it so it can sink in. Clarity around your promise, your offer, the result you get for your niche client, and the higher the perceived value, the higher your prices.
The Commodity Trap
At this little juncture, it’s worth noting that I believe one of the biggest dangers to agencies and service-based businesses right now is being treated as a commodity.
I hear clients say that they feel like short-order cooks or professional order takers rather than the creative geniuses they should be valued for. It’s not going to get any easier either. With the rise of the gig economy, clients being able to source agency services from freelancers, the ‘agency of record’ model no longer working, and rising competition, margins are being squeezed and it’s getting harder and harder to differentiate.
In a commodity market, you can only be as good as your dumbest competitor
So let’s dive into this more and see how you can focus on value, charge more, and avoid the commoditisation trap.
Your perfectly profitable price point
First up, don’t confuse your offer and your value stack with the buying criteria of your potential client.
To use an analogy. If your potential client has a rare heart condition and they’re looking for a specialist who can help, price isn’t going to be the buying criteria. A heart specialist who has had success at treating said rare heart condition will be the criteria. That’s an extreme example to make my point.
You should correlate what’s important to your prospective client. I was recently talking to a wonderful lady named Ashleigh in the DMs on Insta, she wants to redo her website (not a small project) and her exact words were “I would just love a web designer to come and make it look gorgeous so that I don’t even have to think about it.” So a web designer who will come in, be her knight in shining armour, and make this whole thing go away and be amazing. Do you think if you can present that as the added value solution to Ashleigh that price is going to be a buying criterion?
The next thing is still to do with money generally speaking. You need to know what your capacity is, your expenses are and work on the numbers to know what you should be charging. (I’ve yet to work with an agency or service-based business owner who can tell me what their breakeven hourly rate is). Knowing your numbers is obvious but I want to talk a little bit about creating consistent revenue.
Consistent revenue and consistency in your business frees up your mind from concerns and worries over cash flow and taking every client that comes your way. When you reach a tipping point with consistent revenue, you can decide which clients you want to serve, you can grow those relationships to deeper levels and innovate with them and do things your competitors can only dream about.
When I say “consistent revenue” you might be thinking retainers (and you might know my stance on retainers, if not head on back to that blog or my feature in Forbes) but that’s not what I’m thinking. When you take on too much and you’re not charging enough, one of the symptoms is that you’re getting busier, your team is getting busier but that’s not reflected on your bottom line. Does that sound familiar?
I’d much rather you take on fewer projects, charge a hella lot more, deliver something amazing, and have time to work on systems and processes. Investing in that now means you can quit the boom and bust rollercoaster sooner and be on your way to growing and eventually scaling your agency business by taking the road less difficult.
Thirdly, you can sell without selling your soul. You should be ready to be compensated for the work you’ve done. I know that sounds so silly but I work with so many wonderfully creative people who feel like selling and getting paid requires some money mindset work for sure.
What you do is provide massive value to your clients. You don’t just provide a logo design, you provide a brand image that they’re going to use to present their company to the world. You don’t just provide a website, you provide a platform for a business to be able to generate leads and sales. If I created a website for a client that generates £2 million in revenue do you think they’ll quibble if I charge them 20k, what about 50k or even 100k?
You have a belief in what you do (or you wouldn’t be doing it) and you must have some belief that you can do it better than the next branding agency or web agency or you wouldn’t have stuck it to the man and gone out on your own. Take that belief and understand that for this prospective client in front of you to have the best value and support, it’s your duty to make the sale and start your working relationship together. Save them from the next cowboy who comes along!
You have an amazing portfolio, you’ve provided an ROI for clients, your processes work, you have the client testimonials to back it up. Take those foundations, that belief, articulate your value, and do what you need to do to charge more than anyone else in your market.
Sound easy right? It’s not. It’s going to be difficult and challenging but if you crack the perfect pricing point and experience consistent revenue, it’ll be so worth it.
Let’s recap and think about what you can do next to take action in your business.
So far I’ve talked about understanding the buying criteria of your potential client, knowing your numbers, and focusing on consistent revenue so you can serve the clients you want to serve, and the mindset shift of being ready to sell. I’d love to know if anyone or all of these have struck a chord with you. If it has, schedule some thinking time and write down some action steps you can take to charge more than your competitors and avoid the trap of being a short-order cook or treated as a commodity.