Value Pricing and Proposals
| Category: Telesales | Date: 2001-03-12 |
Ive touched on this topic several times and always discuss this in great detail with my clients but was surprised to realize that I had never written a complete Marketing Flash on the topic. So here goes:
The first thing to realize is that you most likely are not getting paid what youre worth. This is not the easiest thing to get. If youre a service provider you probably put a lot of energy into giving and making a contribution. This is good, but you also need to take care of yourself. Many small service business owners play the "Lose-Win game." You lose and your clients win. This leads to frustration, resentment and burnout.
Understand Your Value
The first step in value pricing your services is to work at understanding what your service contributes to the bottom line of your client. Ive worked with clients who helped their clients realize hundreds of thousands, if not millions in savings or increased revenues. For this they were paid a few thousand dollars. They were paid a standard hourly fee.
You might argue that you dont want to be greedy. I want to argue that you are simply worth more! When you discuss a project with a client you need to find out, amongst other things, what your contribution will mean to the client. What are the opportunities? What might be lost if action is not taken?
Dont Quote Hourly or Daily Rates
You dont want to start out talking hourly or daily rates. "Whats your hourly or daily rate?" asks the client. "I dont have one," you respond. "I base my fees on a project or solution basis. Once I know more about what results you want to produce I can give you a fee."
Outline Project Objective in Your Proposals
Too many proposals consist of a laundry list of exactly what youll do for the client. This really is the least important part of a proposal. The key section is "Objectives." Now that you know what the client needs to be happy, those objectives need to be clearly articulated in your proposal. What exactly do your promise to deliver? What will you improve, streamline, enhance, optimize, reduce, increase, clarify or change?
Measure of Success
Once the project is completed, how will you know the results have been achieved? This is simply a restatement of the objectives from the viewpoint of a completed project. Objective: Increase the level of communication between departments. Measure of Success: The level of productivity in all departments has been measurably improved. (I realize these are rather general - substitute your own.)
Choice of Yeses
I learned this from a wedding photographer. He offer a basic, standard and deluxe service. He almost always sold the standard service. But people had the choice of three plans instead of a choice between yes and no. Almost all service businesses can offer some kind of choice. By the way, it is generally better to present the deluxe package first and then come down to the standard, instead of visa-versa.
Reduced Price = Reduced Value
When a client asks if you can reduce the fee you tell them you will be happy to. You simply need to discuss which objectives they do not want included in the total project. Hmmmm. People love to reduce price but hate to reduce value. If its truly a budget issue, theyll cut where appropriate. If they are simply trying to get a lower price they will back pedal more often than not.
Say No More Often
You cant raise your income if you dont set your sights on bigger things. And what this means is starting to turn down projects that dont stretch you. Each year you need to let go of 10-15% of the lower end of your clients. This is not easy, but its a prerequisite to growth. If you keep doing exactly the same thing for the same price over and over youll get stale while experiencing a declining income.
Many thanks to Alan Weiss of Million Dollar Consulting fame for teaching me these valuable lessons!
About the Author
Robert Middleton of Action Plan Marketing works with professional service businesses to help them attract new clients. His web site is a valuable resource for anyone looking for effective marketing ideas.
mailto:
robmid@actionplan.com
http://www.actionplan.com
The first thing to realize is that you most likely are not getting paid what youre worth. This is not the easiest thing to get. If youre a service provider you probably put a lot of energy into giving and making a contribution. This is good, but you also need to take care of yourself. Many small service business owners play the "Lose-Win game." You lose and your clients win. This leads to frustration, resentment and burnout.
Understand Your Value
The first step in value pricing your services is to work at understanding what your service contributes to the bottom line of your client. Ive worked with clients who helped their clients realize hundreds of thousands, if not millions in savings or increased revenues. For this they were paid a few thousand dollars. They were paid a standard hourly fee.
You might argue that you dont want to be greedy. I want to argue that you are simply worth more! When you discuss a project with a client you need to find out, amongst other things, what your contribution will mean to the client. What are the opportunities? What might be lost if action is not taken?
Dont Quote Hourly or Daily Rates
You dont want to start out talking hourly or daily rates. "Whats your hourly or daily rate?" asks the client. "I dont have one," you respond. "I base my fees on a project or solution basis. Once I know more about what results you want to produce I can give you a fee."
Outline Project Objective in Your Proposals
Too many proposals consist of a laundry list of exactly what youll do for the client. This really is the least important part of a proposal. The key section is "Objectives." Now that you know what the client needs to be happy, those objectives need to be clearly articulated in your proposal. What exactly do your promise to deliver? What will you improve, streamline, enhance, optimize, reduce, increase, clarify or change?
Measure of Success
Once the project is completed, how will you know the results have been achieved? This is simply a restatement of the objectives from the viewpoint of a completed project. Objective: Increase the level of communication between departments. Measure of Success: The level of productivity in all departments has been measurably improved. (I realize these are rather general - substitute your own.)
Choice of Yeses
I learned this from a wedding photographer. He offer a basic, standard and deluxe service. He almost always sold the standard service. But people had the choice of three plans instead of a choice between yes and no. Almost all service businesses can offer some kind of choice. By the way, it is generally better to present the deluxe package first and then come down to the standard, instead of visa-versa.
Reduced Price = Reduced Value
When a client asks if you can reduce the fee you tell them you will be happy to. You simply need to discuss which objectives they do not want included in the total project. Hmmmm. People love to reduce price but hate to reduce value. If its truly a budget issue, theyll cut where appropriate. If they are simply trying to get a lower price they will back pedal more often than not.
Say No More Often
You cant raise your income if you dont set your sights on bigger things. And what this means is starting to turn down projects that dont stretch you. Each year you need to let go of 10-15% of the lower end of your clients. This is not easy, but its a prerequisite to growth. If you keep doing exactly the same thing for the same price over and over youll get stale while experiencing a declining income.
Many thanks to Alan Weiss of Million Dollar Consulting fame for teaching me these valuable lessons!
About the Author
Robert Middleton of Action Plan Marketing works with professional service businesses to help them attract new clients. His web site is a valuable resource for anyone looking for effective marketing ideas.
mailto:
robmid@actionplan.com
http://www.actionplan.com
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