There Is No Law

Posted Leave a commentPosted in Marketing, Money, Sales and Influence, Strategy
Reading time: 1

There is no law that says we have to compete on price. Despite what people say and what we may fear, we do not need to lower our prices in order to succeed.

The law that does apply is the law of supply and demand. If we honestly provide something rare and valuable then people will happily pay more. What’s rare and valuable? Our understanding of and ability to serve our clients, our ability to work well with others, and our commitment to something bigger than ourselves or this transaction.

Instead of price-cutting, we can race to the top by listening, caring, serving, and improving.

Yes.

 

In your corner,

Mike

PS: This does not mean we get to raise our prices just because we think we deserve it.

PPS: Another way to see it: we will have all the money we want as a happy by-product of listening, caring, serving, and improving.

 

Today’s photo credit: Eric E Johnson Law books 2 via photopin (license)

matrix

The Value To Our Clients Matrix

Posted Leave a commentPosted in Sales and Influence, Strategy, We=All Who Matter
Reading time: 2 min.

Based on our clients’ understanding of the problems and solutions they face, we can provide them more or less value. The more value we provide our clients, the more we profit. If we remain truly dedicated to out clients’ successes, we all will agree that they are getting a bargain and we are getting well paid.

When our client… And knows how to solve the problem And does not know how to solve the problem
Knows (about) the problem Welcome to RFP and Commodity Land! We compete on price and maybe on feature-function-benefit. Our profit is small. We can do well by selling volume. The presence of many competitors makes selling in volume more difficult. We are problem solvers. We compete on the value we derive for our clients. Our clients see that they are getting a good deal when comparing our fees with the results we helped generate. Our profit is healthy.
Does not know (about) the problem We are so tuned to our client’s needs, wants, and desires and committed to their success that we are trusted business partners. We compete by writing the RFP. Our profit here is up in the air. We can choose to work on those parts of the problem best suited to us and our abilities. We are clearly trusted business partners. There is no competition. Our profit is strong and our clients still agree that they are getting a good deal.

 

Where in the Matrix does your business operate?

In your corner,

Mike

PS: To see the problem before our clients do, we dedicate ourselves to their success and continually invest in learning what success entails for them.

PPS: Perhaps you work for a non-profit or government agency. Or maybe your clients are internal to your organization, not external. If so, the terms change; the Matrix still applies.

 

Today’s photo credit: juan tan kwon via photopin cc Hint: it’s not glass but strong wires.

An Awful Way to Sell or Buy

Posted Leave a commentPosted in Money, Strategy, Success
Reading time: 2 min.

“Lowest Price Guaranteed” is an awful way to sell or buy something. When you compete mainly on price, your quality and service suffer and you struggle to make a profit. When you buy mainly on price, you often regret it and end up paying more in the end. You get what you pay for.

My brother-in-law is a very successful builder. He knows down to each 2×4 how much it costs to build a house that you will love. He prices his houses on value: he feels well paid and you feel like you got a good deal. He chooses to be generous instead of nickeling-and-diming you. When potential clients select another builder with a lower bid, he knows they will be disappointed with their choice and remains firm in his pricing.

It is initially harder to sell or buy on value. You have to know what you clients value–what they really want. You must foster trust so they will tell you. And you have to help them realize that value with your products/services. As a buyer, you will have to trust your vendor. You may need to step outside your comfort zone and be a bit vulnerable.

The rewards–no struggle or regret and plenty of mutual wins–are worth the effort. Go for value.

 

In your corner,

Mike

Pricing on Principle

Posted Leave a commentPosted in Money, We=All Who Matter
Reading time: 2 min.

How much should you charge for your products or services? This is an intense and complex question, yes? It probably brings up thoughts and fears about competition, worth, value, being liked and accepted, scarcity, and security. There are lots of approaches to pricing and they all have merits. Here is a principle you can use to navigate to your answer.

“Set your price so that you feel that you are getting well paid and your clients feel they are getting a bargain.”

I picked up this gem from Alan Weiss’ book, Million Dollar Consulting. Highly recommended for people offering services to businesses. And the principle applies to any offer and any client.

This principle works because it honors both you and your client.  If you agree to a price that harms you, you will feel bad.  If you agree to a price that harms your client, they will feel bad.  Straightforward, yes?

Feeling bad is an impractical way to start a partnership with anyone.  It undermines your and your client’s ability and desire to create a successful outcome and extend the relationship beyond this project or sale.

To set a price that follows the principle, you must know

  • what price range would have you feeling your are getting well paid, and
  • what value your client would realize and recognize by using your product or service.

The first part is relatively easy.  You can know what range of prices would feel best for you by checking in with your feelings. What would feel good, really?

To learn what value your client would derive, ask them.

You could have a conversation that starts like this: “Conservatively, how much money would this (product/service/project) save or generate for you?” Then set your price as some fraction (10% for instance) of that amount.  Allan Weiss, in his book, gives great tips and coaching on having this kind of conversation.

 

In your corner,

Mike