Pricing, Value and Charging
How do you charge for the services you provide to your customers? What are you and your services really worth? And how do you establish that, and more importantly, convince actual and potential customers, particularly in a world where the price of everything is driven down to the lowest denominator with apparently increasingly scant regard for actual value?
If you are fundamentally a product based business, then establishing base cost, adding appropriate related costs and a profit margin is relatively easy in itself, and can to a degree be compared to the market. Even so, the value – added aspect is still hard to establish. And if you’re selling a service, and in a sense thus selling time, how do you price yourself adequately and fairly?
Here are some tips arising from experience and best practice:
• Understand the market – It’s clearly fundamental to ensure that your costing is sufficient to actually cover costs and establish a profit. Establishing a good knowledge of the market and what your competitors are doing will help to establish a base for your own pricing. But your own worth, reflecting your differentiation from others in the market must be established too.
• Understanding your own value – To charge what you’re worth, understanding your own value is the first step. You need to clinically reflect on your expertise. This will include your professional qualifications and expertise gained over the years, as well as your capability.
• Understand the customer’s needs – Find out what the customer’s real needs are. People use service professionals mainly because they have an objective to achieve or a problem they need solved. Understand what solving the problem will be worth to them and what the problem will cost them if it’s not resolved, and you have a basis for establishing your worth.
• Increase your own worth – Self-worth is at the heart of everything we do as individuals, and is also very important from a business viewpoint. If you don’t feel 100% worthy, your self-esteem will be low and your perception of your worth will be undervalued too.
• Focus on Value not Price – This is crucial. You need to encourage customers away from looking at the price of your service, to seeing the value of it. Once this is understood the price will seem low by comparison.
• Communicate your Value – Don’t hide your talents under the proverbial bush. By ensuring that the customer knows exactly what they’ll be getting for their money, they’re much more likely to do business with you and pay you what you’re worth.
• Be Comfortable Talking Money – This is also important to charging what you’re worth, as if you don’t become comfortable discussing it, you will never be able to negotiate properly, and therefore always risk undercharging.
In summary, be strong in your belief in yourself and your business, eradicate negative feeling about money such as “money is the root of all evil”, be confident in imparting and discussing your worth to customers, and remember the often misquoted but relevant phrase about “a man who knows the price of everything and the value of nothing!”
22 February 2018