The Price Is Right?
Price(s) is/are the most controllable variable in most businesses. In one snap decision you can decide to charge 20% less if you so desire but try applying that method to your costs and you’ll quickly feel the full wrath of the suppliers in question (be it human or business). So, it is vital to ensure you have a pricing strategy that works for your target market, but more importantly for you as the business owner.
I quickly found that following some simple principles helped me establish my market rate, enabling me to be confident in having pricing conversations. Having conviction in yourself gives you a much better chance of success. These principles are:
- Know your worth/value
Some simple market research can quickly ascertain what is a comparable price. For me, I am offering senior level strategic financial analysis and insight to business owners (what might be typically badged as Finance Director services). Once I was comfortable about my capabilities and what I should be charging for them, it became easy to have that pricing conversation with prospects. If they baulked at what I charge, then I’d be pretty sure they didn’t truly understand my value, and probably never would.
- Focus on your value and your USP (Unique Selling Point)
All too often people compare themselves to their competition and end up only competing on price often becoming embroiled in the dreaded ‘race to the bottom’. With a premium service, there needs to be a focus on service, quality, and the uniqueness you or your product/service brings to the client. This makes price becomes less of a prominent factor in the decision-making process, which makes the challenge of securing the work at the price you want much more achievable.
- Hold your nerve
Following on from the above points, most negotiations will involve the client trying to get a better deal for themselves. In my early days I would have conversations where I was being asked to discount up to 30% of my ‘worth’. Whilst knowing the work would be handy at a time when I wasn’t overworked was tempting, but then I realised that if I still worked with this client in 2-3 years’ time, I could end up resenting the price I had with them, when I could get new work that paid more. So, I held my nerve and walked away. In one case the client came back and agreed to pay my going rate.
- Clear communication
Making your pricing simple, consistent and understandable can lead to more favourable decisions. Having sub-clauses and caveats in a pricing discussion usually leads to confusion and lack of engagement. Also, if you are offering an introductory discount, state clearly how long this will last so that there are no nasty surprises in store at the end of the initial period.
Pricing discussions can be awkward and become emotional on both sides, but by having a laser like focus on what you want from the discussion can make it far less daunting and far more rewarding, and the more you follow a consistent approach, the more confidence you gain which leads to more outcomes that work for you.