Machen MacDonald: What are you worth?
Are you in a service business? Is there enough demand for your services for your business to thrive? Do you have competitors? How much market share do you need to prosper? Do you charge by the hour? Do you charge by the project? All these questions help with answering the most important question which is, how much should you charge for your services? Another question it may resurrect is — can you increase your prices to keep pace with the growing cost of living and not lose clients?
It can be extremely tricky to answer these questions. If you charge too much, the business will most likely go to your competitor. If you don’t charge enough, you run the risk of not making a profit and perhaps even losing money. Perhaps even worse, you may tarnish your brand because your prospect or market being suspect of your value and thereby not throwing the business your way in fear of it being too good to be true.
It is typical for most service providers to hover the price of their services in the same range of their competition within 5%. This mistake is performed as a result of
1. Being lazy and not doing the research to know what their numbers are to be profitable.
2. Not knowing their own unique value proposition.
3. Not truly understanding the client’s valuation of solving or transforming their problem.
The good news and bad news is … perception is reality. A fee is remuneration provided in return for perceived value received. Psychologically, people believe they get what they pay for. Consequently, there is tremendous power in helping the buyer to stipulate what his or her perception of value is from the project and helping to maximize that perception.
Here are five simple steps you can follow to establish profitable pricing for your services to grow your business and attract more ideal customers:
A Venn diagram is a diagram that shows all possible logical relations between a finite collection of different sets. These diagrams consist of multiple overlapping closed circles, each representing a set. Typically these are made up of three circles. In the case of value, the three circles can be made up of: 1. What you do better than any of your competitors. 2. What’s the major problem you are solving. 3. What service/solution are people willing to pay for? The intersection of those three circles is your value proposition.
Ability to clearly convey the predictable outcome, impact or benefit the client will experience from using your services. The mistake most service providers make is they don’t identify the real problem and can’t clearly communicate how they can solve the problem. They engage in an industry jargon diatribe of facts and features only to thereby confuse and overwhelm the client. By the way, confused people won’t buy. Keep it simple by placing the light on the problem and expressing a simple solution in a simple way. When someone asks what time it is, they are not asking how the watch is built. Just tell them the time.
Level up continually
Learn more and gain the courage to continually improve, more fully develop and offer more value. Think horses to horse-power. The evolution of transportation from horse and buggy to electric self-navigating cars is a great example. Consider how you can disrupt your own industry or product/service offerings. Be the first to market. When our courage is activated, we come alive and access more ideas and solutions to move forward. When we are not on the leading edge we tend to get passed up.
Unique qualifications to succeed
Ponder the following question: What makes you and your company uniquely qualified to succeed at being the trusted provider of the services your clients are in need of? What is your education? What life experience do you bring to the table? What distinctions have you discovered as a result of failing? What have you endured that makes you stronger? Where else and how have you contributed to the industry and community? These are good starter questions.
People are always looking to grow, improve or expand in some way shape or form. Even if it is pairing down and becoming a minimalist. The benefits of simplifying and getting back to basics is perhaps the expression for experiencing more time or freedom to do other things than the maintain of stuff. Get clear on what the expansion is that your prospect or client is looking to experience and highlight the correlation of how using your services will expand what they are looking to encounter.
Each year billions of dollars are spent on drill bits and yet, nobody needs a drill bit. However, they needed the hole the bit provided. What is the resulting experience your client desires that your product or service will ultimately provide? And what will your client pay for that experience of getting their need met? The answer to that is your value in the marketplace.
Taking into consideration these steps will help you find your way to what you are truly worth in the marketplace and what your ideal clients are willing to pay. Keep in mind a car’s purpose is to get the passenger from one place to another. However, people will pay more for what they value. If a person values the feeling of prestige, optimized ergonomics and craftsmanship — they will pay for it and buy a new Mercedes. If they value economy and want to do their part in saving the environment, they may opt for a used Prius.
At the end of the day people buy a feeling. They buy how they imagine they will feel as a result of using your services.
People use their money to vote for what they value. What’s your campaign need to look like so enough people in your targeted market will vote for your services?
Make it up, make it fun, and get it done!
#1 bestselling author Machen P. MacDonald, CPCC, CCSC is a certified life and business coach with ProBrilliance Leadership Institute in Grass Valley, CA. He helps business people gain more confidence and clarity to live their ideal life. He can be reached at firstname.lastname@example.org and 530-273-8000
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