How did you come up with the prices?
That’s a question I got this morning from a client whose prices were implemented. The answer was this: Because pricing has numbers in it, but has very little (to nothing) to do with calculations and math. A price is the maximum amount of money to pay that is accepted by the buyers in function of the value they get. If they accept it and they’re fine with it, it’s for them to decide. It has nothing to do with what the business “thinks” of it, as whether it’s “expensive” or not. Or if inflation…
Evaluating decisions
You can get to the same event / happening and evaluate in different ways. And if you try to compare them, you need to have clear which was the intend for each of them. It won’t necessarily always be the same criteria. Sometimes you do things to show force in your market. Other times to grow accounts. Some others, to show up where your competition doesn’t expect you. And others, to just be there. Each one has a specific criteria. And a potential outcome. Knowing how to differentiate them will…
When is the best time to look for money?
When you don’t need it. It lets you explore ideas, try things out and say no with no emotional load involved. Because when you do need it (money), you’ll have to say yes to everything. Your No’s will be less selective. And you’ll get more sunk costs in it. So, now might be the best time to start trying out things. Better now than later. When you might be in a position of actually needing it.
Telling the difference
Customers might not tell the difference between great work, good-enough work, and mediocre work. But they sure know a good service from a shit one.
The wrong incentives
Charging by the hour creates the wrong incentives. Focusing solely on revenue creates the wrong incentives. Applying discounts without a clear criteria and policy creates the wrong incentives. Serving everyone creates the wrong incentives. Leaving things to wait so that you don’t face the hard decisions now creates the wrong incentives. Trying to make compromises with 2 opposite approaches creates the wrong incentives. Overlooking bad behaviors creates the wrong incentives. And when your…
Thought leadershit
Where do YOUR thoughts LEAD?
Survival mode on
How to make your business survive: discounts. A culture of discount hits your business deeply. It puts you (and your team, if you have one) at disadvantage when going to the market. It becomes a clutch. And as such, it’s impossible to run freely, and fast, with them. It takes off your power in negotiating for deals. It makes you cut prices off, without any specific pattern. It cuts your margins thin[ner]. It gets you to be overworked —and on the way to burn out. It makes you take ANY kind of…
A quick reminder
You as the seller have the total freedom to put any price you want. Your customers have the total freedom to choose whether or not to pay that price to work with you. A way to make it a no-brainer for them to pay is by making that price at least 1/10 of what they gain. Of their outcome.
Power disparity
Leads the dynamics in the relationship. If you’re a partner of your clients, then the power weights are roughly equal. You have things at risk when they don’t work. But if you don’t, that’s not a partnership. And that’s ok. Power also means you can say no, walk away, or withhold from engaging in the deal.
Price difference
“Knowing how much your competition charges will let you know where you can set your prices. So that you don’t charge too little, or charge too much.” Sure. This makes sense when you want to be a me-too player. To be easily exchangeable. Undifferentiated. Expendable. But if you have something truly special? Should you charge the same as everyone else? Here’s a rule of thumb: Make your price AT LEAST 60% higher than your competition. 20, 30 or 40% is too similar. 50 would be fine… but since…
