Decisions
Taking more time to think over things and THEN make a decision is just stalling. Sometimes you have all the facts right on your face —yet you close your eyes and want to believe they’re not there. So you stall. Your friendly reminder that “No decision is a decision”. It might be painful. But it’s simple. 🙂
Orders of magnitude
When developing and designing your offerings (offering/product ladders, too), take your pricing in orders of magnitude, related to the value. If you have something for 100, how would this turn into 1000 for your customer? If you have something for 50K, how would this turn into half a mill for your customer? This will push you to think in terms of your customer, and not in terms of you. When you crack that code, it becomes simple. You stop going from “How can I squeeze the most of what I got…
Adding to the noise
When you’re going into the market and set yourself with what the market pays/charges/”accept”, you’re only adding to the noise. It gives your prospect one more option to choose from. This overwhelms them. Without noticing, they go into the paradox of choice: the more choices you can choose from, the more anxiety and harder it is to choose one option. So, unless your price stands out from the crowd, you won’t differentiate yourself. You’ll get compared on merely numbers. And you do NOT want…
You need to be at least 10% cheaper than your competition
That’s the usual approach price-driven prospects (especially purchasing, procurement —or the accountant) will take on you to lower your price. And it’s fine. It’s their job to do that. And they’re trained to do so. Now, whatever they say is not mandatory for you. You can always say “Thanks for this. This doesn’t feel like a good fit. So I’ll pass.” “Out of curiosity… where’s this number coming from?” “We could explore something like this. I’m curious, though… what is it that made you talk…
Market-based prices
“Hell, no!” That’s the visceral, automatic reaction I get when hearing “You need to price based on your competitors’ prices”. While it sounds logical, the market can be (usually is) underpriced. There are many reasons to it, yet the most common one is because it takes a model of “What it costs me” + “My ‘desired’ margin”. A cost-plus model. Take this into account: while taking the market as a sanity check, and getting yourself a sense of confidence in what you offer, it also assumes that the…
Slippery slope
Charging “competitive” prices. Approaching the segment you serve with “what the market (competitors) charge” gets you to be compared EXACTLY on what they do. And my guess is you deff have something different. A common (mis)belief is that once you get customers, you’ll “flood the market”, and from there raise your prices. Sure, you could do that. And raise little by little… 5%… 10%… 12%… In every raise, you’ll have to justify yourself on why you’re raising them: “Conditions have…
A rate is not a price
A rate is not a price —even when it kinda feels like it. For it to be payable, you need to multiply it by another variable. Might be hours, minutes, quantity, level of effort, impressions… When you charge based on a rate, it’s based on inputs. And you usually have these (with some sort of precision) at the end of the project. If you want to give it ahead, you need to know exactly what the other variables are. Basing what you charge on your inputs takes into the mix ONLY your side, not your…
All price being equal
All prices being equal, why would they choose YOU? If everything is average, you offer something average, for the average price… it should do the work, right? Unless… Your customers care for something out of average. You do something out of average If that’s the thing, pricing according to the market makes no sense.
Revenue will *kill* your business
Wait, WHAT?! In the long term, revenue can (and will) kill your business. And this is not about the lack of revenue, but of your revenue stream. When left unchecked, you’ll get played by how much money you can be making. However, how much money goes into your business means nothing when your margins are thin. And here’s where pricing comes into play. Pricing is not about growth —or even revenue. It’s about how to maximize the margins to keep the business at its best. This is why pricing…
On revenue and your business.
Yesterday’s message was about revenue will kill your business. That is, if you’re only looking for it as the metric to follow (revenue = vanity metric). Here’s the thing Revenue alone doesn’t dictate or even diagnose if a business is doing good or bad. Profit, on the other side, does. While having multiple revenue streams is a great thing to have, if you don’t keep those on check, all your efforts will make little difference. It’ll be ultimately a race to zero. And the worst is that you can…
