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.
How do you give your prices?
Do you have them all with all the details? Or do you have them as one single-price? Whatever form you do, what’s the thing you notice when negotiating/talking to your customers re: your pricing? Do you have any push back to justify anything —if at all? Hit reply and lemme know. 🙂
Simplicity
It’s not about what YOU think/see/feel is simple. It’s about what your customers think/see/feel is simple for them (or not). They don’t know the ins and outs. They don’t know better. They do know better, though, their day-to-day. They’re experts at that. A “simple” system for them might not be something that’s simple for you. Take “my old tax booking system is simple”… until they know how simple other things can be. Because simplicity —or complexity— has not everything to do with the use,…
No is good
Knowing what to say no to is the thing that puts you (and your business) in the expert position. It gives you clarity to choose the right fits for you. It disengages you from incurring into sunk costs (that all-nighter proposal/quote, that long pitch deck, that overexcitement into this next deal). It lets you set and respect your boundaries. It gives you the freedom to walk away. And most of it all: it lets you be the expert.
Revenue or profit.
Revenue or profit. Which one is the one you’re to aim for? Or better yet, if you need to make 500K in revenue, what would your approach be: Low price, high volume, or High price, low volume Same offering. Same inputs. What do you choose?
