Getting Your Pricing Right
Are you being paid your real worth? What is holding you back? It’s a staggering fact that two in five business failures are directly attributed to undercharging or the over use of credit – specifically slow collections and bad debts.
So many people in business never really get paid their real worth. They put the energy into their products and services and deserve to be paid fairly for them. Unfortunately, most of us have been brought up in an environment where money was a taboo subject and to ask for money was considered to be out of place or even rude. This has led to two problems in business, we don’t charge enough for our products or services in the first place, and we don’t like to ask for the money after we have delivered the product or service and a customer drags out payment. I think it’s partly due to our self confidence and not wanting to break those comfort zones again.
In business, there are three pricing emotion barriers you have to overcome. The first is your own price resistance. Do you feel that you are providing a worthwhile product and service for your customers and do you think it is value for money? Then why do so many of us feel that we have to justify our prices or even put them down?
Unfortunately, a lot more salespeople these days do try to sell on price and the advertisements on the television and in the press don’t help. They are also becoming more price focused which is tending to educate the buying public to buy more on price, but I still think most people actually buy on perceived value. Of course, if all they have to go on is the price then that will become their main buying motive. But most people still want quality and service and are prepared to pay more to get it.
You should never sell, tell, reveal or demonstrate your product or service until you understand your customers’ specific needs. That means asking a lot of questions to find out what the customers’ problem is; what they really need and of course that builds the vital relationship and trust. You have a solution to your customer’s problems but you need to know about their problem so you can show them how the benefits of your product or service will help them. That’s the second pricing emotion barrier you have to overcome; the customer’s price resistance. Your line of questioning should take them away from the price and when the customer realises that you have their cost effective solution, price becomes insignificant, you just have to point out their savings and they will be happy to pay you.
Price in any business is determined by reviewing three areas, the cost to the business of making the product or delivering the service, the price that the competition charges, and how much the customer is prepared to pay. Often, when we are setting our prices or fees we don’t always take these points into consideration and we should. The result is our customers often value our service more than we do, we undercharge and end up working much longer hours than we need to just to make a living.
The third pricing emotion barrier is getting paid of course and in our next post "Show Me the Money" we will talk about the importance of getting your credit management right. If you can develop that self confidence to ask the right price at the start you should find it easy to get paid your real worth!
You can view my interview with Dale Beaumont on "Getting Paid" at Birn.ai