Sometimes I think I’m nuts starting my own business 2 years ago (but I wouldn’t have it any other way). Shortly after starting the business I knew I was in trouble because I had a great product but didn’t have a clue how to sell it. I’d set up a quote by estimating how much time it would take me and then multiplying that by my hourly rate. The result was that things would take me 4 times as long and I was making less than I would have on food stamps… and not getting any sleep.
It wasn’t until I met Matt Nettleton and got some sales coaching that I saw the error of my ways. I was determining the value of my service, as presented by my estimate, rather than allowing my customer to value the service. I could work on two different client sites and turn around their inbound marketing efforts, and one could make hundreds more dollars and the other could make hundreds of thousands of dollars. Same work… two different values.
That change in the way I did business skyrocketed my business. I still have many small customers, but that’s been overshadowed by the large customers that value my service more because of the bottom line impact on their organization. The irony is that the smaller engagements we have now are actually the most difficult because a 10% increase in return may not even cover our monthly engagement!
Someone asked me the other day whether I thought it was a good idea to openly market prices for services on their site. They thought it was a great sign of transparency and would instill trust with their prospects. I say it doesn’t. I tweeted back that when you publish your price, price is now a feature that all your competition will compete with you on. The problem with you publishing your price is the same as me and my early quotes. It doesn’t take into consideration the value of your service to the prospect.
If you’re 99 designs, it works. You’re only competing against other low cost services. But it would simply be dumb for some of my graphic designer associates to quote what a logo costs without understanding the value that a logo might bring to the company. New logos have defined companies! A cheap logo may be perceived as cheap – along with the company it represents. A quality logo can change that perception and garner a lot more industry attention.
Your marketing is an outward display of the perception you have of your brand. If part of the value is price, by all means, add “cheap” in the brand name and throw some competitive pricing up there! However, if the value you bring is experience, intelligence, ideation, sophistication, and results… keep prices off the site and let your prospects decide the value you’re bringing. When we sign a customer at 10 times the contract size of another customer, we don’t quantify it by working ten times as hard. We quantify it by trying to achieve 10 times the results, or get the same results in one-tenth the time.
Be careful in both your marketing and sales approach when it comes to value versus price. They are not the same! Price is how much you charge, value is how much you are worth to the customer. Your marketing should promote the value you bring, not what you cost. And if your sales team complains to you that they’re losing sales based on your pricing, get new salespeople. It means they don’t understand and aren’t helping the prospect realize the value you bring.
Sidenote: In this time of crisis, I’d add that our employment system has this same problem. People often expect a raise based on their work effort, standard of living, or change in cost of living. That’s their perceived value of themselves. None of those matter to a company. Based on those, some exaggerate their value… and many more underestimate it. In my entire career (outside of the Navy), I honestly never got turned down for a raise. It was because instead of talking COLA or industry standards, I spoke of results and profits. It was a no-brainer for a company to give me a 20% raise when I was saving them or making them twice that amount.