I know we talk a lot about understanding the value of your product or service. Today I’d like us to explore your value. Do you really appreciate what your product or service does for your clients? Do you believe you are pricing it appropriately?
It is really easy to decide for your clients how much they can afford or wish to pay. However, that is not the best way to price your product/service. And here’s why.
1. Chaos
You’ll make it really hard to keep track of what you are charging if your pricing varies by client. You want to have a standard and usual pricing for the vast majority of clients. Unique pricing should be few and far between and only when the case makes a lot of sense. An example would be offering a first time discount when you strongly believe there will be a lot of follow up business later. This is best done when there is a contract for long term work. That way you are guaranteed to receive the revenue, and the discount makes sense. It’s like a good faith gesture.
2. Devaluation
You run the strong risk of devaluing your product/service. This is risky. You are, in essence, trying to get into the head of your prospect and make decisions for them about what they value and what they can do. If you’re wrong (and there’s a strong chance you will be) the result is that you have actually told your prospect that your product/service is worth less than it should be. That is the belief they will have moving forward. It doesn’t instill confidence and it doesn’t guarantee they will hire you.
3. Failure to Grow
When you do this you make it really hard to grow. You end up spending your time on underpriced work. Moreover, you can get yourself into a cycle where you can’t get to the right-priced work. You’ll end up frustrated and disappointed. This can even lead to re-evaluating your worth internally. You know, when you are underpaid for too long you can start believing that it’s all you are worth.
Not only is this dangerous but it is also unfair to you and your clients. If we stay with the premise that you have a quality product or service, then undervaluing it serves no purpose. If you come across a prospect who can’t afford what you have to offer, they just may not be a qualified prospect. Don’t automatically move to the position of lower your price. The long term impact of that decision can be devastating to your business.
Diane Helbig is an internationally recognized business and leadership development coach, author, speaker, and radio show host. As a certified, professional coach, president of Seize This Day Coaching, Diane helps businesses and organizations operate more constructively and profitably. Diane is the author of Lemonade Stand Selling, and the host of Accelerate Your Business Growth Radio show. She is also a Service Provider for Constant Contact.