Saturday, February 6, 2010

What is your value worth?

The recession is tough on everyone right now. It doesn't matter if you've kept your job (but thank your lucky stars!) or had to reinvent yourself; this recession has absolutely touched nearly everyone in America, if not, the world. Most businesses are trying to keep customers happy without losing their take-home profit; most consumers are trying to get as much for as little cost as possible.
So how do you answer the all-too-often-posed statement: "That's too expensive."? Usually I hear this statement coupled with, "I can get it over here for a lot less!" or something similar. I also found out I'm not alone; in the past few weeks since the new year, I have had the pleasure of listening to my colleagues complain that a customer beat their price down, and in order to retain the client, they felt they had to compromise.
I asked my colleagues, and now I ask you: What is YOUR service worth? Most people don't realize when you ask someone to cut back on their commission, they are asking you to cut back your take-home pay. If the situation were reversed, these consumers would be furious at being asked to reduce their take-home pay. So why, then, do they have no guilt whatsoever in asking us to do this very thing?  I told my colleagues to stand firm with their prices. I reminded them (and myself) they have to make a living and can't do it if they are constantly reducing their hourly rate. Several of us surmised that, when asked to "defend" our prices, we find we do the exact opposite - we reduce them to avoid conflict.
Educating Our Clients
This isn't much different than a plumber helping a client find the water shut-off valve over the phone. In order for our clients to be smarter about their choices, we must educate them about our industries. Now, I don't mean you pull out the school desk and give your client a true/false test about your business! But, you do want them to understand you're not gouging them; rather, you are getting what your time is worth and its perceived value based on past client's information and a current price model for your industry.  The trouble is, most clients want your service! Hands down, they trust you and want to buy your service – period. So why does this process then become about as painful as a root canal?
Time IS Money
Consumers really do not understand that your time not only must be accounted for, but receive payment for contracting your expertise. Absolutely your clients can get lower pricing elsewhere! Aren't we also shopping for the best deals in town? Yet the last time I can remember arguing with someone over their price was about fifteen years ago.
Here are a few thoughts I learned from my colleagues and readings this week: 
1. Educate your clients. When a client questions your price, remind him/her of the benefits your service brings: a) saving time, b) saving stress, c) saving money by not having to do it more than once, d) the increase to their business by utilizing professional services, freeing up their time to run their business.
2. Talk about "the cost". In other words, take the words, "my price", or "my cost" out of the picture entirely. The client can then "see" the numbers rather than what you will make.
3. It's a haggler's market. Many professionals realize they have to take whatever jobs come alone to keep their businesses going during this recession. That does not mean, however, business owners have to sacrifice their own welfare at the same time. For example, if taking a client means you end up trading the cost of materials with the client and not getting your hourly rate, you are sacrificing what you know your value is worth. When you make this sacrifice, you devalue your industry, making it harder for others in your industry to make their hourly rate also. 
4. What's my target market? Remember your marketing plan (don't say 'what marketing plan'!) and ask yourself, "Is this client within my target market?" If not, rather than take on the client, see if a colleague may benefit more from a referral.
5. Is this client worth it? This goes back to not getting your hourly rate. If the client is trying to cut your cost now, are they going to nit-pick everything you do and complain about every nail or keystroke you make? Some clients may be more high-maintenance than others. Certainly they deserve the services you provide as much as anyone else, but at what price for your business? Will that price be worth whatever sacrifice you make in order to retain this client?
6. Is perception a true indicator? This is a last reminder about educating the client. Business owners, being captains of their particular industries, have to price-check against what their competition does on a regular basis. This helps us arrive at our hourly rate for the perceived value of our services. Clients also price-check, but they may not always see the "big picture" when it comes to the value your service will bring them. Remind the client the benefits of using your service, to include saving them time and frustration - and they'll be glad they called you.