Welcome to Business Management
Monday, May 28, 2007
The 3 Biggest Pricing Mistakes and How To Avoid Them
I was recently on a forum where several "time for money" service professionals and business owners were discussing their "rates". I immediately noticed that these smart, savvy business owners were falling into some pricing myth traps.
Here are the three biggest pricing mistakes that I see being made by "time for money" small business owners:
1. Matching/Undercutting.
Many small business owners look around at what everyone else is doing and they do the same thing -- or worse, they lower their rate thinking it makes them more appealing to prospective clients. It doesn't, it makes you look like a bargain and sets you up to be treated as one would treat a bargain.
I challenge you to separate yourself from others in your industry. You want to be exclusive. You want to be known as the Mercedes or the BMW -- not as the Daewoo. Offer clients an exceptional experience and they will pay your price.
2. Focusing on Pricing.
When speaking with prospective clients, you don't want to focus on your rate or your "price"; you want to focus on the results that the prospective client will see as a result of partnering with you.
Discuss the type of results that clients typically see, let them *feel* that happy place AND want to stay there, then give the price.
For example, a virtual assistant can share that her clients have more time to do those things they do best rather than handle all the administrative details of running a successful business and, as a result, they'll generate more revenue.
A massage therapist can discuss the ongoing positive physical, mental and emotional results which occur with recurring weekly massages rather than those booked only "when you *need* one".
3. Discounting.
When someone next asks you for a discounted rate, I want you to pause for a second and then say "I understand, which of my services would you like to eliminate?"
Seriously. You are a small business owner, not Wal-Mart. If a prospective client begins by asking you for a discount, do you think he will appreciate and value all you bring to the relationship OR will he question and haggle from Day 1?
In order to approach your pricing as the natural conclusion to a conversation rather than allowing it to become THE conversation, you need to come from a place of abundance. Not every prospective client will be a match for you and THAT IS OKAY. You want to attract only those clients who recognize the results that you provide and are willing, and able, to pay for those results.
Here are the three biggest pricing mistakes that I see being made by "time for money" small business owners:
1. Matching/Undercutting.
Many small business owners look around at what everyone else is doing and they do the same thing -- or worse, they lower their rate thinking it makes them more appealing to prospective clients. It doesn't, it makes you look like a bargain and sets you up to be treated as one would treat a bargain.
I challenge you to separate yourself from others in your industry. You want to be exclusive. You want to be known as the Mercedes or the BMW -- not as the Daewoo. Offer clients an exceptional experience and they will pay your price.
2. Focusing on Pricing.
When speaking with prospective clients, you don't want to focus on your rate or your "price"; you want to focus on the results that the prospective client will see as a result of partnering with you.
Discuss the type of results that clients typically see, let them *feel* that happy place AND want to stay there, then give the price.
For example, a virtual assistant can share that her clients have more time to do those things they do best rather than handle all the administrative details of running a successful business and, as a result, they'll generate more revenue.
A massage therapist can discuss the ongoing positive physical, mental and emotional results which occur with recurring weekly massages rather than those booked only "when you *need* one".
3. Discounting.
When someone next asks you for a discounted rate, I want you to pause for a second and then say "I understand, which of my services would you like to eliminate?"
Seriously. You are a small business owner, not Wal-Mart. If a prospective client begins by asking you for a discount, do you think he will appreciate and value all you bring to the relationship OR will he question and haggle from Day 1?
In order to approach your pricing as the natural conclusion to a conversation rather than allowing it to become THE conversation, you need to come from a place of abundance. Not every prospective client will be a match for you and THAT IS OKAY. You want to attract only those clients who recognize the results that you provide and are willing, and able, to pay for those results.
# posted by gopi @ 12:10 AM 
Subscribe to Posts [Atom]