In my previous post Stop Paying Lower Prices TODAY, I talked about how you should change your mindset on how you think about finding the Best Price over the Lowest Price when it comes to goods and services.
In this post I will be outlining some of the benefits for you as a business for implementing these ideas and to start charging more for your services…. TODAY!
DOMINATING THE BOTTOM OF THE MARKET WILL AFFECT YOUR GROWTH
It seems nobel to believe that you can be the fair and honest business person that will not over-charge your customers and give them a fair and cheap price for your services. Although it may seem like a good idea, this is a mindset you need to change if you want to provide true value while making your business grow.
Charging a fair price in comparison to a cheap price means that you are not compromising the perceived value of your work as people correlate cheap prices with cheap quality, but it also makes sure that your knowledge and expertise is being compensated and you are taking the right steps in making your business grow.
Here are some points you should be considering;
- Over-charging is not the same as Value Based Pricing.
- Low prices may affect quality of work.
- Saying No means you can say Yes to better opportunities.
- If you want to charge a premium price, offer a premium experience.
- Longevity in low price bidding.
Lets take a look at these points in more detail.
1. OVER-CHARGING IS NOT THE SAME AS VALUE BASED PRICING.
People believe that if you offer a service that is priced higher then the average in your area, that you are over-charging or trying to make a greedy profit off your customers. To show your customers that this isn’t the case, you will have to show them the value you provide over your competitors.
Value Based Pricing is based on the idea that the services you are offering, or the benefit your customer receives due to the service you have offered exceeds their initial investment in you. Some points to keep in mind;
- The value you offer your customer in your service should over exceed their expectations.
- The potential increase in your customers profit margin due to the service you provide should reflect in the price of your service.
- DO NOT use this as an excuse to abuse the idea to over-charge for the value you are providing.
For more on Value Based Pricing I recommend to check out the Seanwes Value Based Pricing Course.
2. LOW PRICES MAY AFFECT QUALITY OF WORK
You may think that you or your employee’s will be okay with working at close to cost price on services but the truth is that the quality of work will suffer.
Once the excitement of winning a bid has subsided and you are faced with long days of working low profit contracts you will find yourself sacrificing your quality of work and begin cutting corners just to get that job done.
I’ve seen people quote $20 for clearing out overgrown yards on community forums! That equates to at best $5 a hour before taxes when you take into consideration the time and disposal of clippings and shrubs. How long can that be sustainable before it feels overwhelming?
And the problem is that it can be hard to tell a long term customer that you want to raise prices or quit, so you end up stuck in this job that you start to hate until your quality of work diminishes and the customer ends the contract leaving in their mind a bad impression of you.
3. SAYING “NO” MEANS YOU CAN SAY “YES” TO BETTER OPPORTUNITIES.
There is a saying that has become popular in todays society when it comes to trying to grow your business;
“Grab whatever job you can”
Sure, grabbing every contract that comes your way is a easy way to grow your portfolio of clients, but are they really the right clients for you?
It may be hard to turn down a job when you are looking to grow your business but you really need to consider the type of jobs you are saying yes to.
“Saying No means you can say Yes to better opportunities.” This statement couldn’t be any more accurate. You need to fight for contracts that are a good fit for you, not what is convenient.
You can’t say Yes to a good contract if you cant fit it in to your schedule thats filled with smaller bad-fit contracts.
Remember: 1 great, high profit and well fitting contract could take the place of 2 or 3 smaller, less profitable contracts. Not only will you be doing one-third of the work, but you will have open space in your schedule to fit in more of these profitable contracts. Doesn’t that sound like the better option?
4. IF YOU WANT TO CHARGE A PREMIUM PRICE, OFFER A PREMIUM EXPERIENCE.
This doesn’t just mean buy expensive equipment or use expensive products. A premium experience is not just giving the customer the what you promised, but it is providing them extra value, the extra little touches that makes your interaction with them a memorable experience.
A premium experience can be summed up in one phrase;
The value you give should exceed the customers expectations.
Let me say that again;
The VALUE you give should exceed the customers expectations.
When the value you give your customer exceeds their expectations then it reinforces in the customers mind that you are a company that takes pride and cares about their clients. More importantly it makes them feel special that you took the extra care to go up and beyond what was promised to give them that experience. (Check back next week for ways to offer a premium experience)
This will not only leave a good impression in their minds about you and your company, but you are more likely to get repeat business and referrals.
LONGEVITY IN LOW PRICE BIDDING
One of the concepts often missed when considering low bids on contracts is the longevity abstained from winning these contracts.
If you want a quick job for the short term then low bids are for you. If you are looking for long term clients to offer value and build bonds with, then avoid at all costs.
A client that is after the lowest price will most likely only keep you around until next lower price comes along. This may be in a few months or in a year, but it will happen.
So why waste your time in short term projects when you can build up to bigger long lasting contracts that will value you just as you value them?
COMPETE FOR VALUE NOT PRICE
There will always be someone out there who will be able to outbid you on price. Competing on price just means you are another pawn in the fight against kings.
Instead of competing on Price, compete on Value.
Find out what your competitors are not doing but should be:
For example, As a Wedding photographer do you have multiple backups of the photos you take in case something happens to them before you send out your client the final product? This will give a potential client peace of mind, but other Photographers may not do this or promote this feature when trying to sell their services.
Ask business owners about the problems (relating to your field of work) that they are facing in their business or at home and implement solutions to those answers into your repertoire of services. These points can be used as a selling point for new bids.
Ask your current Clients about problems they face in their business or at home and come up with solutions you can implement into your services.
Take those extra steps to stand out in the crowd when you making a bid for a new contract and you will come across that you know the clients pains and struggles and you are the only company that will be able to fix the problem.
…and sometimes that is more valuable then a low price.
Have you come across any businesses that have exceeded your expectations? Do you have anything to add on the topic of giving your customers more value?
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