You’ve come to realize that not all clients or prospective clients desire, need, or want the same value, so your firm offers three options: Good, Better, Best. (Or Platinum, Gold, Silver)
What if Good, Better, Best shortchanges your clients—and your company’s bottom line?
I started thinking about the harm of Good, Better, Best during a spirited discussion on LinkedIn recently about value based pricing vs hourly rates. The majority of services providers agreed in theory that value based pricing is the better pricing model.
But they struggled to apply it, and many boiled it down to the idea that providers should offer Good, Better, and Best options.
Good, Better, Best is NOT Value Based Pricing
Here’s how I think about this.
Value Based Pricing means that the provider delivers value to the customer or client and earns a fee commensurate with the value delivered.
The value delivered changes the life or experience of the client or buyer over time. Good, Better, Best typically means more of something, or gradual increases in quality, or a fancier appearance. The increases are not value delivered that changes the life of the buyer.
During your relationship building conversations (often called discovery) the provider should be learning about the prospective buyer’s needs, wants, and desires.
- What‘s the very best outcome or value the client would love to have? (Desires)
- What outcome would be really appreciated? (Wants)
- What’s the smallest outcome that would make a difference to the buyer? (Needs)
Providers can’t be afraid to take the buyer on this journey of discovery because they worry the buyer will settle for the least value. The more you know the better positioned you are to make offers that deliver different value.
Once you’ve reached the point where it makes sense to make an offer (you may call this a proposal, but I prefer the word offer, which implies a mutuality that proposal does not), you’ll identify three valuable outcomes that your firm could deliver.
But please don’t label these value outcomes “good, better, best” or “platinum, gold, silver.”
Why? Buyers are not using those words or thinking like that.
Use the Buyer’s Language
For example, let’s say the highest value the buyer desires is improving their cash flow in order to invest for growth. Call that offer “Cash Flow for Future Investments.” That reminds them what the outcome will be and that the fee is commensurate with that outcome. Remember that value based pricing focuses on the outcome or value delivered. The written offer to the client includes the provider working closely with the company, unlimited access and flexibility, and reviewing progress at specified intervals. There will be a start and end date but no time limits within the period of performance. There must be accountability on the client’s part as well as the provider’s. Every single day, the focus is on creating cash flow for future investments.
An alternative to meet wants might be to deliver “Improving Cash Flow to Sleep Better at Night.” You’ll be helping the firm stay on top of their current situation so they’re not coming into the office every day fearful about accounts payable and bank balances. The fee for this would be less than “Cash Flow for Future Investments” because the value improves the current state.
Your final offer (needs) could be a cash flow analysis and a plan for self-implementation to improve cash flow. You could call this “Planning for Cash Flow Improvements” and offer this for a lower fee. The value of this offer is that your expert analysis will enable the firm to improve their cash flow on their own.
Using the buyer’s language connects with them deeply.
Good, better, best or platinum, gold, silver has zero meaning.
“What You Think About You Bring About”
The famous saying by Bob Proctor, internationally renowned for his ability to motivate people to find success in their lives, sums up what’s wrong about Good, Better, Best.
If you, the Founder, Owner, or CEO of your services firm, think in terms of Good, Better, Best, your thinking will be focused incrementalism, not value. If you’re not thinking about value, you will simply not achieve results that reflect all your potential to deliver value.
To bring about great results for your firm and for your clients, you have to think in terms of value delivered, of how you will meet their desires, wants, or needs. The more you frame things up towards high value, the more your own clients will learn to frame their thinking up too as well.
How are You Going to Deliver Value from Now On?
There is no time like the present to think about delivering value using value based pricing.
- Listen during discovery to the desires, wants, and needs your clients share with you.
- Invest the time and thought processes to design three offers that meet their desires, their wants, and their needs.
- Use the client’s language in all conversations about the value your firm will deliver.
For detailed help read the COMMIT and PREPARE STEPS described in my book Crack the Pricing Code: Implement Value Based Pricing and Generate Fortunes. Every step is there and clear to follow.
If you prefer to get guidance—not go it alone—let me know. Text VALUE to 703-801-0345 and we will start the conversation.