For get the long lists of resolutions! You only need to make two promises to yourself in order to create dramatic business growth: one Do and one Don’t. This week you’ll read about the DON’T. It’s a big one and will make the difference between success and dramatic success in 2018.
Don’t deliberately lose money. In recent weeks I’ve heard CEOs and Owners talk about deliberately undercharging. They make these choices with the best of intentions, and I’m sympathetic to the instinct. However, less money than you deserve does not help your company grow.
- “If I think the customer can’t really afford the invoiced amount, I’ll discount it a little.”
- “I price my services a little bit less so I get clients and more exposure.”
- “We offer a discount on a future purchase as a ‘Thank you’ for their current purchase.”
Why These Cause You to Lose Money
- There may be reasons to help a customer out by lowering their charges. But if you do it AFTER they’ve already incurred the cost, you are telling them that the value you’ve provided and its price are not really fair. Get clarity on the customer’s financial situation and how much you could help them in advance, then invoice what you agreed upon. It’s impossible to come back to the full price after you’ve given them a lower price.
- Exposure to cheap buyers never helps you get the better clients and customers you want. The buyers who like the lower price circulate with others just like them. So your company gets a reputation as a good company for those who are ‘cheap.’ You do not attract better buyers who will pay full fee. Charge the right pice and demonstrate to the better buyers why that price is the best value. They’ll become advocates for you. The cheap buyers will only advocate for your cheapness, not your value.
- When someone pays full price, they have given you the clearest indication possible that they feel the value they received is worth what they paid. When you then offer them a discount on the next purchase, you’re telling them that you don’t believe the price on the current purchase was fair. They feel cheated; they will never again believe that full price is the right price. You are cutting your revenue down and you didn’t have to. If you want to express appreciation for a buyer, give them something extra. Never discount!
- Don’t include all possible value in the everyday price. It’s important to have standards of quality, timeliness, honesty, and accuracy. Your lowest price or smallest offerings should include those standards. Beyond that you should have levels of value that you add and charge for. Differentiate between what offerings lend themselves to levels of value and what can’t. Honesty is honesty. You have to be honest. Being respectful is the same. Timeliness, quality, and extent of customer service can vary depending on the the price.
Make sure this is not a resolution that you’ll break a few days in. DON’T Lose Money has to be an operating policy that is engraved in stone, distributed to everyone and posted prominently in your own work space. Learn it, commit to it, reinforce it and do it.
What steps do you need to take to commit to choosing to not lose money?