Doing the wrong things is expensive.
It may surprise you to learn that IMPACT Based Pricing does not begin with the prices or fees a company charges.
When a firm owner calls and asks, “We currently charge X, how can we charge Y?” I stop them.
We have to first talk about which of their current practices are reducing revenue.
Expensive wrongs
The expensive wrong things I’m talking about are very common. But their frequency doesn’t make them right or any less expensive.
You, the lawyers, CPAs, coaches, designers and other consultants reading this post, need to stop the wrong things in order to start the right things.
Top 6 practices that reduce revenue
- Billing for time is a high risk practice. It reduces revenue when you and your associates work fewer than the target hours, when people choose not to call, or cancel meetings, or price shop. Hourly billing is even more expensive when clients object to charges and you have to write off hours.
- Billing for deliverables costs your firm money because most of the time clients do not want a deliverable, they want you and your knowledge and attention. When people really need to talk things over, and there’s no deliverable for you prepare, you do not generate revenue.
- Billing for value costs your firm revenue when what you value is not what the client values. I spent 8 years believing that value based pricing is good for the firm and the client. Then the idea of value became devalued and completely unpredictable. I created IMPACT Based Pricing for my company and my clients, and we are all enjoying revenue increases.
- A large volume of entry-level, low paying work costs you your reputation and forces you into competing on price—LOW prices. When you position your company as a provider to clients with more significant needs, your fees increase, and volume decreases.
- One-size-fits-all products and services cost you the revenue you could get if you customized. This pairs with #4-a smaller volume of clients with more significant needs and for whom you customize beats all high-volume, low price products every single year.
- 30-60-90 day payment terms cost you cash flow stress, actual borrowing fees for using credit lines, and reduced company valuation because the borrowing costs eat up your profits.
All of these wrong things are choices.
Make right choices instead and make more money.
Did you know?
You can schedule a meeting with me. We’ll talk and you’ll tell me what’s going on in your firm. It’s a Discovery call in the best sense of the word: I’ll discover important information about you and your company, and you’ll discover important information about me and how I work with professional and creative experts. Schedule your meeting here.
