“What is the right fee or price for our services?”
CEOs, Owners, finance, and sales teams ask me this question all the time.
It’s my belief that these CEOs and Owners aren’t really asking about the price.
They want to know how to think about how to charge for the value of their services.
Once we refocus on that question, it pays to go deep into understanding the concept of value.
The Value Landscape
Deep into my thinking I suddenly saw the image of a landscape:
Wherever you go, you see a landscape. It includes different terrain and buildings, trees, traffic, pedestrians, public places, stores, and so on.
Each person walking through that landscape will value different elements.
A hungry person will value the restaurant. The runner will value the trails or park. If they’re trying to build leg muscle, they would value some hills. The driver values the roads.
Same landscape, different elements of value to the people there.
Going even deeper, the runner who’s building leg muscle values hills while the casual walker does not.
My lesson is this:
There are different landscapes (city, country, wilderness) and there are different elements within each landscape that are valued by the people there.
What does this have to do with your knowledge services firm?
It’s extremely relevant.
Your firm’s industry or segment of an industry is your landscape.
Within that landscape are various elements.
Your clients and prospective clients are attracted to the landscape and then will gravitate to some elements within it.
To price successfully—that is, make the revenue and profit your expertise entitles you to—you need to know how your various clients value those elements.
Let’s say your company’s industry is web design. The landscape has several elements including
- graphics and images
- list building
- social media
Some clients want the whole landscape. They’re like people going to an amusement park from dawn till dusk, getting a ticket for unlimited rides, and eating at every kiosk. They value the whole landscape and are willing to pay for it.
Others, maybe the majority, want elements of your landscape.
- Some want the graphics and images. “Make us look good.”
- Some are eager for a robust e-commerce site. They have digital products and need copy to get buyers to click the “Buy Now” button.
- Other clients want to build a mailing list.
The pricing strategy for this firm is based on understanding this landscape and the elements within it.
The firm also needs a process in place that invites clients and prospects to talk about what has value to them.
When you combine a pricing strategy that expects that most buyers will value your elements differently with a process for determining this, you will offer the right fees to each client.
There’s a catch!
I would love it if pricing was so neat and logical.
You could put a dollar figure on each landscape and the elements within it and the money would roll in.
But—dollars and other numbers are not perceived by everyone the same way.
- A ten percent reduction in costs may be huge to one client and be quickly dismissed by another.
- One company’s 30% increase in revenue is another company’s no-go.
I learned this lesson from a business owner years ago.
After showing him that there were ways to increase his revenue by 30% in one year, he told me it wasn’t worth it. The “it” of course was my fee. He did not value the result enough to pay for help getting it.
When I pressed for a number that would be worth it, he admitted that he valued his way of doing things more than the potential for a significant increase.
Numbers do not reliably indicate value, nor is any given number valued the same way.
Do this instead
Yes, ask your clients what value they assign to your landscape overall, and to the various elements within it.
If they don’t value your landscape, move on.
The time and energy you spend on convincing would be better spent on someone who does value your landscape. As one of my LI connections often writes, don’t try to sell steak to vegans.
Once you’re speaking with someone who does value your landscape, use the 6 Questions to learn more.
Use Question number 4 to help them tell you what element of your landscape they value the most.
Start with that. Make an offer that delivers the IMPACT they value. Deliver as promised. Return to them and give them a chance to choose another element.
You’ve read this far—now, take a minute to visualize your firm’s value landscape.
- Write down the 5 elements most clients want.
- Practice talking about the IMPACT those elements make.
- Call a client or a prospect and invite them to visit your landscape. This could be a call/zoom/coffee.
Need some support? Email, or text LANDSCAPE to 703-801-0345