I hear the terms “value based pricing” and “perceived value” thrown around a lot when talking about raising rates and earning more money.
Sometimes I feel like you can’t go five minutes in a conversation about pricing without hearing one, or both, of those terms.
And it’s true, determining the value you provide a client and pricing go hand-in-hand.
But once you’ve figured out how much value your work creates for your client, then what?
How do you justify the price you’re charging, even if it’s totally what you’re worth? What if they run away screaming and refuse to pay a higher price?
Just a couple of don’ts:
- You don't want that screaming, price haggling client. You want clients who are happy to pay the amount of money you're worth.
- You don't need to justify your price.
You need to communicate what you’re going to do for the client and how you’re going to help them.
When a client has a problem there are two things that they value more than money.
- The perception of reduced risk
Whether you realize it or not, clients approach every new project with a tremendous amount of fear and doubt. They’re already thinking about the last four times they hired someone to fix their problem and how it didn’t work out.
Your job is to change the client’s perception of you right off the bat.
When you do that, they’ll be willing to pay your quoted price, and they’ll be telling all their other scared client friends about you!
The thing is that clients are just like you and me (the good ones, not the bad ones). They just want to work with someone who understands them.
And you need to be able to communicate that with them.
Some Rules of Communication
- Say things your client can understand and perceive value from.
Technical jargon and seemingly random numbers aren’t going to mean anything to them. How are you going to fix their problem i.e. increase revenue or reduce costs?
- Don't be afraid to be passionate.
When you’re talking about something you love or love to do, it really shows and it’s contagious. Clients are excited about what you’re saying when you’re excited about it.
- Show your expertise in your field and how you've solved similar problems.
Communicating that you’ve succeeded before, and then some, is the sexiest thing to a client. (Laugh now, but wait till you see it in action.)
- Make it your business to know your client's business. They'll be so impressed that you understand them that they may just fall out of their chairs (which would be hysterical).
If you can communicate what you do best, in a language they understand, it won’t matter what other competition is out there.
Because you’ll be selling your client on you and your price without them even knowing it’s happening!
So next time you hear someone talking about “value based pricing” and “perceived value” remember that those terms are just code for, getting your client to feel like you’re going to deliver on the promise you’re communicating.
The promise that you’re going to solve their actual problem and bring value to their business.
You want to leave your client thinking, “Wow, he gets me. I can talk to him and he understands my pain. I’m willing to pay just about anything for him because he can get it done.”
And all it takes to get there, is some good old fashioned communication.