How do you know when you’ve got the price just right?
The answer is simple - you can’t.
You will never know when your prices are right. Everyone values your work differently; they are all willing to pay different prices.
Every buyer has a maximum willingness to spend. You can’t simply ask them what that number is because they are never going to tell you. But there are ways of knowing you have got very close to their maximum.
You can watch the video here.
The first thing you need to realise is if you reveal a price to your client and they say yes straight away, you have gone in too cheap.
They probably have a number in their head that’s their maximum willingness. If you give a price that’s below that number they will take you up on it straight away and you won’t get a chance to change the price - but they would have paid more. You’ve left money on the table.
You need to start with a high price. If the client says ‘that’s too expensive' - that’s great! It means you have gone in above their maximum. Now you can work down.
A great tool to help you with this is called Effective Pricing. It’s a software tool that you can use in front of the client to price. It builds in a number of very powerful strategies and things you need to do to make sure you are getting the right price. You can learn more about that here.
Once you have gone in high, you can work with the client to adapt their package and bring the price down. You can give the client choices.
People love having choices when they buy something because they feel like they are getting exactly what they want.
You can use Menu Pricing - give a Bronze, Silver and Gold option. The people that are willing to pay you a higher price, the people that really value what you do, will choose to pay you more.
You can go even further and offer even more choices using what I call preference questions.
For example, they may want to meet with you, the senior partner, or they may not value having you specifically and therefore will meet with your assistant instead. It may be that they have chosen to have monthly meetings, but they could instead choose quarterly or annually.
Different people value different things. Giving them choices means they will help you to get closer to their maximum price. You can experiment with them and get closer to their maximum willingness.
Ultimately, what you need to do is make sure that you are continually testing your prices because you’ll never know if you’ve got the right price unless you test. You need to have systems in place to test your prices regularly.
If you find when you are meeting with clients you are winning more than 50%, you are too cheap. Please don’t congratulate yourself thinking you are an amazing salesperson. You could well be, but it’s more likely you are far too cheap. I recommend you aim to convert 25-50% of your clients.
Don’t celebrate conversion rates, celebrate getting the right price.
You’ll never know what the right price is, but you can use techniques to get as close as possible.
If you found this valuable and would like to learn more about value pricing, I run a free live online training session every month with a topic chosen by you. Attend live and you can ask me any questions you have. Click here to register and I will send you an invitation to the next session.
Wishing you every success on your pricing journey
Chartered Accountant, Public Speaker and Author of Amazon No.1 Best Seller “Effective Pricing for Accountants”
Your Pricing Journey gives you access to my pricing training delivered every month in easy to digest, and easy to implement, steps.
So if you sometimes find yourself working too hard, for too little money, this programme will solve that problem.