Without contrast everything seems expensive

price psychology Nov 21, 2016

Why everything seems expensive without contrast 

I often get asked what the most powerful technique is when it comes to pricing.

And I reply – “The contrast principle.”

I believe that it’s described most effectively in the introduction to a book called Influence, Science and Practice by Dr Robert Cialdini.  The book – which I consider to be the best book on selling that I’ve ever read – talks about the primary laws of influence. Dr Cialdini calls the concept ‘perceptual contrast’ and describes it like this:

“When we see two things in sequence that are different from one another, we'll tend to see the second one as more different from the first than it actually is.”

It’s a theory that carries into pricing. Human beings are clueless about price.

Honestly. We don’t know the price of anything because we don’t know the absolutes.

Therefore we compare.

And our clients compare too. Without you...

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Clients are clueless about your price

price psychology Nov 14, 2016

How your clients know nothing about price

Did you know your clients are absolutely clueless about price?

Yes – clueless.

And it’s proven. In fact, it’s proven by psychophysics, a branch of science that has been around for more than a hundred years.

So what does it mean?

Essentially psychophysics means that we are more sensitive to differences than we are to absolutes.

Take sensory judgments such as weight, smell, taste and sight for example.  If I showed you two shades of red you would be able to see the difference – i.e. tell me which shade was darker – but it’s unlikely you would have no idea on the absolute shade of red.

The same with your sense of touch.  If I asked you to put your hands in two buckets of water – one hot, one cold – you would struggle to tell me the exact temperature of the water. But you would be able to tell me which one was hotter and which was cooler.

We are great at understanding the differences...

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Your fixed price is always wrong

value pricing Nov 07, 2016

Why fixed pricing is always wrong

Or to be more precise… when you have a single fixed price 

It’s always wrong.

Essentially it goes back to the basics of economics. I have always been fascinated by economics – so much so that I took a degree in it. One of the most important things I learnt was the theory of the equilibrium price.

Or in other words the fact that price should be set where the supply and demand curve intersects.  

When you look at a visual representation of that it shows an area above the equilibrium price and below the demand curve that is the consumer surplus. 

 That is also the amount of profit available if we can tap into the fact that different customers will pay different prices.

 

You can watch the video here.

The concept of magic price

In a previous video I looked at the concept of magic price and how you figure out your magic price. I looked at the situation of you selling a tax return that costs you £50 in...

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How to find your magic price

value pricing Oct 31, 2016

Taking the law of supply and demand to the next level

So what is a magic price 

Essentially, it's the price that maximises your profit.

The law of supply and demand

When I started to study economics, even at school one of the very first things we learned was the law of supply and demand. That the point at which the supply curve and the demand curve intersect is the equilibrium – or ideal – price. The trouble is that while that works in theory, in practice it's difficult to measure.

If we could, if we knew, for example, exactly how many tax returns people would buy at £200 or £300, we could easily plot a demand curve. And then, if we worked out the profit for each price point, we’d end up with a bell-shaped chart. One that basically shows that a zero price – giving your stuff away for free, while still having to cover all of your costs – means you’d be making a loss.

Similarly, at the other end of the scale, if you price too high...

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Your clients aren't price sensitive

value pricing Oct 24, 2016

Debunking the myth of price sensitivity

One of the big myths I hear over and over again – and one of the main things holding us back with our pricing – is that our clients are price sensitive. But, as the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I can tell you that they’re absolutely not.

Let me explain.

Most accountants and bookkeepers I speak to think their clients are price sensitive. But research by behavioural economists suggests that the number of price-sensitive people in society is about one in five, or 20%. And a typical example might be someone who’s retired, who collects the free newspapers and goes through them every weekend meticulously cutting out the 3p-off food vouchers.

So I admit all they care about is price. They’ve got time on their hands. But what I also know is that they’re not your clients. And, if they are, then you may want to revisit your ideal client process!

 

If...

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How to price special projects that come up without notice

value pricing Oct 17, 2016

3 tips for pricing one-off jobs

When deciding how to price projects such as annual accounts it’s relatively easy. It’s repetitive, predictable and we are able to create a package solution to suit that makes it easy to price.

But what about when it’s a one-off job? How best do you price it then?

Here are 3 tips to help you do it more effectively:  

Tip 1 – Establish the value to the customer

The one-off job, or special job, is just that – it’s unusual and so pricing for it is unusual too.

The first step therefore is in quantifying its value to the customer. What is it that they want you to do and – more importantly - why do they want you to do it?

Getting the answer to the second question will help you in determining the benefit to them of what they are asking you to do – and therefore the value to them. It may be subjective but that’s fine.

You need to create a picture of what’s at stake. That will help you work out...

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Why there is no such thing as a market price

value pricing Oct 10, 2016

Why believing in a market price could mean you’re missing out

As the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I want to share with you why there's no such thing as a market price.

Often, if I tell an accountant they’re charging too little for something, that they should increase the price of doing a tax return, for example, they’ll say, "But Mark, you don't understand my client base. I’m charging the market price – I can’t charge any more."

But I’m going to tell you exactly what I tell them: that they’re wrong. That’s there's no such thing as a market price. And I can prove it.

Staggering results from benchmarking survey

In 2014 I was privileged to carry out the single biggest benchmarking survey of the UK accounting profession. In it, I asked 725 accounting firms a whole bunch of questions about how they price as a profession. In particular, I looked at 25 different accounting, tax...

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How to get sales leads automatically

winning new clients Oct 03, 2016

Increase your sales leads – automatically

List building – building up your database of prospective clients, of those people you'd like to work with – is one of the fundamentals of marketing. Yet when I ask most accounting firms and bookkeepers how big their list is, typically it’s less than a hundred.

A list of less than a hundred severely limits your potential growth. Even sole practitioners should be aiming for a couple of thousand. But how do you go about reaching this?

You can watch the video here.  And here are the steps you want to take.

Stage 1: Establish a system

The answer is you put a system in place that will nurture and grow your list. It’s what I see as one of the main strategies of social media, including the big three: LinkedIn, Twitter, and Facebook.

In addition you should have – actually, not should but must have – either a YouTube channel (video’s the most powerful form of marketing there is), or a blog. Or best...

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Your first webinar

winning new clients Sep 26, 2016

How webinars can increase engagement – and conversion rates

Have you ever run a webinar? If you haven't, then it's time you did because they’re incredibly powerful. And, to help you get started, I’m going to share some key tips.

If you prefer to watch rather than read, you can watch my video here

 

 Live? Or pre-recorded?

The first big question to think about is whether you should run webinars live or pre-recorded.

Some great software exists that allows you to create webinars as videos and then run them on any schedule you like. Once a week, for example. People log in to watch the webinar, and it feels live. As a concept it has a lot of appeal. However, one problem I’ve found – and other people’s research bears this out – is that even though pre-recorded webinars may feel live, conversion rates are significantly lower.

Tip #1: Run them live

My first tip then is to run them live. That way, you can give whatever offer...

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The event lead-winning system

winning new clients Sep 19, 2016

Events can help you win leads – and business

Have you ever spoken in public, or thought about speaking in public? If you haven’t, it’s a great way of establishing yourself as an expert and winning new business. But, incredible as it may seem, although the event lead-winning system has brought me hundreds of thousands of pounds of business over the last 12 months, I don't see any other speakers using it.

 

If you prefer to watch than read you can watch the video here.

The secret behind winning new clients…

If you've been invited to speak at someone else’s event, for example one organised by your local chamber of commerce or bank, what’s your primary goal?

Of course you want to add value. You want to deliver great content. And you want to be seen as the expert. But your primary goal is always to capture the contact details of everybody in the room.

But, before I teach you how to do just that, let me talk briefly about the three-tier event...

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