Value pricing

I can hear your excuses for why it is not necessary, in this particular case, to spend much time and attention assessing and communicating the value of your proposed service.  “I’ve served this client for a long time,” you say; “he already knows the value, it would look strange if I now started to discuss it with him.” “The client has asked me for this work and is not asking any competitors; we don’t have to convince him the work is needed – he’s convincing us.” And so on, and so forth.

And then… the client comes back and tells you he has a new boss, who, surprisingly, doesn’t see the need for your work  in quite the same way. Or, he comes back with push-back on your price (always a sign that the client has estimated the value of your work lower than you have). Or you’re halfway down the project, and he wants to scale back…

Always, always figure out what the impact of your service will be on the client’s business, and estimate its worth. You’re not just doing it to “justify the price tag”: figuring out the value to the client helps you scope the work, commit the client’s effort and resources to your project, measure your progress, adjust along the way, and create much stronger referrals once you are done. Value is of course ultimately best expressed as  expected bottom line gains, these can in turn  be estimated many different ways: based on expectations of  market share gained, growth accelerated, productivity improved, skills upgraded, pipelines filled, close rates increased, portfolios balanced out, customers satisfied and retained… Ultimately, there is always a dollar number, and you need to do the work to get there. What’s the value of improved employee engagement? Well, if fewer employees leave, how much recruiting and training cost would be saved? And what impact is greater employee satisfaction expected to have on customer satisfaction, and in turn on customer retention, average  deal size, average number of products purchased per customer…?

Why are you providing this service, and how will you know it was worth every penny? More importantly, how will the client know? Before you quote a price, make it a habit to have a defensible estimate of its expected ROI.