Inevitably, when you price correctly, some clients will tell you that your prices are too high. In fact, if you are not hearing that routinely, you are not charging enough.
So what do you do? Give them a lower price.
I’m not suggesting you cave on price
While lowering your price, you must also remove value from your solution. It must be a “get-give” trade-off. In other words, you give the client a lower price and they get less value.
Unfortunately, it doesn’t play out this way for most young consulting firms. They tend to relent on price while maintaining much of the promised value.
I’ve done it. I’ve caved on price yet failed to reduce the scope of work. It hurt the relationship. That mistake created an “us versus them” mindset and opportunities for mutual benefit suffered.
The good news here is that it doesn’t need to be this way. With a better understanding of how businesses buy, you can spend time up front discovering what the client values.
In fact, only 20–30% of buyers actually care about price alone. And, that statistic is for all businesses. I’m confident it is lower for consulting opportunities where expertise is critical.
There are three types of business buyers
Nelson Hyde of Holden Advisors, says there are three types of buyers.
- Relationship Buyers — those taking the long view
These buyers don’t switch vendors often and gain strategic advantage by collaborating with trusted vendors over time. In fact, they are skeptical of low prices. These buyers will pay to make sure they are getting the best quality.
- Value Buyers — those seeking the the best ROI
Instead of focusing on the up-front price, these buyers are most interested in the long-term return on investment. They perform extensive research when selecting consulting firms. They partner with firms that can prove the impact and financial results the firm offers.
- Poker Players — those that want value yet focus on price
These buyers are actually Value or Relationship buyers yet they pretend to only care about driving the price down. They bluff and like to play many consulting firms against one another. Discovering their real intent is as simple as giving them what they want (low prices) yet removing the value you originally offered. When they complain, they have shown their hand.
Learning to price with confidence
I encourage you to get to know what type of buyer your client is. This will help you gain leverage. In the end, you will know how to approach pricing strategies and better understand the value of your solution.
In consulting, it’s almost never about the price. If you can show the value of your solution is real, pricing considerations will always come afterwards.
This is where sharing your wins and demonstrating your knowledge and expertise is an instrumental tool. The time investment here will pay dividends long-term.
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