Most of you charge according to your costs. Charging what you are worth to you. That keeps you in your comfort zone, but it is not how successful businesses charge. Apple, Nike, Unilever, Tesco, etc. all charge what they are worth to their customers.
This article is about showing you how to charge what you are worth to your client. You will need to do two things; make the client want your service, then make them pay their top price.
1. Make them want your service
This is selling. You might not believe it, but you are probably good at selling. Well, at least the main bit about understanding what your client wants and putting a proposal together in line with that. The bits you probably find daunting are pricing and closing (which we’ll come back to).
To understand needs you have to know your client’s business, so question and listen well. I know very little about your business, except that your clients’ needs will be more complex than just cost. On most occasions, they’ll include variations of quality, innovation, time to completion, on-time delivery, flexibility or cash flow.
If these needs aren’t present, then you have no chance to add value. In the short-term you will only be able to compete on price, which means in the long-term you can only survive by managing out cost (probably reducing your salary/dividend).
So, think with your client. Think for them. Ensure your proposal focuses on what is important to them. For example, if cash flow is their concern, construct a deal where you get paid when they do. If it is time to completion, guarantee the completion of the time critical work within so many days of the handshake.
Ensure the client realises that the success of their project depends on your contribution.
2. Make them pay their top price
Great, they want your solution. Though, you’ve yet to talk about price. If they have asked you, you would have avoided giving a price by explaining that you can’t until you know what they want? The real reason is because you first need to know how much they are willing to pay!
The price they pay will depend on:
- The choices they have. The less complex their needs, the easier it will be for them to create choice. Are they talking to other architects?
- How much they think you will accept. Why would your client pay 10,100 when they think you’ll accept 10,000? So, hide this fact, be very aware of the signals you give off. Also, make it difficult for them to break down and compare your costs. Always quote for a completed service, if your quote includes hours or day rates, these might be challenged. If they survive this challenge, then they are too low!
You are now about to talk price. To do this, ask them again whether they are happy with the proposal? Then re-state your proposal, emphasising the key benefits. Finally, introduce the price, saying “we can do all that for you for X.”
But go for a high price. They’ll probably pay it, especially if cost is not the key driver, you nailed the proposal and they have no idea that you would accept less. Be courageous. Just go for it. And be reassured, it gets easier every time…
Now for the final close, “would you like to place the order?” “If not, what is stopping you?” “So, if we resolve that, would you be ready to place the order?”
They may very well try to negotiate the price down. Hold your nerve. Re-sell the benefits. Be friendly and understanding, but say sorry and emphasise the work involved and that your offer is market competitive. Then re-sell the benefits, again. Pause and keep pausing and see what happens.
If they continue on price, ask them, “other than price, have they got any issues with the proposal?” If you think that they really do need something from you, go on give them something (you should now have plenty to give!). This will seal the deal and help them go away with a positive feeling.
So, if you want to transform your practice from a busy one into a highly profitable one, then start charging what you are worth…
Sean Sidney, Negotiation Specialist
Su writes: Sean has kindly offered a free chat if you mention my blog, Just Practising. Call him on 07816 072339
Very well explained.
Very good advice.