May 4, 2019
The Wrong Things
Sent by Jonathan Stark on May 5th, 2019
Is $10,000 a lot?
The only rational reply to this question is:
“Compared to what?”
It’s a lot for a Coke Zero. It’s not a lot for a big house in Beverly Hills.
The acceptableness of a price is relative to whatever the buyer is comparing it to.
In the case of a soda or a house, the product is easy to understand. They’re tangible; physical objects that buyers have lots of experience with. They are easily understood and will naturally have a perceived value in any potential buyer’s mind.
But what if you sell services? Things like software development or web design or copy writing or video production or brand management. Services are largely intangible. They are not easily understood by your prospects. So… When you give someone a price for a service, what should they compare it to?
- How much money they have budgeted for the engagement?
- How much time they think it should take you to render the service?
- The prices that your competitors have quoted to them?
- How much they currently pay an internal employee to do something that seems similar (or harder) to them?
No, no, no, and no.
It’s likely that these are all too low to justify the fees you’d like to be presenting. The only thing your prospective client should be comparing your proposed price to is the perceived value of your contribution to their desired business outcome.
I don’t think I have ever personally, or through a student, encountered a client who defaulted to thinking about the value of their desired business outcome on their own.
Most of the time, they’re not even sure what their desired outcome is when you first ask. It seems to reside in an unexplored subconscious area. It’s like a gut instinct. For some reason, they have simply come to believe that what (they think) you do will help them somehow… but they can’t exactly articulate why they believe that.
If you care about customer satisfaction, and you want to leave your clients better off than you found them, and you believe that professionals should “first, do no harm”, then you owe it to your clients to uncover their desired outcome before giving them a price for a course of action. It takes practice to get good at this, but until you do clients will compare your price to that wrong things.
Yours,
—J