One Simple Step to Gaining an Unfair Advantage When Pricing!

I write a lot about bad money. As a constant reader you’ll be familiar with the concept, but simply put, bad money is any cash that runs through your business that is not good for the business overall.

Usually, this comes from poor investment choices, poor project choices or poor client choices.

It’s easy to understand why bad money is no good for your business, but today I want to discuss one of the major contributing factors that allow bad money to seep in where you least expect it.

I want to talk about pitching the price of your products or services.

The reason is simple: the concept of bad money is easy to understand, but there’s no sense in simply understanding it conceptually, we need to understand the actionable steps to take in order to try our very best to avoid letting bad money through the door.

We all price our products and services wrong

Specifically, why are our prices always too low?

The reason is simple: we treat our products and services as “things” that require “pricing”.

In fact, here’s a definition from good old Google:

“Price: The amount of money expected, required, or given in payment for something.”

In various other posts throughout Excellence Expected, I discuss the notion that the very best clients are those with whom we develop partnerships, not those who expect a master/servant relationship.

To this end, the word “price” implies that the person parting with the cash retains all of the control over the product or service “purchased”.

In fact, that is rarely true. Well, at least it shouldn’t be true and if it IS true in your business, then we need to have a little chat.

Think about it: you set your business up to work for yourself, so why “sell out” and choose to work with people who you know just want the product or service at the cheapest “price”.

It's a recipe for disaster. Maybe not right now, but it will catch up with you and it will reveal the shaky foundations upon which your business is built if those kinds of customers make up the bulk of your cash flow.

I know, I’ve done it. It sucks.

And it grinds you down into a position where you have to simply do more work to increase your profitability, or sadly in most cases, to just pay the overheads.

“Price”. Forget that word. Right now.

We put too much time into “proposals” and don’t win enough

Whether you’re a product business or a service business, at some point someone will ask you to put a proposal together.

On the “nice” end of the scale, this is to get the approval of a budget for your product or service from the person who controls the purse strings, whereby the enquirer has already decided that your solution is the perfect fit.

On the crappy end of the scale, you’ll be putting a metric tonne of work into an in-depth proposal that will get 80% ignored because the person who was tasked with “getting three proposals” will simply skip to the “price” section of your proposal and make a decision that is largely led by the figure that you’ve quoted.

Unless you have a relationship with the people to whom you’re submitting proposals, this blind type of quoting is a little bit of a lottery and simply requires too much time against the potential return, unless you’re pitching for pre-qualified, well-budgeted work or sales.

The result is a disdain for proposals, and rightly so in many cases.

Worse, this kind of perpetual process can result in you simply lowering your prices to win the work and then realising later that, actually, it’s just not worth it.

Hello bad money, goodbye cashflow.

One Simple Step to Gaining an Unfair Advantage When Pricing

The reality is that the only thing that you can do to attract the right kind of customer is to build a solid relationship with them from the start.

Whether you do that personally or via high-quality content, it’s important that we all realise the part that a relationship plays in the process.

But, that’s not enough.

It’s our job to close down any barriers to purchase that we can possibly imagine or, more importantly, that our prospects can imagine.

We do this by understanding needs, emotions, desires & worries and then by marrying the value that we bring to the table against those to exceed all expectations that the prospect has.

It is our job to pleasantly surprise people every single day, with every single interaction.

Yet the truth is that still, it may not be enough.

Rather we have to get specific with our language and consider every single connotation of every single piece of communication that we have with someone.

To that end, it’s vital that we consider our wording very carefully.

There is one hyper-specific change that you can make right now to the way that you communicate “price” to your prospects.

Simply swap out the word “price” for the word:

“Investment”.

Why?

Here’s Google again…

“Investment: the action or process of investing money for profit.”

versus

“Price: The amount of money expected, required, or given in payment for something.”

The difference is clear.

When prospects are nurtured to consider expense with you as an investment, which it genuinely is, then they become more receptive to the long-term.

They begin to see that you actually care about what you’re selling and that you’re actually very, very focused on showing and delivering the potential return on that investment.

After all, it is a quality and an as-guaranteed-as-it-can-be return on the money that we need to invest that we all look for when considering when parting some hard-earned cash.

Perhaps most importantly, when faced with the word “investment”, prospects will begin to realise that they aren’t comparing apples to apples when considering partners to work with.

They will begin to look deeper into the value that you bring to the table because after all, you’re the only one who pitched an “investment” and didn’t simply chase a “sale”.

Give yourself an unfair advantage. And use it!

Try it today, and let me know the results in the Excellence Expected Facebook Community.