Do you know what your value is to your client? You have to be able to quantify your value to every client in order to maximize business growth, Can you do that at the moment? Determine the value you provide to your customers and then make sure to charge appropriately for it.
Knowing your value can be a tough question to answer and there can be wildly different answers for different industries. With products, you need “hard” pricing, no question. However, even products these days come with (highly profitable) insurance and warranties for the purchaser. (Think of “trip insurance” in these volatile times.)
The important things is that you figure this out as quickly as possible and make sure to charge appropriately. If you don’t, you risk leaving money on the table that you’ll never be able to get back. That’s money you could have used to fulfill your dreams.
Let’s take a look at 5 methods to enhance your value:
- Don’t underprice your products/services because you don’t have the confidence to ask for your value.
You must get comfortable “asking for your value” in the same way that you got comfortable “asking for the business.” Setting fees and prices is a mental exercise. You have to see yourself as providing important, pragmatic, valuable products and services to others. You do have a history of providing that, but you probable haven’t bothered to categorize it or examine it. I am suggesting here that you formalize it so that you can give yourself the assurance that you deserve to charge well. So you have to believe in yourself to charge for your value. It’s as simple as that. - As you make sales to similar size companies, start building your confidence and then dedicate a portion of your sales and marketing efforts to larger companies.
Larger companies have larger budgets. Period. As you start to grow your business, start developing a plan to go up-market. This means that as you get better at being in tune with your customers’ wants and needs, start prospecting for larger companies. Closing larger sales to larger companies will not only make you more profits, it will give you a boost in confidence. - Develop ways to increase the value of your existing products/services to your customers.
As you grow your business, you should focus on creating more value for your customers. More value will translate into more profits. Most customers know what they want, but they don’t always realize what they need. What people “want” is usually a commodity subject to price competition: an airline seat, a refrigerator, their taxes completed, and so on. But when you introduce an unforeseen need, there is no longer price competition because the offer is now one of uniqueness. An airline ticket to Paris is one thing, but what is a curated, private tour of the Louvre worth? A pool pump and heater is one thing, but what if you could control them anywhere in the world from your smartphone? Your mission is to find other areas where your products and services can command higher value. As you can see, it’s not that difficult if you refuse to settle for the “same old, same old,” and don’t just respond to what the customer “wants.” - Create new, higher-value products and services.
Your existing customers are in the best position to tell you what additional needs they have and what else they would likely buy from you if you created it. All you need to do is ask them. However, they are likely to tell you what they need today, or even what the needed yesterday. You need to find out what they will probably need tomorrow! So don’t simply ask what they need, ask what they think they’ll probably need in the near future. Keep in mind that even if you have a trusting relationship with your clients, they might not be willing to share certain business-related matters with you because they are embarrassed! Don’t take it personally. - The six secrets to successful price increases.
(a) Don’t beat around the bush about a price increase. (b) If you still can’t get comfortable talking to your existing clients about a price increase, then only raise prices for your new clients. (c) Insert an annual price increase sentence into your engagement letter and/or contract. (d) Be keenly aware of the timing of your price increase. (e) Never make your clients feel that they are getting less from you as you are increasing your price. (f) Never sit down at the negotiating table unless you’re willing to get up and walk away empty-handed.
Remember, running a business does not to be complicated. Keep it simple!
Business owners, check out ways I can help you find hidden profit and improve cash flow at www.portalcfo.com.
Manny Skevofilax is a consultant, speaker, and author who helps business owners maximize profits and overcome growth challenges to achieve financial freedom. An expert in strategic planning, financial statement analysis, and business operations, he’s been achieving extraordinary outcomes for his clients since 2003. Prior to starting his consultancy, he was a vice president with Comerica Bank, a U.S.-based commercial lending institution. His new book is Ultimate Profit Management: Maximizing Profitability as You Grow Your Business which was published by Taylor & Francis.
Learn more at portalcfo.com. Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.
