December 1, 2020
I get a lot of feedback from what I write, much of it private, which I understand. Who wants to talk about their own frustrations, disappointments, stress, and failures which come from inadequate pricing? I know this firsthand.
Here’s a note I recently received, from a consultant with her own practice, in response to something I posted on LinkedIn (reprinted in full with permission):
Thank you for sharing that article about pricing this morning. When I took on my first few clients, I was over-delivering and undercharging. I had learned that I shouldn't do this because I was more stressed than when I had a job. Once I learned that I could walk away from a client and say no, I felt more confident. But as I learn more about selling, contracts, etc., it is all about the solutions you provide to the client. It's about how you can make their business and emotional impact better. Thank you for sharing and guidance with your content.
There’s so much here which is valuable, but her comment about being more stressed than when she had a job stood out. When I speak with a professional services provider about their practice, one of my “red flags” which indicates a pricing problem is working too hard for too little money.
It’s a terrible feeling. Maybe you’ve left a large professional services firm because you want independence and flexibility. Maybe you’ve left corporate because you’re tired of their back-stabbing rat race which has no respect for your family and personal life. You start your practice, and everything is fresh and hopeful. You pull in a few clients and start to get some momentum. You may know that you’re undercharging, but that’s part of the “dues” you think you have to pay to get going. After a while, you aren’t getting any sleep, you’re frazzled, you resent your clients who you are busting your butt for, and your significant other is telling you that you made a big mistake.
That proud moment when you became a business owner? That euphoric feeling when you were holding the metaphoric grass trophy over your head? It’s now laying on the floor, shattered, because you don’t own a business. You own a job.
There’s a pronoun problem in what I just described. It’s all about “I” and “me.” There’s nothing here about the clients I’m working with, whose businesses I’m straightening out and whose lives I’m changing.
My friend points to one of the biggest problems services providers have with their practice: they haven’t spent nearly enough time developing a deep understanding of the needs, problems, hopes, and goals of the target tribe of clients they want to serve. Their description of a client need involves something functional, like filing a tax return or developing digital advertising. Those functions are just the means to much bigger and deeper ends which clients are looking for: solutions which permanently change their business and personal lives for the better.
It doesn’t matter whether they are bakery owners, farmers, attorneys, truck drivers, or programmers. When you’re able to get under the skin of the members of the tribe you want to serve, you end up having more substantial conversations with your clients. They feel like you understand them. Your confidence rises. You’re prescribing remedies which meet long-held needs and dreams, not just for the business, but for the business owner, their significant other, and their family. You’re making, as my friend indicates in her note, an emotional impact, not just a financial one.
And the door opens for your pricing to change for the better, because you are pricing based on client outcomes, not some silly measure like your timesheet.
And you’ve regained ownership of your business.
Image Credit: JumpStory
©Ray Business Advisors, LLC and John Ray
About me: I’m enthusiastic about how changes in pricing strategy can significantly change profitability for a business and enhance life choices for business owners. I live this passion through Ray Business Advisors, my outside CFO and business advisory practice, in which my pricing is exclusively value-based, not hourly. I work with business owners on how they can change their pricing not just to increase their profits, but better serve the wants of their customers. Click here to learn more or call me at 404-287-2627.