Well, another year’s flown by. Those of us who are professional service providers are in the annual December sprint to wrap up projects, close the books, and carve out a few precious days to spend with family and friends.
It’s also time to start looking ahead to 2015, to new beginnings, and to new ways to take our businesses to the next level. I love a fresh start. I’m filled with anticipation every time I open a blank excel spreadsheet. As a revenue management professional, my mind immediately goes to revenues and pricing strategies.
And the New Year is a natural time to bump up your rates. After all, whether you’re an accountant or an architect, a designer or a personal trainer, a lawyer or a project manager — there’s no denying that we’re all a little bit older and — hopefully — a little bit wiser. We’ve learned new ways to solve problems, capture opportunities and get things done. Which makes us more valuable to our clients than ever.
So I encourage you to reflect on these seven rules-of-thumb as you consider how best to capture higher fees for your services in 2015:
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▪ Don’t sell yourself by the hour. It turns your unique and valuable services into a commodity. It creates a conflict of interest because your client benefits the less you work and you benefit the more your work. And it makes less experienced service providers look like a value, which is the exact opposite of what’s true.
▪ Sell results. The value of what we do is not based on our expenses or our businesses’ cost structure. Our value is based on the positive impact we deliver for our clients. That’s what we should be asking them to pay for. Quantify the value of your work based on how much revenue it will generate, or how much cost it will save.
▪ Don’t start off talking about price. When you do, you run the risk that your potential clients will quickly determine that they can’t afford to use you. Never talk about price until you’ve demonstrated that your clients can’t afford to not use you.
▪ Take time to learn what your client needs. If you want to command higher fees, the best thing you can do is help your clients explore exactly what they need. Develop an understanding about how your work addresses their deepest concerns about their business. Then, draft your proposals accordingly.
▪ Position your fees as an investment, not as an expense. Your proposals should clearly quantify the financial benefits of your projects. Once you’ve done that, you can put your fees in their proper context — as an investment with a concrete ROI.
▪ Establish and maintain relationships with decision makers, not just with subordinates, or the human resources department or accounts payable. Other than your own expertise and passion for adding value, your personal relationships with the key executives who control budgets is the most important asset in your practice.
▪ When you meet price resistance, don’t lower your fees, remove value instead. Offer to reduce the scope of the project or shorten its duration. Don’t lower your fees without removing a piece of the project. Doing so undermines your price integrity and sets you on a spiral down a slippery slope.
So let’s sprint across the 2014 finish line, take some well-deserved time for renewal and self-reflection about our businesses, and keep these seven pricing tips in mind. In the New Year may we put all of our talent and experience to work for our clients and may we capture our fair share of the greater value we create.
Adam Snitzer is a revenue strategy expert and president of Peak Revenue Performance, a consulting firm that specializes in designing and executing innovative pricing strategies. He can be reached at email@example.com, or via the company’s website at PeakRevenuePerformance.com.