Tag Archives: pricing

Business Strategy , , , , , , Leave a comment

2026 Tech Trends Whisper in Your Ear

by

Freelance professional are not only happily engrossed in performing paid client work; you must simultaneously perform labor that is unpaid—not yet— searching for more work. Ambitious Freelancers are networking to maintain visibility and participating in activities that showcase your professional chops, such as appearing on webinars and podcasts and publishing a blog or newsletter. Your core business development strategy is to convince prospects of your ability to consistently produce the deliverables they need when planning to hire a Freelance worker in your professional category. But in addition to carrying out your revenue producing strategies, the often unspoken role of a Freelance professional is that of small business owner.

As you work both hard and smart to develop and maintain a thriving client roster that generates your preferred number of billable hours and bottom-line revenue, you can never lose sight of the responsibility for managing and optimizing all aspects of business operations. Therefore, it comes as no surprise that staying abreast of major developments in the constantly evolving B2B technology sector is a significant portion of your business management obligations. Dozens of technology tools have been brought to market over the past three or four years and it is certain that one or more potential is capable of creating operational efficiencies in the back-office operations that support your accounting, contract management, lead generation, email marketing, or client onboarding, for example. Time and/or money could be saved, clients will become more satisfied with the after-sales support and other customer service functions you will seamlessly deliver. Even if you are by nature a late adopter, let 2026 be the year that you introduce at least one innovate and undeniably practical technology tools to make a positive impact on your business operations.

Responsible decision-making can only take place when trustworthy information is available; you can keep up with emerging technologies by simply paying attention. Speed read articles and watch videos to learn about new tech products so that you can assess their potential relevance for your organization. You may already be familiar with the sites TechCrunch and Wired and may also find them informative.

While researching, keep this question in mind—does it appear that incorporating this technology will enable you to expand your business success by capitalizing on the outcomes and results it is expected to produce? You already know that most newly released tech products are outside the scope of your needs and budget but as a new year approaches, consider that late adopters often find that they’re leaving money on the table by ignoring technology advancements. Your perspective must always be big-picture and long-term.

Finally, to fully access the intended usefulness of your new technology tool, it must be integrated into your workflow. If you have an employee, develop a strategy to encourage buy-in of the tech tool’s purpose and benefits, so that this new resource will become part of your company culture—how things are done now. Be strategic as you evaluate tech-enabled upgrades you might like to introduce. Below are areas where recently released technology tools could enhance your business operations.

Use emerging tech for leadgen and marketing

The days of cold calling have all but faded away. The gold standard of B2B lead generation in 2026 and beyond is powered by AI-driven tools that enable targeted personalization and feature text, audio and video marketing content, product demos, case studies or testimonials and even live streaming that allows prospects to interact with your company in real time. AI has transformed B2B leadgen to enable marketing campaign activities to deeply engage prospects, a capability that results in higher sales conversion rates.

AI-powered leadgen tools enhance your marketing funnel by analyzing prospect behavior and interaction data to identify to identify and nurture top-quality leads—while complying with current privacy regulations and best practices. By addressing prospects’ specific needs and challenges, you will be able to design marketing campaigns that truly resonate and deliver. As marketplace competition intensifies and customer demands become more exacting, Freelancers in the B2B sector may discover promising benefits in tech innovations.

Account-based marketing has revolutionized the way B2B leadgen by identifying a more narrow swath of high-value prospective client leads rather than reaching out to a less dicrete audience. ABM delivers customized information to key decision-makers, which often leads to better sales conversion rates and smarter use of your resources. ABM uses a precise, data-driven strategy and takes a deep dive into target lead profiles, cross-department priorities and key insights. ABM tactics include:

  • Personalized Outreach: Creating tailored marketing campaigns for individual accounts based on the industry, whose messages will acknowledge client pain points, business goals and other priorities.
  • Custom Content: Developing case studies and presentations that address the challenges of target accounts. Providing relevant educational content, which is one of the most effective ways to attract and nurture B2B leads. Instead of pushing a sales message, content marketing educates by providing useful insights, industry best practices and potential solutions that facilitate informed decisions that yield good results. By addressing typical pain points and offering effective solutions, Freelancers can build trust and position themselves as a partner and go-to resource.
  • AI-powered opportunity identification: Growth leaders in B2B sales are using AI to find new niche, potentially lucrative markets.
  • Value-based AI-enabled pricing: B2B companies are using tech innovations to more comprehensively define value, as they gravitate toward dynamic models that can automate pricing models that are personalized to attract discrete customer segments.
  • Customer Relations Management: Automation software tools will help you analyze customer data, industry trends and competitor behavior to identify accounts that have the most sales potential for you.
  • Search Engine Optimization: SEO is a foundational lead generation strategy that helps B2B companies attract high-quality leads by improving their visibility in search results. When potential customers search for industry solutions, thought leadership content, or service providers, for example, a robust SEO strategy can ensure that your business appears at the right time. By consistently optimizing for search engines and user experience, your Freelance entity can attract a steady flow of organic leads who are actively seeking solutions, thus making SEO one of the most cost-effective B2B leadgen strategies. By optimizing website content, technical website structure and backlink profiles, your business can drive organic traffic and generate leads that convert to paying customers. SEO tactics for B2B lead generation include Keyword Optimization, that is, targeting high-intent search terms that align with buyer needs and search behavior and On-Page and Technical SEO, that is, improving page speed, site structure and mobile usability to enhance search performance.

Use emerging tech to improve the customer experience

Customer experience can be defined as the impression that customers and prospects have of your brand—the company, its products and services and, by extension, you—as they move through your company’s buyer’s journey. Each touchpoint on the journey is an opportunity to create a confidence-building impression that contributes to a satisfying and memorable customer experience. The presentation of an excellent customer experience has for some customers become non-negotiable and in fact, a customer experience that’s perceived as exceptional for some customers outweighs the importance of pricing. B2B customers are responding more like B2C shoppers and adopting many more consumer-like behaviors, e.g., seeking more robust buying experiences.

Include operating with a thoughtful strategy, delivering effective value propositions, optimizing for a wide variety of channels, and sustaining growth. But to stay on the front foot, B2B sales organizations can leverage technology to find the right markets while discovering, retaining, and delighting customers across all channels. Today’s leaders understand the value of embracing innovation and using cutting-edge technology to execute strategies. McKinsey’s latest B2B Pulse Survey reveals a widespread willingness to adopt advanced digital solutions,  yet only 20 % of respondents say they have consistently implemented technologies that fuel outsize growth. 

An exceptionally positive customer experience is a powerful differentiator that can drive revenue and brand loyalty. According to a 2025 Zendesk CX Trends Report, 60% of customers have purchased a service or product from one brand rather than another based on the customer experience they expect to encounter. A 2017 World Economic Forum report predicts that your customers will obtain “more choices and control than ever before” over the next decade thanks to technological advances.

To distinguish your company from competitors in the crowd, Freelancers would be wise to explore and evaluate tech innovations as a way to optimize your operations and appeal to the evolving demands of your clients and prospects. An exceptional customer experience will prioritize:

  • Personalization–Tailor services and communications to respond to individual customer preferences and purchase history
  • Efficiency–streamlined, fast and accurate delivery of service
  • Consistency–Provide a predictable and comforting level of product performance and service
  • Empathy–Show customers that you feel genuine concern for their needs and perspective by actively listening and recommending solutions that your services or products can provide
  • Communication–Provide customers with accurate and timely information
  • Feedback–Provide methods for customers to comment or request assistance and demonstrate that you value their input

Use the new technology to make available a customer experience platform for your company so that you can account for all client and prospect interactions with your company, from the first viewings of your website to advancing through your buyer’s journey to become a qualified lead, to making a purchase and becoming a full-fledged customer and culminating with post-sale support activities. Click here to view options.

Thanks for reading,

Kim

Image: © Gamutstockimagespvtltd

Business Strategy , , , , , , , , , , Leave a comment

Get It Right: How to Make It While Freelancing

by

About one in two American workers will participate to some degree in the Freelance labor market by 2027, according to researchers at Statista, the German global business intelligence platform, who project that about 86.5 million workers, more than half of the U.S. workforce, will earn their living as Freelance professionals or other independently employed workers.

That more smart and ambitious professionals are expected to join the Freelance labor market is a powerful vote of confidence, but a growing numbers of professionals will inevitably result in a marketplace crowded with competitors and making it increasingly difficult to stand out and build a thriving, sustainable Freelance business entity.

As a new year approaches and the “fresh start” impulse kicks in, you may be inclined to take up some future-proof thinking; your brainstorming may lead you to remember that the best defense is a good offense. What proactive and assertive strategies can you explore and enact now to strengthen your position in a marketplace that is destined to become more competitive?

A defensive strategy known to augment the power of your brand is to include in all marketing initiatives and collaterals campaign messaging that describes and promotes your brand’s Unique Selling Proposition—those singular benefits that appeal to your ideal clients and distinguish your services or products from competitors. It is imperative that USP attributes are consistently and unambiguously communicated in marketing messages, to ensure that your marketplace offerings are recognizable to those who value them.

Robust marketing is just one vital component needed to build and sustain a successful Freelance venture. Below are a few basic actions that, if enabled by big-picture thinking and working smart, along with a dose of good luck, can help you to climb to the top of the Freelance earnings pyramid. Here you go!

1. Freelancing is sales

Freelancing means that you must work so that you can work—and the work you must do is selling. It’s an unavoidable fact that in order to be hired for client work, Freelancers must persuade prospective clients to become your paying clients. That can occur if your capabilities are superior to any competitors who are also vying for the assignment. Furthermore, you must demonstrate that you are well-organized and efficient, pleasant to work with and that you are good cultural fit for the client’s company and team. Finally, you must have two or three credible references to provide third-party verification of your abilities and good qualities. If the client, which could be represented by a hiring committee, is satisfied with your competencies and credentials, you will be awarded the contract.

Note that the primary ingredient in this process is sales. To make money, Freelance professionals (and all business owners) must become adept at sales and that includes understanding the “pain points” that motivate clients to seek out the type of services or products that you offer. Before client work is obtained, the Freelancer must sell—and that begins with identifying and connecting with viable prospects who may have a project scheduled for which you are qualified. Selling is probably the most important competency a Freelancer must develop, whether you are a software developer or a make-up artist, because you can’t entirely outsource it. The owner of the company must be able to sell the product or service to prospective clients.

Face2face networking is the most effective way to meet those who might hire you, although quite a few Freelancers regularly connect with prospects who become paying clients when working through a Freelance marketplace such as Xolo, Upwork, Freelancer, or Fiverr, which vets the legitimacy of Freelancers and prospective clients. In addition to possessing the necessary skills to satisfactorily complete the project, the Freelancer must also communicate that s/he is trustworthy, dependable and, oftentimes, has done work similar to the project in question, in order to instill sufficient confidence in either online or in-person prospect introductions to extend an invitation to interview for the project and green-light the hire.

2. Identify your market niche

What services will your Freelance consulting business provide and who can you expect to become your clients? Freelancers must acquire expertise in a marketable skill and understand the typical “pain points” of prospective clients. You must learn to articulate the problems can you solve, which goals you can help the prospect achieve. Aspiring Freelance professionals cannot simply decide that you’d like to earn a living as a social media marketer or special events photographer and voila, you will receive offers of work. High-level skills and significant experience are needed before you can go out on your own and expect to make a living.

When pondering the possibility of launching a Freelance business, research the marketplace need in your geography of the current and trending demand for skills that you can demonstrate at expert level. That you are “passionate” about certain activities is not enough. Which trends are emerging and which once-dominant trends are waning?

Finally, research and learn how those who would be your prospective clients getting their needs met now. The answer to this question will reveal your competitors. Research who is making money in your niche. Visit websites and social media accounts to find out the identity of big clients and learn how your prospective competitors sell to clients.

3. Freelancers are business owners

Freelancing calls for more energy, determination, savvy and creativity than social media cheerleaders let on. As detailed above, Freelance professionals do more than provide the contracted services by providing an effective solution that solves a problem or achieves a goal. Freelancing also means you must become adept at managing the business aspects of your entity.

In all likelihood the best way to obtain comprehensive business development skills capable of building a robust and sustainable Freelance venture is to contact SCORE, The Service Corp of Retired Executives, the nation’s largest network of volunteer, expert business mentors who, at no charge in most cases, will help you, a small businesses owner-operator, plan, launch, manage and grow your entity.  SCORE is a not-for-profit organization launched by the Small Business Association in 1964 and is dedicated to developing thriving small business communities through mentoring and educational workshops.

4. Your story Is your power

Storytelling can be an opportunity to share your unique experiences that differentiate you from competitors and help you and your company, services, or products to stand out in the ever more crowded marketplace. Your stories communicate your brand identity and brand persona as they connect you with potential clients in a memorable way. Your stories are one of your most important relationship-building marketing assets.

You can share professional experiences, personal reflections, obstacles you’ve faced and tackled and observations that have taught you powerful lessons. Regardless of the type of story, you should follow a clear structure by ensuring you highlight what exactly happened (the context), the lesson to be taught through the challenge or crisis in the story and conclude with the positive outcome or result—even if it was unexpected. Your stories bolster your relatability, build transparency and trust, demonstrate your resilience and resourcefulness and might also opens doors to opportunities like speaking engagements and co-hosting workshops. A resonating story is all about how you tell it and for that bit of magic, I refer you to champion storyteller Kelly D, Parker.

5. Price like you understand the job

Don’t allow fear to cause you to under-price your services, including all the “extras” that collectively represent the quality of the customer experience your clients have come to associate with your organization. Like the classic L’Oreal tagline for Preference Hair Color said, “Because you’re worth it“. Freelancers who underbid projects, thinking that low project fees result in more work only misinterpret the psychology of sales. Freelancers who don’t ask enough questions to apprise the scope of the work and client expectations, don’t account for revisions and don’t build in a buffer zone of time to mitigate timeline delays caused by unexpected complications that could undermine achieving the preferred project completion date don’t really understand the meaning of cost-effective.

Your project price quote tells a prospect that you understand the scope, you’ve thought things through and that the client can trust you to stay calm and in control, whether in the best-case scenario, when all goes according to plan, or when something goes sideways. If your price is too low, the client may silently worry that you’re missing something important. On the other hand, if your quote is too high as compared to others that were received, the client may suspect that you’re padding the estimate as a way to enrich him/herself.

The pricing sweet spot is a balancing act that must satisfy both the client and you. Your project quote must be not be so low as to raise red flags, nor so expensive as to create anxiety, but realistic and competitive enough to suggest you know exactly what you’re getting into. Price like you understand what it takes to do the job right and clients will trust you to do it.

Thanks for reading,

Kim

Image: ©Edmund Dantes/Pexels for iStock

Business Plan , , , , , , , Leave a comment

How Much Do B2B Freelancers Really Earn?

by

As we enter Fiscal Year 2026, it is apparent that Freelance work continues to be viewed as a good choice by American workers who feel the need to generate income to either supplement their W-2 wages or establish themselves in full-time independent employment that will financially support their household. The ability to exercise greater control over their time and design a flexible work schedule, remains a prized benefit of Freelance work. Worker confidence in Freelance employment has primarily been attributed to periodic occurrences of economic instability that many economists say in the current era began with the global stock market crash of 1987. The now common business strategy of downsizing as an effective strategy to slash corporate payrolls and bolster the company’s financial position seems to have begun shortly after the 1987 crash. Ongoing corporate lay-offs, particularly at enterprise companies, finds a growing number of American workers fed up with constant worrying about losing their jobs; increasingly, the proactive worker response is to take charge of one’s professional and economic destiny by opting out of the search for post lay-off W-2 employment.

As more workers are laid-off, there has emerged a growing trend for them to build Freelance careers instead of seeking another traditional nine-to-five job. As of 2024, 20% of (now former) employees have become Freelance professionals or owners of traditional businesses. It’s been reported that 50% of employees age 45 years or younger would seriously consider leaving their current full-time employment if the usual benefits were available to them.

In sum, Freelance earning opportunities are making a tremendous cultural impact on America, as regards the meaning of work and on the national economy. In 2024, more than one in four (28%) of U.S. knowledge workers were in the Freelancers and they contributed $1.5 trillion to the U.S. economy, surpassing the 2023 Freelance labor contribution of $1.27 trillion in annual earnings.

You might wonder what constitutes a ballpark annual earning as demonstrated in a sampling of Freelance enterprises and you could be surprised to learn that Freelancers in the U.S. earn an average annual revenue of over $99,000, with an earnings range of $31,000 to $275,000 per year. As you know, the hourly rate or project fee a Freelance professional can command is influenced by the ability to convince prospects that significant value will be delivered in the process. In addition, enthusiastic recommendations and an admirable client list—characteristics of a powerful brand, you surely notice—-also matter. What do your prospects and clients think you bring to the table that gives them the confidence to pay the project or retainer fee or hourly rate you request for your time and expertise? Do you have on your wish list the goal of making your Freelance consulting practice more lucrative?

Self-employed professionals are advised to price their services in a way that aligns with their competitive market position, not primarily on their years of experience. To make the leap into more prestigious clients and a loftier pricing level that will open the door to more billable hours and perhaps more interesting projects as well, focus on how you might package and sell your knowledge and expertise as a high value consulting product.

Consider the types of problems your prospective clients would like to solve or competitive advantages they’d like to attain and do some brainstorming—what solutions can you provide to satisfy one or more of those agendas? What do you do that can be described as generating recurring revenue for your clients, for example, or providing a solution to other high priority problems and challenges that your prospects are motivated to resolve?

You can apply your knowledge and expertise to any aspect of your prospect’s business—strategy development, operational efficiencies, financial management, digital marketing, technology solutions, public relations, or search engine optimization. Promote your credentials, specialized knowledge, delivery format, outcomes and client list to justify your (increased) rates. Package your expertise into tiered service levels that prospects will find uncomplicated, relevant and easy to envision themselves buying, using and profiting from the solutions and competitive advantages that you will deliver.

When discussing your services with prospective clients, the prices a Freelance professional charges will likely be more acceptable when based on their perceived value in the marketplace, rather than based on their years of experience in the industry. Be certain to showcase the following attributes and achievements, which can be presented as competitive advantages:

Specific skill set. Your skill set will play a vital role in your pricing structure. You can charge a premium price if an assignment requires a strong underlying technical skill set, such as software development or programming, mobile app development, legal writing, or PR crisis communications, for example.

Education and training. Education and certified training can significantly boost a Freelancer’s income. Although this will vary from profession to profession, a bachelor’s or master’s degree or PhD, as well as specialized training certificates earned at accredited programs or institutions usually allow a Freelancer more leverage in pricing negotiations.

Reviews and proven deliverables. Solid references, ideally from three to five client sources, are essential to verify your expertise and demonstrate your most desirable attributes, such as work ethic, problem-solving ability, or collaborative and cooperative working style. Past project reviews provide an easy way for a company to verify a Freelancer’s performance. A large number of positive reviews proves your credibility, which justifies premium prices.

Years of experience. Experience is a valuable resource in any field. The amount that a Freelancer makes typically increases with the years of experience they have in their service area.

Freelancing payment schedules

Keep in mind that, along with a Freelancer’s increased earning potential and flexibility, comes an unpredictable number of billable hours (that is, projects) and an inconsistent payment schedule. The matter of payment can be addressed in the contract and reinforced during the client onboarding process, when the payment method and schedule are confirmed. Below are the usual Freelance payment options.

  • Hourly rate. A Freelance professional may be paid a mutually agreed-upon hourly rate for work produced. Likewise, invoices are sent to the client and payments are made to the Freelancer on a mutually agreed-upon schedule.
  • Project fee. The Freelancer is paid a set amount to complete a project with a defined scope and completion deadline. To facilitate timely payment, it is common for Freelancers to ask the client to pay 10% – 20% (or more) of the total contracted project fee in advance, before you commence work; subsequent payments can be linked to the Freelancer’s successful completion of one or more mutually agreed-upon project milestones. The goal is for the Freelancer to collect from the client at least 70% of the total project fee before all work is completed. It is imperative that Freelancers build in a payment protocol to protect oneself from the unfortunate phenomenon of unpaid work.
  • Retainer fee. A retainer is a recurring payment that a Freelancer receives based on an estimated amount of work for a project’s duration, or a predetermined amount of time. Retainers are typically paid monthly or quarterly.

Thanks for reading,

Kim

Image: © mrakor/depositphotos

Business Strategy , , , , , , , , , , Leave a comment

A Strong Financial Foundation Is the Launchpad for Growth

by

Here’s the scenario: business is good, and growing—sales revenue is up as compared to last year, clients are happy and their number is growing. So what’s the problem? For some reason, business is not making a profit. What’s wrong?

This puzzling and frustrating problem is more common than you think. It could be that expenses or debt payments are eating you alive, but there might be a less obvious problem—your financial management leaves something to be desired, so you’re unable to find and fix the money leaks. Let’s take a look at the usual suspects.

Do you invoice clients in a timely fashion, say, within 14 business days after completing a project? Are invoices paid within 30 days of receipt—or is 60 days the more likely payment timetable? Do you keep up with accounting/bookkeeping functions and complete the business financial statements—Income Statement, Cash-flow Statement and Balance Sheet—within 14 business days of the next month? Most of all, do you review the financial statements and analyze the info so that you are aware of the story your business financial data is telling you? Do you act on that information by making adjustments in how you operate—trimming expenses, adjusting prices, invoicing on time, for example? Beyond that, do you have a business budget and do you operate within it?

The moral of this story is that businesses do not always fail because of a product-market mismatch or an aggressive competitor who gobbles up market share. Sometimes a business can be a victim of its own success and grow faster than its financial foundation can support. The weak points are often either cash-flow deficiencies caused by late client payments, which may be a result of slow invoicing, unwieldy debt and expense payments, poor pricing strategy, or inadequate working capital. Fear not, my friend—with a bit of disciple, you can control most of these issues.

Money is the lifeblood of the business and along with sales revenue, you want to focus on building up enough working capital: that is, the amount of money that remains after business liabilities are subtracted from business assets (see your Balance Sheet). Working capital is liquid, meaning it’s available to float you now. You also want to promote good cash-flow, so that you can stay on top of accounts payable and, if applicable, payroll (whether for 1099NEC or W2 employees)—ideally, without dipping into the working capital fund. Your intentions to grow, expand and/or make capital improvements or upgrades to your business depend on the amount of available working capital, which is supported by revenue and cash-flow. If necessary, working capital can be used to pay operating costs while you’re waiting for the accounts receivable to be paid. That said, keep in mind that business growth plans cannot be viable unless adequate working capital is available to put things in motion. In other words, getting your financial house in order, step by step, is integral to facilitating the business growth that you envision. To that end, below are financial management practices that you may find effective.

Accounting–Staying on top of accounting/bookkeeping functions will keep you fully apprised of your company’s financial condition. You know that it’s not possible to effectively plan or manage the company without accurate financial records that provide information that you can review, analyze and use as decision-making guideposts. If your monthly revenue exceeds $2000, you might have the wherewithal to hire a bookkeeper or business accountant to prepare the monthly financial statements and the quarterly and annual tax filings. Personal referral is probably the best talent search method, but social media or NextDoor can also be helpful sources. However, don’t be afraid to do your own bookkeeping! Taking on the financial management of your company, even if only for a year or two, will give you numerous valuable insights that you would otherwise never obtain. You might investigate Quicken Simplifi to start the process.

  • Ensure that all transactions are recorded—every business lunch, every office equipment expense, each fee paid to attend a business networking meeting or professional development session, all client invoices. Document every spend, every month.
  • Ensure that transactions are correctly categorized.
  • Can every payment you receive be cross-referenced to an entry in the books?
  • Are monthly Profit & Loss and Cash-flow Statements and the Balance Sheet completed and closed out within 14 business days of the next month?

Accounts Receivable–A joint study conducted by SCORE, the Small Business Association mentoring program and the financial services company U.S. Bank revealed that as many as 82 percent of startups and small businesses fail due to poor cash-flow management. Sending an invoice is a wonderful feeling, but you hold your breath until payment is received. You need to get paid within 30 days in order to control and predict cash-flow. Business plans cannot be made until you can confirm the amount of available funds. Help yourself by invoicing in a timely fashion and also by discussing the invoicing schedule with every client and following it.

  • Is anticipated revenue (i.e., accounts receivable) linked to agreed-upon project milestone payments or, if you sell a product or service via subscription, are subscription renewals linked to accounts receivable? Are invoices promptly, perhaps automatically, sent according to contracted agreements?
  • Is the status of receivables updated once they are collected? Is there timely follow-up on unpaid invoices (e.g., reminders are sent on day 45)? Automated reminders will be a helpful method to implement a formal accounts receivable follow-up process.
  • If you have the type of business where extending credit to customers is the norm, have you developed a standard set of credit terms and customer credit limits?

Forecasting and budgeting–Planning, budgeting and forecasting are central to financing the company’s operations and short- and long-term goals. When forecasting and budgeting, you will be greatly assisted by software such as QuickBooks, Quicken, or other financial software solutions.

Forecasting is the process of making informed predictions about future business outcomes. The process can involve projections for specific business metrics, such as sales growth, or for industry changes, or recommending how you will be best positioned to navigate the economic landscape in which your company operates. Forecasting uses your company’s historical data and analyzes current market conditions to make predictions as to how much revenue your organization can expect to earn over the next few months or years. Companies use forecasting to support the development of business strategies. Historical company data is analyzed so that patterns can be recognized and used to predict future outcomes. While forecasting consists of estimates of future conditions and possible outcomes, the process can encourage you to consider a range of potential scenarios and in that way position the company to capitalize on potential outcomes that appear most likely to occur or prepare the company to adapt to potentially challenging conditions if they arise. Forecasts are usually updated as new information becomes available, to promote accuracy and relevance.

Budgeting details how the financial plan will be carried out each month and addresses items such as revenue, expenses, debts and anticipated cash-flow. A budget is a forecast of revenue and expenses over a specified future period, typically one year, and details how the financial plan will be implemented each month. The budgeting process can be challenging, particularly if clients don’t pay on time and undermine cash-flow, or if sales revenue is intermittent or your sales cycle is long. It is acceptable to adjust your budget to reflect the actual amount of revenue received or compare actual financial statements to determine how close they are to meeting or exceeding the budgeted revenue and expenses. Once the budget period has ended, it is essential that you compare the forecasts to the actual numbers. It is at this stage that you’ll discover whether the budget aligned with the expected expenses and revenue.

  • Operating Budget: The operating budget includes the expenses and revenue generated from the day-to-day business operations of the company. The operating budget also represents the overhead and administrative costs directly tied to producing the company products and services.
  • Cash-flow budget: A cash-flow budget helps determine the amount of cash generated by the company during a specific period. The company’s inflow and outflow of cash is critical because timely payment of expenses is dependent on cash that is both generated and available. Monitoring and encouraging the collection of accounts receivables helps you forecast the income that is due in a particular period.
  • Strategic Forecast: A spark of inspiration may strike like lightening and you might be amazed by your own creativity. If you’re serious about bringing your brilliant idea into reality, you’ll test its potential viability with strategic forecasting; the goals you pursue be both realistic and most likely attainable. Strategic forecasting is integral to making that determination. In Step I, you’ll determine whether your goal should be a primary or secondary target and whether it is short-term (e.g., one year) or long-term (e.g., three years) initiative and address the question of what the business aspires to achieve by pursuing this goal. Next, you’ll define the market conditions that the company operates in, to further evaluate the capabilities and resources needed to take on the goal. In Step 2, you may find it helpful to categorize the strategies you’ll use to pursue your goal into functional strategies and operational strategies. Functional strategies refer to the action plans and tactics you’ll use to implement the strategies; operational strategies focus on resource allocation used to achieve the goal. If your goal passes muster in Step 3, you can then develop your strategy roadmap. A successful strategy will anticipate challenges that are endemic in today’s fast-moving economic environment and will integrate risk management and an agile approach that bakes in the ability to adjust your strategies as new trends, opportunities and—to be realistic—obstacles appear.

Pricing–how you price your products or services is based on factors such as market demand, customer behavior, competitors and market position. Identifying a pricing strategy capable of driving revenue and maximizing profit without alienating customers is critical; identifying the pricing sweet spot your service or product can be challenging. Begin your pricing strategy by determining your pricing objectives, e.g., maximizing profit, increasing market share, or stimulating client acquisition. 

Remember that pricing influences your ability to pursue, and achieve, business goals because it determines the sales revenue and is, in most cases the primary, if not sole, contributor to working capital and profit—the engine that keeps your entity solvent and sustainable. When evaluating potential business goals, examine and, when necessary, adjust your pricing to enable the company to generate sales revenue that’s capable of providing the financial foundation that will facilitate your ability to achieve the growth, scale or expansion goals that you envision.

Give yourself reliable data and insights that enable informed pricing decisions, rather than relying on intuition or outdated market info when determining prices. Avoid methods inclined to produce ineffective pricing strategies that are unlikely to access the full revenue generation possibilities of your services and products.

Finally, be aware that clients may be willing to pay a premium for services or products that possess what they feel is a desirable differentiating characteristic. A unique characteristic may be perceived as a competitive advantage that sets your service or product apart from what is offered by other vendors—sustainability, for instance. Furthermore, clients are not infrequently willing to pay a premium to do business with a brand they consider trustworthy or prestigious. Below are pricing strategies and factors to keep in mind.

  • Cost-plus pricing is based on the cost and value of the time and effort (talent) required to develop your B2B solutions, or source/manufacture B2B or B2C products. From there, a profit margin that target clients will presumably accept is added, to create the selling price.
  • Value-based pricing is particularly attractive in that it reflects the maximum amount clients are willing to pay, and minimizes the focus on service or product production or acquisition coat, which might be difficult to calculate when developing B2B solutions.
  • Tiered pricing targets different customer segments and may produce additional revenue from those willing to pay a premium for upgrades and add-on features, or offer volume discounts to attract clients who have higher consumption rates.

Thanks for reading,

Kim

Image: Quentin Metsys (Flemish, 1465/1466-1530) The Money Changer and his Wife (1514) courtesy of the Louvre Museum in Paris, France.

Survival Strategies , , , Leave a comment

Reinvent and Rescue Your Failing Business

by

Those of you who follow astrology know that the planet Mercury is currently in retrograde meaning, as a result of an optical illusion, the planet appears to be moving backward in its orbit. Mercury began to retrograde on August 5 and the phase ends on August 28. The third and final Mercury retrograde of the year will occur November 25-December 15 (the first retrograde Mercury of 2024 was April 1- 25). All nine planets can appear to retrograde and it is said that when they do, the effect can scramble our best laid plans. For example, signing contracts is said to be ill-advised during retrograde Mercury (and also during retrograde Venus, Mars, or Jupiter). However, there is an upside associated with the downside of retrograde Mercury—you may be able to rectify what went off the rails.

Astrologers claim that Mercury is the planet most closely associated with business activities. You would never launch a business during retrograde Mercury (or retrograde Venus, Mars, or Jupiter), when the planet seems to be orbiting backward, because the venture would almost certainly fail—you want forward movement to get things rolling. Instead, astrologers advise you to use retrograde Mercury to figure out whether a failing enterprise can (or should) be rescued and is worth the effort and money needed for the resurrection.

The prefix re– conveys the spirit of retrograde and signals that it’s time to pause and reflect on what has transpired and anticipate how the outcomes might influence next steps. The ancient practice of astrology recommends using retrograde Mercury to revisit, reconsider, repair, recuperate, or reimagine what appears to be broken but, with careful reassessment and cost-effective reengineering, can be successfully rebuilt.

Oh, why not? Do not allow the heartbreak and frustration you feel as your dream of entrepreneurship crumbles convince you to abandon ship too soon. You owe it to yourself to discover what might respond to a well-executed pivot and put the remedy in motion.

Review what went wrong

Conduct a thorough post-mortem to reveal which factors caused the failure. Was it the product or service offered, or were you too far ahead of a developing trend? Did you overestimate the size of your target market, or become too optimistic about demand for your offering? Were there operational problems that, e.g., interfered with product manufacturing or delivery, or was cash-flow the problem?

A comprehensive review of financial statements, sales data and customer feedback will help you recognize the glitches. With an accurate diagnosis of what has not been working, you can redirect your focus and develop a reinvention strategy.

Rethink the business model

A business model describes how the venture will make money—methods the company will use to sell the product or service to customers and how the business will drive sales, for instance. A business model also determines the type of products and/or services that make sense for the company to sell and how to effectively market and brand those products or services. The will identify the ideal customers the company should aim to capture, the depth of customer demand and anticipated operational and selling expenses. Miscalculations in the business model planning are almost certain to eventually result in unmet revenue expectations. Appropriate market research is the remedy for an ineffective business model. Study direct competitors and industry trends.

Reconfirm customer demand

Understanding your target customer’s needs and priorities is integral to start-up success, so obtaining psychographic data will help you clarify what is essential to them when they shop in your product category. Whether or not your business failure was a lapse of product-market fit, identifying and then learning how to communicate your offering’s value proposition is a key component of brand-building and achieving sales revenue goals. An insufficient product-market fit results in the product or service failing to resonate with prospective customers and results in weak demand.

Revisiting the buyer persona of your ideal target customer will also be instructive. Let your market research lead you to identify the right customer, the right product-market fit and just maybe, reveal a niche target audience with a readjusted offering, that differentiates you from competitors and paves the way to a loyal customer base that is your springboard to sustainable growth.

Reassess pricing

Pricing problems limit sales revenue, whether you’ve priced too high or too low. Incorrect pricing is often implicated in cash-flow and revenue difficulties. Get your bearings by researching three or four competitors to verify the price tolerance range for your product or service category and get an idea of how you might readjust your pricing—and maybe customer payment options, too. Being flexible and creative with how customers can purchase and pay for products and services—on your website, on social media, on consignment, with free delivery—can boost sales and build your customer base. But first, do your price comparisons to ensure any new pricing is competitive and fits your market tier and brand, whether luxury, midlevel, or economy.

Reexamine the sales strategy

Again, make it easy for customers to do business with you, whether you are a bricks & mortar shop, sell on line, or offer your wares through a subscription service. Also, shipping and delivery should be easy and priced at a level that customers accept.

Furthermore, inefficient or cumbersome business procedures can drain time and resources away from serving customers and growing the business. Investigate technology—marketing, financial, operational— to simplify workflows, delegate tasks, improve organization, speed up processes and reduce expenses associated with day-to-day operations.

Thanks for reading,

Kim

Image: © iStock for TheSchoolRun. The solar system.

Marketing , , , , , Leave a comment

Thoughts on B2B Pricing

by

The prices assigned to a company’s products and services are an important element of the company’s marketing strategy. Pricing strategy plays a key role in determining a company’s revenue and overall financial picture and cannot be treated as an afterthought. Those of you operating in the B2B sector especially will note the codependent relationship between product and service pricing and the ability to attract and retain customers. B2B purchases are complex, involving multiple stakeholders, an extended sales cycle and high-value contracts. According to Marketing Chart, 63% of B2B buying committees consist of at least three decision-makers.

Identifying the optimal price range is critical business intel. If prices are too low, it becomes difficult to attain the sales revenue goal; there will be extra work and worry caused by the need to fill the sales pipeline with evermore prospects and hope to convert enough of them into paying customers. Price at a level that prospects find excessive may alienate them and possibly drive them instead to do business with a lower priced competitor. So your mission here is to find a sweet spot price range that prospects will tolerate and become your loyal paying customers.

Evaluate your industry and competition

As you contemplate pricing you will benefit by first identifying benchmarks by investigating pricing norms, in particular, standard mark-ups and the typical profit margin range in your industry. Next, check out the prices of a few competitors. Evaluating these numbers will also reveal whether or not your product and/or service production or acquisition costs are reasonable relative to the typical selling price range found in your industry and used by competitors.

Be advised that while knowledge of competitive pricing will help you determine an acceptable price range for your products and services, it would be ill-advised to merely apply a competitors’ prices for similar items to your line. Let factors that are unique to your situation guide your finalized pricing strategy.

Determine your pricing potential

It’s critical to identify a price range for your products and/or services that aligns with your brand and market position and is also accepted by your target customers. Knowing where on the value spectrum customers classify your products and services is essential information for every business and that knowledge is particularly important for pricing. You’ll confirm pricing potential when you understand customer perceptions of your company value and brand position. You may decide against pricing at either the upper or lower extremes of customer price tolerance but by considering key factors, including acquisition or production costs, competitive pricing intel and knowing the price tolerance of target customers, you can determine which end of the pricing spectrum will be most advantageous for your line.

Remember also that Freelancers and business owners in nearly every industry continue to grapple with the unfortunate effects of depressed wages, which for many have not kept pace with inflated prices that were declared “over” in 2022 but that we can’t seem to outrun. Customers remain cautious with their spending and most companies realize that pricing competitively to attract and retain customers is a must. Here are some common B2B pricing strategies that may help you find your sweet spot.

Cost-plus pricing

This strategy employs an uncomplicated mark-up formula. The business owner calculates the acquisition or production costs of the product or service, adds a certain sum for overhead expenses such as rent, payroll and utilities and arrives, tacks on the desired profit margin and arrives at a price that will cover all costs and deliver the margin. Also called mark-up pricing, this strategy focuses on internal factors like production or acquisition costs rather than external factors like brand reputation and competitive prices. 

Premium pricing

A premium pricing strategy aims for the maximum amount a customer is willing to pay for a product or service, rather than focusing on production/acquisition costs, competitive pricing, or other factors. Selling your product or service at a premium can mean deliberately pricing higher than competitors, as a way of demonstrating to your target market that your product or service is of a higher quality and more desirable than what’s sold by competitors and is therefore worth the additional cost. If marketing and branding activities convey high-end status and particularly when customers and influencers provide good word of mouth, a premium pricing strategy will be a brand-building asset and fulfill customer expectations.

Loss leader pricing

AKA penetration pricing, this strategy is enacted when a business assigns an irresistibly low price to a high-volume product or service with the intent of enticing customers to abandon competitors who sell a similar product or service at a noticeably higher price. The hope is that customers drawn to the loss leader will be motivated by the availability of other desirable items, and already happy with their bargain-priced item, will purchase those products or services that bring in a higher profit margin and make up for the low, or nonexistent, profit margin of the loss leader. Some B2B companies use a “freemium” version of loss leader pricing and allow new users to access a limited version of a product or service at no cost in the hope they’ll convert to paying customers. The strategy can also be effective for lead generation.

Trader Joe’s customers will be familiar with the chain’s quite successful use of loss leader pricing. For 20+ years, bananas at Trader Joe’s were priced at 19 cents each (increased in March 2024 to 23 cents each, as a result of rising transportation and farming expenses). The price of an organic banana was returned to 29 cents each, after being priced at 25 cents each for a few years. Trader Joe’s Markets is a privately held company and does not publicly report income, but it is believed that annual earnings are about 13 billion annually—so loss leader pricing appears to work for them.

Competitive pricing

Monitoring competitive pricing is time-honored business strategy. When the pricing strategy is influenced by a close competitor, prices are set relative to rivals and follow the going market rate for similar products and services. Prices may be set slightly lower or higher depending on factors such as product quality, target market and the marketing strategy. Proprietors of relatively new B2B companies often benefit from using this strategy because existing brands have already determined what customers will pay for similar products and services.

Tiered pricing

Most businesses serve a wide range of customers who have different business needs and operate under different financial conditions. Tiered pricing addresses the diversity of customers by offering price points for products and services that reflect the addition of features included at each level. Lowest cost versions include only basic features and highest price versions offer the most, and most desirable, features. Tiered pricing can increase revenue by enabling the business to sell to a wider range of customers.

Tiered pricing can also support the pricing strategy known as price anchoring. By offering three or more pricing tiers, the business can position its premium option as a psychological reference point as the best value for the money and use this story to encourage customers to accept up-sells.

Subscription pricing

With a product or service that requires repeated sales, e.g., access to software as a service (SaaS) or attending a monthly networking meeting, Freelancers and other business owners will turn to the subscription pricing model. Subscription pricing is usually a win-win for both customer and business owner because monthly costs are locked in with (typically) an annual contract. Both parties know the amount of money that will be paid or received each month or quarter. Subscription pricing delivers the advantage of expense (the customer) and revenue (the business) predictability that will encompass a predetermined length of time that also supports business planning for both the customer and the Freelancer or business owner.

Thanks for reading,

Kim

Image: ©TK Kurikawa for Shutterstock 1457812421

Business Strategy , , , , , Leave a comment

Perfecting Your Pivot

by

If the quintessential American motto is “change is good,” then in the business sector change finds its ultimate expression in the pivot. You have no doubt noticed that business publications often feature reports of a pivot executed by one entrepreneur or another. The pivot is the new American myth, a swashbuckling action-adventure narrative that stars a Luke Skywalker archetype who launches a start-up. If sales start tanking, our brave and brilliant entrepreneur-hero correctly diagnoses the problem, intuits the marketplace zeitgeist and engineers a flawless pivot that not only saves the company from bankruptcy, but carries it to phenomenal success.

These heroes’ journeys are exciting and tremendously appealing but as you know, reality does not unfold like scenes in a movie. What’s lost in the fawning admiration is the cold fact that a pivot is a complex process. Getting it right demands a deep dive into both your data and that of your marketplace. The ability to recognize the story that the data tells and the good judgment to know what to do about it is another requirement. A dose of good luck is the third resource you’ll need.

It may take a couple of disappointing quarterly financial reports to convince you that a change must be made, and soon, to avoid getting trapped in a permanent downward spiral. Once it becomes obvious that corrective action is necessary, your first challenge is to identify which aspects of the business need to change and what might be left in place.

Resist the temptation to assume that major surgery, i.e., a pivot, is the best remedy. Choose the course of action that data indicates is the most specific and least disruptive solution and should have the best chance of successfully turning the company around. The purpose of your research is to discover and confirm growth opportunities and how to either successfully enter a new market or hit the restart button on the market you’re in, by refining your methods. Carefully research the size of potential new target markets, your access to those customers and the competitive landscape.

For example, as you analyze the efficacy of your marketing strategy, you may realize that some combination of ramping up your inbound marketing activities to increase outreach to target customers, reassessing your pricing strategy and/or upgrading pre- and post- sale customer services provided could make a substantial positive impact.

Once you’ve analyzed your business and marketplace data, you would as well be wise to review your company mission and vision statements. Before making any big changes to the purpose or mission of your enterprise, make sure that the new direction of your company will align with your values and guiding principles. Or will your pivot necessitate a rewrite of your vision and/ or mission statements?

Pivot to solve a problem

Analyze your KPIs, with special emphasis on marketing data and revenue streams. Get input from your customer-facing team members and feedback from high-volume customers—both groups have wisdom to share. Every pivot is different, but every pivot must solve a problem. Following your analysis, you can develop your pivot strategy, the roadmap that defines the aspects of your business that you’ll pivot and the aspects that will support the new direction and can remain in place.

Your pivot plan will outline the steps you’ll take to execute the pivot. It should include timelines, resource allocation and key performance indicators (KPIs) to measure its success.

As well, encourage yourself to be confident once your decision is made. A pivot is a significant challenge but it is nevertheless a sign of robust strategic thinking and problem solving, essential qualities that support the long-term viability of your enterprise. Signs that a pivot might be necessary include:

  • Insufficient customer base
  • Weak brand equity
  • Unsatisfactory revenue and profit
  • Negative customer feedback
  • Overwhelming competition

Types of Pivot Strategies

Pivots offer customizable options—-there is no one-size-fits-all template. Your company’s pivot may involve a group of small changes that together result in a significant positive impact. Conversely, your pivot may be based on a very visible alteration in your signature product or service that precipitates a re-calibration of your brand and all the ways you market and sell it. Below are five of the most common pivot strategies:

Marketing Pivot: Signals a big change in your company’s core marketing strategy. Pivoting in this instance may include targeting a different audience, using more appropriate outreach channels, re-calibrating your use of inbound and outbound marketing techniques, or adjusting the company’s brand voice and messaging tactics.

Product Pivot: Describes a change of the company’s product or service offerings. Pivoting a product may include altering the product’s ingredients, features, or packaging. In a more dramatic approach, the defining characteristic of your pivot may be the introduction of new product or service lines to provide solutions that are more responsive to customer needs and priorities.

Brand Pivot: A branding pivot strategy entails one or more adjustments to a company’s characteristic image and philosophy. Pivoting a brand may include renaming the company (see Facebook to Meta), editing its mission to serve a new target market, updating the company tagline, or refreshing the visuals, e.g., the logo and/or color scheme used.

Pricing Pivot: In this choice, a company may change the pricing tier in which it has previously operated. For example, a retailer that originally priced in the mid-market tier may conclude that economy pricing will better reflect the perceived value of its products. The expected outcome is a broader customer base that generates greater revenues and increased profits.

Distribution Pivot: Closing all or most of a business’s physical locations in favor of operating in the e-commerce sector is a bold example of a distribution pivot. The strategy involves changing how a company delivers its products and services to consumers. Pivoting your distribution model could include expanding into new geographic markets, adding or discontinuing retailer partners, or introducing the franchise model.

Communicate and monitor

In advance of your venture’s pivot, encourage support by explaining the upcoming changes to stakeholders—employees, customers, investors. Outline the changes you plan to make and clearly articulate how those changes will benefit their relationship with the organization. Schedule videoconference meetings with each key constituency to discuss the pivot and make the case for why it is necessary.

Be certain that your explanation adequately answers the anticipated questions and potential concerns of each group. Consider creating a Frequently Asked Questions (FAQ) sheet for each stakeholder constituency. Finally, closely monitor the pivot’s progress as reflected in the KPIs you’ve chosen, as well as feedback from key members of your constituencies.

Thanks for reading,

Kim

Image: The Academy Drum and Bugle Corps of Tempe, AZ

Business Strategy , , , Leave a comment

90 Day Business Tune-Up

by

Memorial Day Weekend is over and summer is here—-yay! The fourth quarter, which has the most revenue potential for most Freelance and other business entities, will arrive at the close of this short, sweet season and whether it brings you a feast or something less than, you’d better be ready. There’s a lot to prepare for this year.

Inflation has been eating your profits for at least two years. The shakeup that followed the recent collapse of three big banks still lingers and talk of recession refuses to subside. So maybe it’s time to take some defensive action to insulate your enterprise against the turbulence? Ya think?

Then again, you may have reason to feel optimistic. Are you one who anticipates a potentially robust fourth quarter? That happy thought may inspire you to consider scaling your operation, maybe hiring one or more part-time or even full-time employees, to ensure that your organization will seamlessly meet the increased demand for your products and services.

In either scenario, you’ll have some planning to do and it makes sense to start the process now and guess what? You can make a few smart moves that will give your business a summertime tune-up that will start showing the results you want in just 90 days! Analyzing key performance index metrics, numbers that reveal what’s really going on in your business, is Step One. You’ll want to verify the customers who bring you the most business, the average dollar amount of invoices, the average length of your sales cycle and the average number of days it takes to collect receivables, for example. That and other KPIs will help you decide what should be done to capitalize on your advantages, minimize potential obstacles and give some wiggle room when it’s needed.

SWOT Analysis

Objectively evaluating your business on a monthly or at least quarterly basis is always time well spent, regardless of the economic conditions you face. Since the 1970s, the SWOT Analysis has enabled business owners and leaders to account for the Strengths, Weaknesses, Opportunities and Threats that a business should focus on and manage. FYI, there are many free online tools that make it faster and easier to conduct a credible SWOT Analysis, ensuring that you evaluate all aspects of your business and help you consider goals and next steps.

Taking a peek at two or three major competitors can also unearth useful information and may even help you recognize previously undiscovered opportunities to pursue or other potential advantages to explore. Look for what can help your business stand out, including product or service add-ons and upgrades, customer loyalty rewards and customer experience and after-sale support.

Once the SWOT has been completed, identify what can be implemented in the short-term and develop strategies that include action plans and a timetable to keep you on schedule and drive results. Other areas that may benefit from scrutiny and are known to produce tangible results quickly are below.

Cash-flow

Insufficient cash-flow makes it difficult to manage your accounts payable and other fixed expenses and can result in late fees. Two strategies that you can institute immediately are known to improve your business cash-flow— 1.) speed up collection of accounts receivable, usually by timely invoicing and 2.) control spending.

Re: invoicing, time tracking software often has invoicing capability and it’s a timesaver for B2B service providers. Alternatively, you can develop the practice of creating a draft invoice when you send a contract to customers. The services you provide will be described and will be the basis of your invoices. Mostly, you’ll only need to add the time spent on the tasks.

Coaxing customers to pay on time may also mean that you need to broaden your company’s payment systems. Accepting two or three payment formats (e.g., mobile and online in addition to checks) could shorten the average number of days it takes to collect outstanding receivables. In addition to meeting customer expectations and helping to increase sales conversion, digital payments also mean money is deposited to your account within 48 hours.

Re: spending, examine your budget and look for what can be reduced or eliminated. For example, have you been a user of premium services and if so, are the upgrades meaningful? Also, you might consider renegotiating your contracts with suppliers, asking for a lower credit card interest rate if you always pay on time and reduce any discretionary spending.

Finally, money saved allows you to build a nice cash reserve, oh happy day! That means you’ll face the most favorable conditions should you look to obtain a line of credit that provides additional cash reserve. With a line of credit, you can draw from it on an as-needed basis but only have to repay what you actually borrowed.

Pricing

We all know that prices are rising and this gives you “permission” to raise yours—-maybe by 10% -20%? Your customers probably won’t complain, unless they are especially price sensitive. Consumers don’t stop purchasing when prices increase—-they simply adapt to what’s within their budget.

Consider designing a premium and a budget version of your services and add two new price points to the mix. Consumer behavior surveys have demonstrated that shoppers of B2B and B2C products and services appreciate the options of multiple price points. It’s highly unlikely that the majority of your buyers will gravitate to the lower price and in fact, if you design your premium services to reflect what buyers value most, a majority will probably choose to pay the higher price in order to obtain what’s important to them.

Customer experience and retention

If business slows down, it’s imperative that you step up your customer retention activities. Keeping a customer is always less expensive than acquiring a new one, so do whatever possible to persuade customers to keep doing business with you.

Prioritize customer satisfaction. Along with providing high-quality products and services, attentive customer service and beneficial after-sale support will result in significant improvement in customer satisfaction. Furthermore, everything from a website that navigates intuitively, to quick follow-up on questions asked on social media will positively impact the customer experience and the good reviews, repeat business and referrals that every business needs.

Get free advice

I’m honored that you read my blog (thank you!) but there are other sources you can explore and they’ll have information and advice well beyond what I offer. Small Business Development Centers and SCORE, both affiliated with the Small Business Association, offer free technical assistance and resources to owners of businesses of every size and what you learn can make a real difference. .https://www.sba.gov/about-sba/sba-locations/headquarters-offices/office-small-business-development-centers

Your local chamber of commerce or neighborhood business association will charge a (reasonable) annual dues plus a per event ticket price, but you’ll get a good ROI. There will be at least a few events that justify the money invested and you’ll get to meet fellow business owners and Freelancer peers. You might event meet your next client.

Finally, remember that the professionals you hire to provide business support services—your banker, accountant, bookkeeper, HR or IT specialist— also have expertise in addition to the specific service that convinced you to work with them. I’m sure that within their spectrum of expertise, they’ll be delighted to share valuable insights and maybe even help you to recognize new opportunities.

Thanks for reading,

Kim

Image: Kelley Wholesale Florist at The New England Flower Exchange in Chelsea, MA.

Business Plan , , , , , Leave a comment

Course Correction: Tacking Through Headwinds

by

When you decide to become a Freelance consultant or business owner, your mission is to build and launch a successful and sustainable entity. To that end, there will be Important Things you must do very well and a corresponding list of Big Mistakes you must avoid and summarily correct if you fall into the trap. Our old friend the SWOT Analysis (Strengths, Weaknesses, Opportunities & Threats) reminds us that when leading a venture there’s always something to analyze, fix, capitalize on, or avoid. Below is a list of usual suspects that can tank a business. Be on guard!

Failure to understand the customer

Apologies for hammering this topic in nearly every post, but it’s impossible to overstate the fact. If you plan to become self-employed or open a business (and you must make a plan, even if it’s an outline scrawled on a cocktail napkin), you must be assured that you:

1). Have an accurate description and understanding of the customer segments you expect to buy from you and

2). Verify that your choice of prospective customers has a need, if not compelling reasons, to buy your product or service at a volume that will sustain your venture. In short, you’ll need a critical mass of paying customers.

Failure to research the marketplace

First thing you do is research the chosen industry and confirm that your sector is on an upward slope because under no circumstances do you want to enter a shrinking market. Also, search for announcements of new products and services that will soon be released, to verify that a competitor will not make your product or service obsolete. Furthermore, search for updates that may reveal potential new customer groups for you, or shifting demand for current products and services. In other words, customer loyalty can wax or wane, new iterations and uses of what’s available can develop and nothing is static and forever.

Failure to choose a good business model

Create your roadmap for customer acquisition and achieving profitability. Included in your assessment will be how you’ll source, create and bring your goods or services to customers. Decide also the payment methods you’ll accept and when payment will be made (billing after the product or service has been delivered to the customer or payment when the goods are ordered?).

Failure to develop a coherent marketing strategy

It will be tremendously helpful to create a multi-prong marketing strategy in which you’ll outline basic promotional goals for what you’re selling—-sales/marketing funnel, newsletter, blog, social media, branding, PR, website messages. All paths must travel in the same direction. All elements , text and images, must advance and support the same story.

Failure to create an effective customer acquisition and retention strategy

Identifying the customer groups that you’ve confirmed are a natural fit for your products and services is only half the story (sorry!). You then need a plan to reach out to them— that’s what your marketing and brand appeal exist to do. The value of your products and services, plus the efficiency of how you deliver to the customer, along with your diligent quality control, customer service and post-sale support impact customer retention and referrals.

Failure to anticipate required cash-flow

Posts on March 15 and April 19 addressed pricing and cash-flow, as regular readers will recall. The objective is to lay the groundwork for generating sufficient revenue to pay expenses, pay employees, pay yourself and reinvest in the business. Timing is everything and money must be available when you need it most. If there are gaps, corrective action should be taken immediately.

If invoicing is how you generate revenue, take steps to invoice on time. Insert on every invoice a polite phrase to indicate that payment is due upon its receipt. Give yourself an infusion of cash by asking for 15-20 % up front on projects where you anticipate billing $1000 or more. Worse case scenario, you’ll have to take an under-the radar unglamorous part-time job or get lucky and score an adjunct teaching gig at a local college or business incubator (BTW, I’ve done all of the above).

Failure to price appropriately

Pricing is an integral component of the marketing strategy but it often gets treated as an afterthought. Your revenue projections will underperform if you don’t price appropriately. Prices must support profitability as well as be perceived as reasonable to prospective customers. They must reflect your brand, whether luxury/premium, mid-market or discount. Think carefully about the message that your prices send to prospective customers.

Thanks for reading,

Kim

Photograph: On the rocks, aftermath of a nor’easter at Lewis Wharf in Boston Harbor, October 17, 2019

Marketing , , , , Leave a comment

Pricing B2B Services

by

According to Dorie Clark (no relation), Adjunct Professor of Business Administration at Duke University’s Fuqua School of Business and author of Entrepreneurial You (2017), there are four pricing strategies that Freelance consultants might use, depending on the project at hand and the relationship you have, or would like to have, with the client. It is crucial to follow a pricing strategy that will support your objective to persuade the client that your prices are fair, your solution will be effective and you are the right person to hire.

Hourly billing. The most straightforward pricing strategy is to bill clients by the hour. When you are unsure of the number of hours it will take to complete a project, perhaps because your responsibilities will vary from week to week or month to month, then an hourly rate pricing strategy is reasonable. On the other hand, if you do have a good idea of the number of hours that should be necessary to complete the job, an hourly billing strategy is also reasonable, particularly for one-off assignments or sporadic work with the client.

You can then provide a reliable project estimate, based on your hourly rate for the work proposed and the anticipated number of hours, and that information will be reassuring to the client. But if you underestimate the time needed to complete the assignment the downside of this strategy will emerge, because your final price will overshoot your estimate and your client may not be thrilled.

Another potential downside to hourly billing is the level of scrutiny that it invites. Some clients may challenge the number of hours you record for the tasks involved and that is uncomfortable.

Set fee for services. This pricing strategy requires the Freelance consultant to develop a standard suite of services, where all related tasks are included and there is one price for the whole package. “Productized services” is the term pricing experts use for this strategy. If certain of your services are frequently requested, make life easier for yourself and your clients and create a standard rate sheet for services you perform most often.

For example, if you often conduct half or full-day workshops, billing a flat fee for all tasks involved is a more favorable strategy than billing separately and hourly for the associated tasks. Clients are comfortable accepting a flat fee because the project price is all-inclusive, predictable and transparent. Furthermore, the project specs describe your duties and discourage “scope creep,” those extra unpaid tasks that some clients like to sneak in. If the client would like an extra service or two, then you’ll price those separately and not be tricked or coerced into giving away free labor.

Value-based pricing. Evangelized by Alan Weiss, elite management consultant to multinational companies such as Merck Pharmaceuticals and author of dozens of books, including (Million Dollar Consulting [1992]), this strategy hinges on what Weiss calls “a value-based project fee structure.”

You begin by having a detailed conversation with the prospect so that you will understand the project requirements and the project’s relevance, urgency and impact on the organization. In other words, you and your prospect will achieve mutual agreement on the value of the project to the business. Weiss says that it’s useful to ask questions such as, “What would be the value to the company if this weren’t a problem?” or “What impact would it have if you could do XYZ better?”

Dorie Clark recommends the value-based pricing strategy for Freelancers who work with Fortune 500 companies, because value-based pricing is a way to help the prospect envision and appreciate the value of the right outcomes delivered at the right time. Clark feels it is appropriate to charge a higher project fee when working with big-budget clients because the stakes are so much higher.

Your work for a Fortune 500 company might, for example, create $10 million in new value, whereas even a dramatic improvement for a small not-for-profit organization may only enhance the bottom line by $10,000. Once the prospective client understands the full value that your work will bring to the organization, your fee — a tiny percentage of the overall gain — will in theory seem trivial in comparison.

Retainer agreements. These are an excellent arrangement because predictability is a wonderful thing for both you and the client. Once it is established that you’ll work a more-or-less fixed number of hours per week or month on a certain assignment or category of assignments and a comfortable relationship develops, by all means suggest that you create a monthly retainer agreement. Bring evidence of 6 – 12 invoices to bolster your case.

In the retainer pricing strategy, the client pays the Freelancer a flat fee every month for on-demand access to your services (and that could be anywhere from $500/month to a four or even five figure sum). This allows you to depend on a certain amount of money each month, no matter what. The downside is that unless you’re careful, your client may take advantage of the “all you can eat” pricing by monopolizing your time.

To prevent abuse, be very clear upfront about who can contact you and for which types of services. It is also advisable to specify the hours that you’ll be available ( 8:00 AM – 6:00 PM or longer?), the protocol for weekends and holidays and the methods of contact—email, phone and/or text. You’ll also want to specify whether they only have access to your advice, or if there are specific deliverables you may be asked to produce (for example, you might also agree to generate content for social media or the company newsletter). As you gain more experience and develop long-term relationships with clients, you will be able to propose retainer agreements and institute more control over your monthly income.

Freelancers who succeed are those who are appreciated for the value they bring to their clients’ organizations. An important building block that supports how you communicate your value to the client is your pricing strategy. Study the pricing options discussed above and choose the most advantageous for you and your client.

Thanks for reading,

Kim

Photograph: Courtesy of the Everett Collection. Dink (Margaret Nolan) gives James Bond (Sean Connery) a massage in Goldfinger (1964).