Tag Archives: value

Business Strategy , , Leave a comment

Raise Prices? In This Economy?

by

An effective pricing strategy is essential to every business,  because one goes into business to make money.  Freelancers and business owners deserve to be paid just as every worker expects payment for services or labor performed.  Determining how to price products is fairly straightforward  (what is the cost of materials? what is the price of labor?),  but pricing services,  especially intangibles,  can be daunting.  Many Freelancers operate in the knowledge economy  (e.g., providing leadership training)  and it’s not always possible to benchmark your prices against that of competitors’.

Add to the mix that clients are well aware that they have the upper hand in nearly all fee negotiations.  Exploitation is alive and well and there can be shameless manipulation to obtain your top-drawer services at bargain-basement prices.  The smug assumption is that if you refuse to work dirt cheap,  then it will be easy enough to find someone else who will.

Then there are the  “clients”  who request free services in exchange for  “opportunities for exposure”  or  “future paid work”  that I strongly suspect never materializes.  (Why would it?  Once you’ve built their website for free,  they no longer need you.)   In my experience,  nonprofits are the worse offenders and they do it with a clear conscience.  They rationalize their disrespectful behavior because their budgets are thinly stretched and their organization is all about doing good.  Ha!

Yes,  there is risk to raising prices in this climate of hyper cost-consciousness,  but every once in a while one must raise prices and there may be compelling reasons to do so now.  Your price increase may be in response to any number of factors,  not the least of which is to synchronize the value you bring with the fees you charge.  Or maybe you just plain old need more money to maintain your preferred standard of living as you hand over more money than you should for groceries and gasoline.

The art of pricing is to charge a fee that simultaneously reflects your perceived value to clients and allows you to achieve your desired bottom line.  To that end,  you can discover useful competitive intelligence at http://gsa.gov/mobis and learn what others in your specialty charge the US government for consulting services rendered.

To access,  see the search box at top right and enter a professional category  (e.g. project management).  Scroll through the businesses listed until you find one based in your geography.  Look to the right,  click  “terms and conditions”  and view the services and prices revealed.

If you learn that your prices are rather low by comparison,  then it might be time for a price increase.  Additionally,  if clients remark that your services are a wonderful bargain,  then it’s definitely time to give yourself a raise.

Be aware that billing practices can either help or hinder the introduction and acceptance of a price increase.  It’s easier to bill by the hour and for small jobs that may suffice.  But hourly billing can expose you to haggling over your hourly rate,  making a price increase unpalatable for those who’ve worked with you before.

A flat project fee holds many advantages and typically benefits both Freelancer and client.  A project fee also makes it easier to institute your price increase.  To make sure that you don’t lose money on a job,  obtain written project specifications  (to avoid  “mission creep”)  and calculate the number of hours/week it should take to successfully complete the job.

Be sure to add in at least 2 – 3 hours extra per week to accommodate unexpected delays.  You may even choose to discount your  (discreetly increased)  fee somewhat,  in exchange for the stability of working on a long-term project  (because those extra hours allotted may not all be used).  Furthermore,  you should also specify a weekly cap for hours worked and set an hourly rate for time worked in excess of the cap.

Your mission,  should you decide to accept,  is to get paid what you’re worth.  Investigate MOBIS to learn how your prices compare to competitors’.  Whatever your pricing,  if you feel that an increase is in order,  be strategic about your approach.

Billing a flat project fee whenever possible is likely to be helpful to you and your clients  (they’ll know the project cost up front).  A modest price increase may be best,  or perhaps increase only the prices of selected services.  Most of all,  as discussed in previous posts,  you must work with the right clients and sell the value of your services.

Thanks for reading,

Kim

Survival Strategies , , 6 Comments

Pick the Right Clients

by

As a coda to last week’s post about understanding,  communicating and being rewarded with money and respect for your value, I add thoughts about how to recognize good and bad prospective clients so that you will be positioned to sell on value and avoid being treated as a mere commodity.

As mentioned last week,  it’s important to develop the confidence to understand and accept that your services are not meant for every possible prospect.  Those who intend to exploit and devalue Freelancers will get us nothing but a knot in the stomach and lousy pay.

I know all too well,  however,  that sometimes it’s about paying the rent and keeping the phone on.  Who among us has not worked with a client who was a complete jerk early in the game,  but we kept telling ourselves that we’re pros,  we’ll make it work,  just get the frigging money and pay the g-d bills?

Other times,  it’s about getting the right name on the client list and catapulting yourself to the next level.  So you roll with the punches and vow never to work with the SOB ever again.  Even billionaires wind up doing business with those they’d rather not, so they can stay billionaires.  Business is like that.

Yet we do have some measure of control over the clients we work with,  no matter how dismal the economy.  It starts with our very own business model and whom we envision as our target clients: Fortune 1000s and large not-for-profits,  arts or social service organizations,  medical device and biotech.  Perhaps you decline to pursue chemical companies that create seeds for genetically engineered crops,  or tobacco companies,  or start-ups of any kind.

Whoever your target clients,  you must avoid like the plague those who display disrespectful or unethical behavior.  The sorting process takes place in the initial meetings.  First,  pay attention to how the particulars of the project and its scope are presented.  There should be attainable goals,  specific deliverables,  a clear idea of what your role will be and a reasonable project time-table.

The client should probably do 70% of the talking in your first meeting,  but there should be space for you to add your insights to the discussion as well.  Your second clue is,  have you been invited to add your thoughts about possible solutions and strategies,  or is your prospective client the supreme expert who casts you in the role of supplicant?

Several months ago,  I spoke with a prospect who had one set of goals during a phone meeting and our first face to face and a rather different set of goals in our second meeting.  Our first meeting was great,  our second meeting was revealing.  The prospect did all the talking and blocked a true dialogue.  Goals had changed and they seemed unattainable to me.  My perspective was not sought and my value seemed unappreciated.  Further talks were postponed as the prospect decided to take a vacation.  Eventually,  she opted to shelve the project. I was furious at the time but  now realize that she did me a favor.

As you get to know your prospective client do not ignore how he/she speaks in reference to other Freelancers with whom he/she may have worked.  Very early in Freelancing,  I met a prospect who was oh,  so charming in meeting #1.  But in the second meeting,  he showed his true colors by making frequent references to how he was reliably able to hire Freelancers to work  “cheap”.  Also,  as he described the project,  my role and the deliverable,  he stipulated ridiculously scant hours and short time frame for project completion.

Definitely,  I should have walked right out of that clown’s office after politely suggesting that it might be best if he contacted one of his  “cheap”  Freelancers for that assignment  (I wanted to, believe me).  But I was needy and desperate for both money and a better client list,  so I meekly sat there and sucked up the attack on my professional value,  signed the contract and began work.

The whole impossible task was going nowhere and I was not even close to producing the deliverable as scheduled when lucky for me,  a ranking staff member realized the whole thing was untenable and stepped in to work with me.  That staff member understood my value and appreciated the contributions that I made to setting the stage for the project’s eventual successful completion (and also ensured that I was paid on time).

So what is the moral of this story?  As always,  learn to appreciate and communicate your value as a competent professional and insist that all who aspire to work with you do so as well.  It’s the only way to be a successful Freelancer.

Thanks for reading,

Kim

Sales , , 1 Comment

Sell on Value

by

According to business experts,  it costs 5x more in resources to acquire a new client than it does to retain an existing client.  That cost is probably greater for those of us who specialize in providing intangible services,  where relationships and reputation exert a huge influence on the ability to attract clients and generate billable hours.

It is therefore imperative to 1.) Expertly communicate a strong value proposition and 2.) Unfailingly meet client expectations,  even when the client doesn’t really know what the expectations could or should be.  Those of us in the service business,  tangible and intangible,  must learn how to make the customer feel as though he/she has won by doing business with us.

To successfully compete as a service provider involves confidence,  reputation,  personality and selling skills.  Have the confidence to believe in your value as a highly qualified expert in your field.  Develop the selling skills to communicate your value with self-assurance  (but never arrogance)  in a way that is easily understood and targets the needs of your prospective clients.  Make clients and prospects feel as if doing business with you is a very smart decision.

Accept that you are not mass market and that your services are not a fit for every potential client.  It’s been estimated that 1/3 of customers are focused primarily on price.  Do not waste your time with such individuals because they are not for you.  Most are negative and difficult to work with,  because they know the price of everything and the value of nothing.

Sell your unique value by building a portfolio of success stories to trot out and demonstrate the excellent results that you reliably deliver.  Use those stories to inspire confidence in your abilities  (in both the client and yourself).  Turn your client list into your sales force by obtaining word-of-mouth endorsements whenever possible.  Build trust in your professional capabilities.

Continue to demonstrate your value by fine tuning your listening skills,  so you will hear and understand both what your client wants and also what he/she really needs  (and that may not be the same thing)  and how you can best apply your talents to the project in a way that the client will come out feeling like a winner,  believing that hiring you was a smart decision.  Express your answers by using the client’s own words and phrases when possible,  using language that the client will relate to and appreciate.

Emphasize the customer service that you are known to provide,  the prompt response to client questions and needs and also your sensitivity to costs  (despite your premium pricing).  Let clients know that it’s actually less costly to travel first class.

Thanks for reading,

Kim

Professional Development , , Leave a comment

Summer Reading List

by

For just about all of us,  the school year Summer Break meant having fun: hanging out with friends,  going on picnics and trips to the beach,  summer camp and family vacations.  Yet Summer was not all fun.  When I reached high school,  Mom and Dad made sure I got a job every year,  so I would earn some money and learn the habit of saving when they insisted that I bank half of my paycheck each week.

Also,  students at my college-prep public high school were required to read two books  (from the school’s list)  over the Summer and submit a book report for each when we returned to school in September.  I’ve always been an avid reader,  so the reading assignment was never a chore for me  (although I disliked writing the book reports).

This year,  I decided to renew that tradition and get into some business-themed books.  It had been a while since I’d mined that category and I had the appetite to make up for lost time.  Here are three books I’ve read since June.  Maybe you’d like to suggest a few titles that you’ve found to be useful?

TouchPoints  (2011)     Douglas Conant and Mette Norgaard

Freelancers,  corporate execs,  nonprofit organization leaders and business owners all require leadership training.  This excellent and informative book provides first-rate lessons for experienced leaders and those new to the club.  Learn how to create a leadership model that reflects your unique style and values,  rather than merely mimicking a cookie-cutter template.  Learn how communication skills promote leadership skills.  Explore the existential question of why you choose to lead.

Knowing Your Value  (2011)     Mika Brzezinski

Although this book’s intent is to confirm that women deserve to receive appropriate financial reward for their professional gifts and teach them how to successfully negotiate a raise,  salary or contract fee  (and other perks)  that accurately reflect the value they bring to the organization for which they work,  I recommend this useful and enjoyable book for both genders.  The Haves are shamelessly using the weak economy to withhold money from the Have-nots and that means we all need to learn how and when and under what conditions we can respectfully request money and recognition  (plus a good title!).

Black Faces in White Places  (2011)     Randal Pinkett and Jeffrey Robinson

The title of this book is misleading.  It is not primarily a book about survival strategies designed to assist people of color who work in Euro-American dominated environments.  Randal Pinkett was the winning contestant on  “The Apprentice”  in 2005  and he is the only African-American to be named the winner.  The authors do speculate as to why no other  “Apprentice”  winner has ever been asked to consider sharing the prize.  Was it subtle racism?  Only Trump knows.  But who among us has not been treated unfairly at some point?  The authors posit that the most reliable way to triumph in life and business is to deliver excellence and that is the subject of this well-written,  dense and absorbing book.  Pinkett and Robinson  (who run a lucrative consulting firm)  provide a detailed roadmap that is applicable to Freelancers,  business owners and all professionals of all races.  Learn to identify your passions and your purpose,  nurture beneficial relationships,  develop and consistently deliver excellence and give back generously,  to pay it forward and mentor others.

I’ll be back next week with the rest of my Summer reading list.

Thanks for reading,

Kim

Business Plan , , , 1 Comment

Business Model Guideposts

by

I will teach “Become Your Own Boss:  Effective Business Plan Writing” , a three part workshop (total 6 hours) held at Boston Center for Adult Education 122 Arlington Street Boston MA on three consecutive Thursdays 5:30 PM – 7:30 PM February 17 – March 3.  Register at http://bcae.org, course #420174 or use the direct link:

http://bcae.org/index.cfm?method=ClassInfo.ClassInformation_class_id=4967&int_category_id=48&int_sub_category_id=13&int_catalog_id=0

The business model defines the method by which an organization creates and delivers value through products and services offered and the way in which it persuades customers to pay for that value.  The business model encompasses the manufacture and marketplace delivery of products/services,  how best to access prospective customers,  where and how business transactions take place and customer service.  The business model is the blueprint for how the venture operates in real time and makes a profit.

The business model reflects what the business owner/management team believe about what customers value,  the way in which customers want that value delivered and what they will pay to obtain it.  The business model can also function as an analytical tool. 

 Its examination can help the business owner effectively address challenges such as client retention problems,  insufficient new business development,  or persistent customer service snafus.  It can urge the management team to find a way to lower the cost of goods sold,  add or delete services, or  rethink sales distribution channels.

How’s your business engine running these days?  Might a tune-up be in order? Here are some questions to ask yourself and guideposts to follow as you build or refresh your business model:

  • Who are the target customers?
  • How can your organization best attract,  acquire and retain the target customers?
  • What need does your product/service fulfill or what problem does it solve?
  • What perceived value does your product/service provide?
  • How can you differentiate your product/service in ways that resonate with the target customers?
  • How will you generate revenue?
  • Where will business take place,  how and when will customers pay?
  • Identify and locate customers with sufficient money and motive to do business with you,  preferably on a regular basis.
  • Verify that there will be enough paying customers to allow the business to make a profit.
  • Identify which product/service features and benefits that target customers value most highly.
  • Identify the least costly source location and manufacturing process for your products/services.
  • Use the most cost-effective product/service delivery system that customers will accept.
  • Identify product/service add-ons and upgrades that are easy and inexpensive to provide and for which customers will pay a premium to obtain.

Thanks for reading,

Kim

Marketing , , Leave a comment

Survive and Thrive—Price to Profit

by

Let’s segue into the pricing thicket,  which is where accounts receivable begin,  if you think about it.  I confess that I struggled with pricing.  I offer an intangible service and I knew of no way to find out what my competitors charge for similar services.  Clients pay what they think we are “worth”, but how is that determined?

The received wisdom is that clients are very price sensitive  and that they are more so in this economy.  Fear drives many Freelancers to price conservatively,  yet experts advise against that practice.   Many of us need a smarter pricing strategy,  because we’re probably  leaving money on the table.  We  just don’t know how much.

Pricing that is based on what competitors charge,  hoping that number will allow  you to cover costs and turn a profit (“cost competition”),  is what almost everyone does when they can figure out their competitor’s prices.  However,  pricing specialists  warn that this is unwise,  because that price will not reflect your value to the client.  In fact,  prices that fall below a certain threshold can even steer prospects away from a business.

If prices are perceived as too low, clients will suspect that the service delivered must be inadequate.  In a service business,  delivering the service and meeting (or exceeding) expectations are the overriding factors— not money.  The money is always negotiable when it is demonstrated or perceived that the service will deliver the desired results.

What competitors charge is important,  but that should not overwhelm your pricing strategy.  Ideally,  price should accurately reflect the client’s perception of the value of  the deliverables.  But what might that be? Different customers can have very different ideas about what a service is worth,  sometimes based on their ability to pay.

It is therefore worthwhile to develop pricing strategies,  rates and service packages for different categories of clients,  e.g. corporate and nonprofit rates,  with service packages tailored to meet each group’s typical needs.

Think counter-intuitively.  People pay for what they value.  They pay a premium for what is perceived as high quality,  expert,  reliable and trustworthy.   A good reputation, excellent credentials,  impressive client list and referral from a trusted source also influence the price that clients will pay.  If you are holding several of these cards,  you can charge more and clients will be happy to pay.

A useful counter-punch for gaps in your bona fides is your marketing message.   Make your intangible service appear tangible to clients/prospects.  Describe your service as providing deliverables that will produce measurable outcomes.  Make it easy to understand what you do,  so that clients can relate your value to their business problem and can picture themselves as the beneficiary of your unique solutions.

When setting prices,  it is better to err on the premium side.  This will position you as higher quality and will support profitability.  Furthermore,  clients probably don’t know what your competitors charge unless they’ve hired for your category of service recently.

So what if you’re totally in the dark about your industry pricing norms?  If you have money to spend,  hire a pricing consultant.  If you don’t have money to spend, visit gsa.gov/mobis.   Click products & services,  choose a category,  find a vendor,  click terms & conditions and peruse price and service lists used by firms that bid on federal contracts.  Also, you can learn what clients think of your pricing,  scope of services and delivery of services with a follow-up evaluation survey.  You may be surprised to learn that if you tweak a couple of things,  clients would be willing to pay more for what you do.

Thanks for reading,
Kim

Marketing , , Leave a comment

A 5 Step Value Proposition Plan, Steps 3, 4 & 5

by

We continue to build the value proposition that will convince clients and prospects that doing business with you helps to make them more successful in their own jobs or businesses.  Let the important customers know that they are important by soliciting their thoughts and opinions about your products and services;  let them tell you what you do that makes their work easier or more productive;  and let them tell you what else you might do that would make their work still more productive or less problematic.

Step Three is to motivate customers to sell for you.  When you demonstrate to customers that they’re on the VIP list,  they will love that feeling of importance.  They will feel even better about doing business with you and will be inclined to talk you up and make good referrals for you.  Word of mouth is the most powerful form of advertising,  make no mistake about it.  It will give your business tremendous credibility.

Bring your top clients behind the velvet rope and into the VIP section.  Oh, and make sure you devise a “rewards program”  for this advisory board.  Pass along a few perks to those who help you upgrade your game.  Perhaps you also can make a referral or two?

So Steps One and Two set the stage for Step Three,  when top customers deliver to you prospects who are ready to spend money.  Personally referred prospects are likely to be pleased with your services, because they will have heard about you from one whom they trust.  An expectation of success will be established.

In Step four,  incorporate what you’ve learned in the interviews done in Step Two. Implement those suggestions that make good business sense.  Make the necessary adjustments if  you get the heads up on competitive activity or changing conditions of some sort.  Don’t let your good  work go to waste.

In conversations with your customers,  what common themes emerge? Be sure to respect and value in your business practices what your customers respect and value.  For example,  let’s say you’re about ready to trim certain costs in order to stay within a particular price range—yet the VIP crowd indicates otherwise.

If leading customers crave a certain level of service,  quality of merchandise,  or style of packaging and they are willing to keep paying for it,  don’t take it away and disappoint them! Stay the course and give them what they want.  They will love you for it and show that love by handing over more money to you.

Lastly,  in Step Five acknowledge your strengths and apply them to running your business. View your strengths through the prism of a restaurant.   Are you front of the house—excelling at customer contact and relationship building,   making sales calls, networking and schmoozing,  forming strategic partnerships?  Or are you back of the house—most comfortable and effective while overseeing operations,  crunching numbers, devising long term strategies,  negotiating a lease?

Recognize where you excel.  If you work solo,  perhaps outsource what can be comfortably handed over to another party (like PR or bookkeeping).  If you are going into business with partners,  make sure that skill sets are complementary and not competing. This will make roles and  responsibilities  easier to delineate and ensure that the important bases are covered, thus improving the venture’s chances for success.

So there you have it,  5 easy pieces that will help you re-examine and re-focus your business practices,  optimize client loyalty and goodwill,  encourage referrals and the right kind of buzz and build up your bottom line.  If you can convince yourself to try the first two steps,  I guarantee that you will be impressed with the results and sold on working through the entire program.

Good luck to you,
Kim

Marketing , , Leave a comment

A 5 Step Value Proposition Plan, Steps 1 & 2

by

No matter what,  human beings must do business.  In feudal societies and capitalist dictatorships;  in flush times and depressions;  in war and in peace;  there will always be traders,  sellers and buyers.  Where there is a need (real or perceived),  there will be a product or service available to provide some level of fulfillment.  Someone always makes money.

The most successful sellers present the most compelling case,  i.e. the strongest value proposition,  for their product or service and  they become  market leaders.  Maybe you’d like  to position your business for that kind of success?  There will be work involved,  but nothing that is insurmountable. The process can be broken down into 5 manageable steps and implemented according to a timetable convenient for you.

Getting started is easy— ask your customers! They may know more about your business than you do.  They certainly know the market place in which your business operates,  because they navigate those waters as purchasers and consumers of the products and services offered therein.  Your customers have done their homework and they have chosen you.

Above all,  we must  value our customers and communicate that to them.  Big spenders, the VIP customers,  deserve to receive the most value.  Important customers can benefit a business in more ways than one.  They are able to become our opinion leaders,  our advisory board. These customers can play a key role in helping to grow the business. Understanding this is Step One.  Next, demonstrate your trust and respect by implementing  Step Two:  interview the VIP customers.

Identify your three biggest billable hour clients and invite those with whom you interact the most out to eat at whatever meal you can afford to buy.  Client priorities can change as their organization and business environment changes.  Organizations will change in response to economic,  leadership,  competitive and consumer preference changes.

Stay on top of things by asking your VIPs what you can do to better serve them,  help them to do business better or make their jobs easier.  You can also ask what the competition is doing,  what changes may be on the drawing board within their company, etc.  You get the idea.  You may even find out about new markets for your services.

If you can access your competitors’ customers,  take them out to coffee,  too and see what you can find out about that scene as well.  What next big thing (or old school remix) is winning the hearts and wallets of customers?

Strengthen relationships,  make important customers feel even more so,  find new business opportunities,  tweak your business model or your advertising choices and maybe even get your foot in the door with a competitor’s client. Talk less,  listen more, take notes and be humble.

Next week,  we’ll examine the remaining three steps that will help you to create a winning  value proposition for your business.

Thanks for reading,

Kim