The Five Pricing Pitfalls
SHARE YOUR REFLECTIONS --- After watching the video, please use the Comments section to share with us your reflections.
- Do any of these pricing mistakes resonate with things you're doing or have done?
- Are there other pricing mistakes you've made or have observed others make?
- What's one pricing-related skill you would like to be able to improve?
- How would improving that skill help your consulting practice?
I’ve worked on hundreds of sales proposals throughout my career, and I assisted others with their proposals. I’ve made and seen my share of mistakes. Let me share with you the five most common and damaging ones that I encounter.
1. Commodity Trap : This is where you go with the crowd, charging market rates for a standard service that is comparable to what others are charging…while that may sound reasonable, it’s a slippery slope to letting your service become a commodity. And commodities wind up competing primarily on price. That’s not a good place to be if you’re trying to grow your consulting practice.
2. Falling Short of Awesome: This means you did a good job with your project but you fell short of the client’s expectations, because you didn’t really address their business need.In other words, you gave them what they asked rather than what they needed. This often comes from acting as an order-taker, rather than as a real consultant.It’s important to understand your client’s business needs and tailor your solutions and services to those needs.
3. One-Size-Fits-All Pricing:Many consultants make the mistake of thinking they should have a single rate that they charge everyone for everything.Price should be a reflection of your value, and your value varies based on the client and which client needs that you’re solving. There needs to be flexibility in your pricing to address different needs and value propositions.
4. Blindfolded on a Bridge: Some consultants make the mistake of assuming that their price is based solely on their costs. Clients don’t care about your costs. They gauge value based on their own criteria and by comparing across different vendors. You need to understand your client’s business needs and stay on top of the constantly-changing competitive landscape.If you don’t look outward, you are like a blindfolded person walking on a bridge.
5. This is my price! Sorry: Too often, consultants give off this vibe of being apologetic for their prices.They are ill-prepared to answer pricing questions and stumble their way through these conversations.Their lack of confidence gives a shrewd negotiator an opening to negotiate their price down. Worse, they fear and avoid these conversations and are anxious to get out of them, so they often give up too much too quickly during negotiations.Confidence without arrogance is a key success factor in negotiations.