Articles on Pricing Strategy

BILLING FOR VALUE rather than time

Pricing should be strategic and reflect the value of your team’s unique expertise.

When you price your services higher, you communicate confidence in the value you create. It tells your clients that you know you can make a big difference for their company. And who doesn’t want that?

It’s that same confidence that leads us to recommend value pricing for the majority of the work our clients do. Value-based pricing allows you to increase your margins while delivering greater value to your clients. Win-win.

Still unsure about value-based pricing? You’re in the right place. Read on.

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FAQs

How do I raise prices without losing clients?

When you raise your prices, you don’t just universally raise them for all clients. You start by raising prices for new proposals as they come in the door.

And, ultimately, if you lose a few clients who aren’t willing to pay the new price for their next project, that’s okay. The math is simple – say you raise your prices 50% and lose 20% of your clients, now you’re working 20% less and making more money.

For more on this topic, check out our article and E-Book, How To Raise Prices Without Losing Clients in Your Small Business.

What is value-based pricing?

Many of us have become far too used to charging for our time rather than our value.

Early in life, we’re taught that pricing is a function of cost. So when we price a project, we estimate how many hours it’ll take to accomplish a given set of tasks, multiply that by an hourly rate and we’ve got our price, right?

There are two problems with this approach. 1) Humans are universally terrible at estimating time. 2) Nobody cares how long it takes you to finish a project. We only care that you solved the problem we needed you to solve.

Value-based pricing means pricing your services based on the value the client places on solving their problem. For example, if your client has a problem that’s costing them $100,000 in lost revenue and you solve that problem for $50,000, they’ll be delighted, regardless of how many hours you spent.

For more on this topic, check out A Quick Guide to Value-Based Pricing.

How do I implement value-based pricing?

First, in order to implement value-based pricing, you need to be recognized as an expert. If your firm is equivalent to 50 other firms competing for the same business, price your work the way most prospective clients are likely to choose. But if you are unique, if you bring special knowledge, a novel process, and a track record of success to the table, you can command a price premium.

Next, value-based pricing requires a completely different sales process – one that addresses the value question up front. A keen understanding of what the transformation is worth to the prospective client shapes the price. For more tips on implementing value-based pricing, check out A Quick Guide to Value-Based Pricing.

How long should a proposal be?

A proposal should be a simple outline of an agreement you’ve already made with a prospective client.

If you already have a deal, you don’t need 20-pages worth of content (that your prospect is unlikely to read anyway) to make the case – you need 1 concise page that outlines the results the client can expect from engaging with you and names your price.

For more tips on writing concise proposals check out our article, How Long Should a Proposal Be?

All Articles on Pricing
Strategy

So you want to make more money.

Apr 11 2023

Creating more value (so you can earn more money).

Apr 04 2023

Be the yoga pants!

Mar 25 2023

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Articles on Pricing Strategy

BILLING FOR VALUE rather than time

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Articles on Pricing Strategy

BILLING FOR VALUE rather than time

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Pricing Strategy FAQs

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Learn what stage growth your business is in and get specific recommendations for how to move forward.

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