With only moments from FoFA and Fee Disclosure Statements dictating some of your practices, it is crucial to ensure you are ‘price proof’ and able to deliver a convincing story of the value you provide and what it costs. Otherwise, you may be at risk of failing to convert ideal prospects to clients or worse, losing valuable clients you already have.
Clients pay your bills. Without them, it does not matter how efficient your processes are, how sexy your brand is or how beneficial is the advice you provide – you won’t get paid. So don’t let clients use price as the reason they choose not to work with you. There are plenty of other reasons they could come up with on their own.
I am sure you don’t want your bottom line to be at the mercy of your pricing confidence (or lack of). Therefore, irrespective of what pricing model you use, one of the best ways to boost your pricing confidence is to nail your story around value. In the absence of understanding value, price stands out like sore thumb.
When addressing your pricing strategy, here are 8 key points to consider:
- Knowledge is power. You can’t make a sensible pricing decision without all the facts. Yet many advisers still determine price as if they were at a casino gambling table. Know your minimum price that covers all your costs AND build in a margin for profit. If you are game, the best businesses are those that also use value to drive their pricing decisions. Remember, you did not go into business to break even, did you?
- Every client should be profitable (unless it’s part of your pro-bono strategy). Discounting your ‘establishment’ value in the hope clients sign up for your profitable ‘ongoing’ can be risky business. What if they decide to leave after one year?
- Be aware of what price does to our perception of value. Unless you are using a discounted pricing strategy to compete, remember the saying, “if it looks too good to be true”…
- Consider what you put a price on. Are you attaching a high price to something of minimal value, and letting a huge piece of value walk out the door? All your IP, time and effort to develop the advice should be worth more than completing the paperwork.
- Think carefully about when you confirm the actual price with the client. If you are delivering premium value, clients would not expect you to know the actual price when you first meet.
- Keep it simple unless your strategy is to confuse. The more complicated you make your pricing structure the bigger the turn off. Clients actually want to know what they are paying for and what they get.
- The first meeting is not free – someone foots the bills. You need to be clear on who it is.
- Consult your pricing committee. This involves ‘testing your price’ with someone other than yourself before you tell your client. It could be a team member, a colleague, a PDM / BDM or a business coach.
At the end of the day pricing is all about people’s perception of value. Supercharge your pricing confidence and make the dreaded pricing discussion a thing of the past. Otherwise it is going to be a harder slog in the future.
