Why We Struggle with Pricing
Relative to “Those” Competitors
Many BVFLS practitioners have a mind-set that presents a self-made obstacle to successfully marketing their professional services. In this article Rod Burkert shares three reasons he has observed that may explain why we, as professionals, struggle with pricing relative to “those” competitors and suggests ways to address those concerns of losing out on price.
I want to go on record that I am not immune to price compression. And if I haven’t said that before, I’m saying it now. But if I’ve been more fortunate than others it’s because, in the years after the Great Recession (when price compression began in earnest), I’ve tried to focus more on the outcome I provide rather than the report I deliver.
Our competitors offer reports at lower prices. It’s tough to win when they are “giving away” what they should be selling. That’s what we tell ourselves anyway. (It’s what I used to tell myself.)
But there is nothing we can do to control or influence our competitors’ actions. (So why do we lament or complain?) We can only do something about our actions … and thoughts/beliefs.
Based on my own experience, as well as constantly talking with BVFLS friends and colleagues, I’ve come up with three basic reasons about why we struggle with pricing relative to “those” competitors.
- We Don’t Believe our Value
If we do not believe in our heart—with every fiber of our being—that we are creating more value than another competitor’s alternative, then we can’t expect to capture more value, i.e., charge a higher price, from the client. If we don’t believe our solution is worth more, than no one else will believe it either … so we must demonstrate that worth to the client (see #2).
I believe this particular issue stems from our profession’s maniacal focus on the technical aspects of the reports we deliver to our clients. We’re so worried about the latest quantitative methods, the most recent court cases, and the current professional standards that we forget we were hired to provide a solution to fix someone’s problem.
- We Cannot Justify our Higher Price
Number of hours times an hourly rate is a price, not a value. If we want to capture more of the value we create, we need to be able to justify our higher price. We need to help our clients understand the additional value they are receiving by going with our solution. And we may even need to go further by helping our clients defend our solutions within their organizations.
If we want our clients to perceive the value, we have to be able to clearly articulate what makes us different and how/why that difference matters in their world. Then give them evidence (e.g., references testimonials, case studies) to defend that value.
- We Aren’t Selling to our Aspirational Clients
Aspirational clients (a phrase I first heard used by Mercer Capital’s Barbara Price) are the clients we want to have because they have intellectually challenging assignments, see the value in the solution we provide, and are fun to work with.
But instead of proactively seeking out these clients (or investing time in our positioning so that they seek us out), we are reactive—aggressively waiting for the phone to ring so someone will invite us to submit a proposal. We end up selling from behind, so to speak, which eliminates the ability for us to create value during the “buyer’s journey.”
I think it’s good to keep in mind that there will always be some prospects with systemic challenges to paying for value. In some cases, they might believe what we do doesn’t create enough value. In other cases, their low margins prevent them from making the necessary investments in their businesses to hire people like us. And then there are those who have the mindset that only accepts lowest price as the greatest value.
Keep a stiff upper lip when you encounter these prospects … and remember it’s business, not personal.
What do you think?
Everyone has a different idea of what a successful practice is. The practice you want is personal because it is based on what “successful” means to you. I help practitioners focus on the strategies, tactics, tools, and tech to build/grow/scale their versions of successful practices. If you want some help with that, e-mail me at rod@rodburkert.com.
