Mainly, the thing working against us is fear. We’re afraid that if we charge too much, it’ll backfire and we’ll lose clients. We’re afraid that we’re not as good as we think we are. Or worse, that others will see right through us and realize we’re frauds.
The other obstacle is that we only want to focus on the work. Raising rates and negotiating pricing? That’s for sleazy salespeople. But counter intuitively, pricing has everything to do with the work. You pour your time and energy into work that you can be proud of — work that can make a difference. So it is in service to your talents and the work that you maximize the value you receive.
Never forget: Clients are looking for someone to help them solve a business problem and they’re more than happy to pay top dollar when you help them solve that problem. Not to mention that charging a fair price teaches them to value you and your work.
Ok, so how do we get there?
1. Master the art of up-selling
Up-selling lets you make more money by providing clients with additional services. It creates a win-win situation, but only if you’re willing to take the initiative and ask. Up-sell only natural extensions to your service, not unnecessary add-on products. A lot of people try to up-sell unrelated services, which make their proposals longer and clients hesitant. Smart up-sells – like a logo redesign to complement a homepage redesign – point out needs clients hadn’t even anticipated themselves.
Don’t present your clients with too many options. Sheena Iyengar, a professor at Columbia University, conducted a study at Draeger’s Supermarket on two consecutive Saturdays. On the first Saturday, she set up a tasting booth offering 24 choices of jam. Only 3 percent of the shoppers who tasted jam made a purchase. On the following Saturday, Iyengar set up a booth with only six choices. This time, 30 percent of the shoppers who tried the jam made a purchase.
The same goes for up-selling. We recently conducted research of over 25,000 estimates and proposals. That research revealed that up-selling with just one or two options converted the best. Additional options decreased conversion rates.
Finally, resist the temptation to up-sell in your initial conversations with clients. Up-selling at the point of decision – when you present your services and price within a proposal – is ideal. Up-selling in your proposal doesn’t pressure clients like up-selling right away does, and it gives them complete control to accept or reject your recommendations.
2. Make your competitors’ prices irrelevant
When you go shoe shopping, you have a general idea of what you expect to pay. Unless you’re shopping somewhere like Gucci, seeing “$795” on a price tag would probably make you run for the exits.
Your potential clients do this too. Dan Ariely calls it “arbitrary coherence.” Making past purchases (or seriously considering purchases) influences how similar decisions will be made going forward. Understanding how this works is the first step to avoid getting lumped together with bargain-basement competitors in your potential clients’ minds.
“Similar” is the key word here. Arbitrary coherence only kicks in when the decisions are close enough in the prospect’s mind to trigger the previous price point. Starbucks customers don’t use Dunkin’ Donuts prices as anchors to consider how much coffee should cost at Starbucks. Why not? Both sell coffee, but each business creates a completely different experience. Dunkin’ Donuts is a blue collar, hurry to work place. Starbucks is a nice environment to lounge and relax.
Crafting a unique experience for your clients can make your competitors’ prices irrelevant. When you start out, you may be tempted to emulate the language of more established players, but check their price point. Do everything you can to create a distinct experience from people charging less than you.
One of my favorite examples is the proposal process. Take a close look at what lower priced competitors do when someone asks for an estimate. What does that experience look like?
Maybe, you see that it’s something like this:
- Client submits web form asking for a price estimate
- There’s a brief email exchange nailing down project requirements
- A quick price estimate is given through email
Compare that to higher-end competitors:
- Client submits web form asking for a price estimate
- A brief client questionnaire is sent back and minimum budget expectations are set
- Email exchange and/or phone call to nail down business objectives and project requirements
- A professional looking proposal is sent for approval
For high paying clients, the proposal process of higher-end companies is more inline with what they expect.
Look at everything from messaging on websites and emails, to the way they position their services. You’ll avoid preconceived notions of what your price should be and make clients more receptive to paying what you’re worth.
3. Use persuasive words to command higher rates
One tiny word can make the difference between winning and losing a client. In a Carnegie Mellon University study, Professors Scott Rick and George Loewenstein tested phrases to describe a fee associated with shipping a DVD box set by overnight delivery. Here are the two variations they tested:
- “A $5 fee”
- “A small $5 fee”
Just by adding “small,” the second phrase improved the response rate by 20 percent. Pay attention to how you word your estimates and proposals. Using words like “small,” “minor,” and “low” might not seem like a big deal to you, but they matter enough to clients to justify higher rates.
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