Do you know the one key to being a better pricer? It’s the ability to have a good conversation.
This might seem like an overly simple solution to a costly and often complex challenge but pricing success really does come down to your ability to encourage and navigate respectful dialogue.
Sure, you need to know some key pricing principles, but after that, increasing gross margin in a customized services firm like yours comes down to open, two-way communication.
Sounds easy enough, but in the creative professions, we don’t allow for much of this two-way communication in a typical sale. Instead, we seem to prefer the briefing-and-presenting model where one party transmits—either from the front of a room or via a document—and the other quietly receives before both retreat and reconvene again with the roles reversed. There’s a lot of “thank you, we’ll get back to you” and little real dialogue.
Businesses that price and sell products or productized services (e.g. SaaS or training) rely more on data and segmentation studies to set price, but not you.
You segment your audience in units of one and therefore have the ability (and hence requirement) to uncover what the individual wants and is willing to pay.
And if you’ve read Pricing Creativity you know true willingness to pay becomes obvious only once you determine what the people on the client side really value.
You learn little of this from reading a brief and you certainly don’t learn it when you’re in the full-blown transmission mode of a pitch or presentation. You learn only by asking. And asking in an environment where the client believes you’re willing to hear the truth (it’s obvious to the client you haven’t over-invested in time, money or emotions) and they feel comfortable opening up to you.
Keeping it Conversational
Alas, pricing success, like sales success, requires you to replace presentations with conversations. (The Second Proclamation of The Win Without Pitching Manifesto.)
So put away the deck, call off the presentation skills training, and, with empathy and curiosity as your tools, seek to understand what the client wants, the forms of value that might be created, and what they might be willing to pay for that value.
Then retreat and start thinking about costs and solutions.
When you re-engage to share your proposal, offer some options in how the client might hire you (Rule #2 of Pricing Creativity). Keep the written document to one-page (Rule #6).
And keep the meeting conversational. Your physiology is one of calm presence. Calm instead of excited—you are a selective professional—and present instead of presenting, absent or distracted—with you focused on the client, actively listening.
Help the client choose the best option for them and don’t try to talk anyone into anything.
In addition to watching your cost of sale plummet, I promise you the better you get at letting go of your own need to present and instead master the art of conversation, the more money you will make.
Try it and let me know how it works out.