D. Rhodes, CPA, Writer and Editor
As a business owner, who's really in the driver's seat when it comes to your pricing strategy? Are you boldly taking control and commanding the worth you provide? Or are you meekly handing over the keys and letting clients expedite your journey to rock-bottom commodity rates?
Whether you subscribe to a faith or not, operating with purpose and intentionality around your pricing strategy is crucial for your business success. So let's dive into this key concept...
Imagine your pricing is a vehicle and you hold the keys. You have two choices.
Get in the driver's seat and take control of where your pricing goes.
Hand over the keys to your customers and let them dictate the direction.
You can either take a seat and steer that pricing with confidence. Or you can unknowingly give up control.
Value-based pricing is you driving. It's you commanding your products or services value. Commodity-based pricing is recklessly handing over ownership to your client or customer. It's you letting your customers drive while you merely go along for the ride.
When you lead with value-based rates, your clients act like the stop light:
Green light: They happily pay your prices, valuing your skills.
Yellow light: Some hesitation, but you can ease them along.
Red light: They aren't a fit for your services and rates.
When clients start dictating commodity-level pricing, you'll find yourself in a perpetual roundabout doing the bare minimum. This results in you standing up dizzy in debt and low bank balances.
So how do you change this?
One step is by understanding implicit value. Greg Crabtey states, "If you don't value your services, neither will your customers." So, quantify your Implicit Value and make it a non-negotiable part of your pricing.
The Value Pricing Calculation
To truly understand value vs. commodity pricing, let's look at how to calculate your rates:
Value Pricing = Market Rates + Your Implicit Value
Market rates are simply the going rates in your area for your products and services. Do some research on competitors to establish a baseline.
(Shameless Plug --> We are currently collecting this data for you. Reach out and let us know your city, state and zip code, so we can add your market to the list!)
But are you truly maximizing your profit potential if you stop at market rates? Your implicit value is the key...
It's the unique skills, specializations, and personal brand you bring to each sale. It's the language you market with, the environment you create, the conversations you facilitate and much more. This starts to create the gap between being commodity and premium.
Ask yourself this question - Do I feel confident in helping my clients or customers reach their desired result?
Why is this important? You have to make sure that you actually provide value.
To raise prices Year-Over-Year without adding new value is nothing but business gouging. You have to quantify what exceptional value you create and provide, before fading the thought of "premium" into your pricing strategy.
So are you the driver of your pricing model through value-pricing? Or are you letting customers pressure you into a race to the bottom?
Value yourself first. Then your clients will follow suit.
Remember: Our ultimate goal is to help you save time and money, while building wealth and legacy.
The choice is yours, but the clock is ticking. Reach out today so we can help get you from where you're at, to where you want to be. Your move boss.
*This article provides general information, not individual tax advice. Tax situations vary; consult with a qualified tax professional, like myself, for advice specific to your circumstances.
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