The key to premium pricing – Be special

Recently I had occasion to read an old blog post (Oct 2006) by David Maister where he was discussing Value Pricing.

To quote David from his blog – “you get paid a lot when your client believes you deliver a level of value that cannot be (or is not being) delivered by other possible providers.” He goes on to say ” there is no secret trick to value billing just figure out a way to be more valuable. If you are, you will get paid more.” David also discusses how he provides an unconditional satisfaction guarantee and recommends this for all professional service providers. This nearly 6 year old blog post and the 26 comments that it spawned highlight an interesting point. There are so many reasons to get rid of the hourly rate, but of them is not, so that you can suddenly charge much higher fees. The hourly rate method of pricing drives so many inconsistent behaviors in the firm however the purpose of this article is to focus on other aspects of value pricing.

Be More Valuable.

You can not expect to get higher prices unless your customers believe you are more valuable. In other words Be Special to your customers. Now I believe that as professionals it is important that you articulate the value of the services being providing. This is something many professionals struggle with. However even aside from that, David’s point about being more valuable to the customer is imperative.

To be more valuable it is therefore necessary to really understand what is important to the customer. It is necessary to have the customer at the core of everything. These are simple words but incredibly important. It is all about the unconditional satisfaction guarantee that David also mentions. To provide this it means that you have to lift the game to ensure you will fulfill the guarantee.

Often the automatic response to providing an unconditional guarantee is that people will exercise it. Now maybe there would be a small % of clients who might though I would think they soon would not be clients. Also you probably would already discount your price now anyhow so you are effectively giving the guarantee. But really what you want is the impetus to increase the standards in the firm so the customers is feeling that your are more valuable.

The customer must be at the center of the business. This is a radical shift for professional service firms when you consider that it has been focused on the technical services that can be provided.

So how can you be more valuable to your customers?