Personally, I rarely publish prices for services, because I think it encourages price shopping, and creates a climate where I can’t add value, and so I can’t compete. That’s bad for the client, because they always get nickel and dimed with mediocrity. With pure price shopping, I’m competing even with unscrupulous and dishonest service providers and even with incompetent ones. I don’t want to make only what they make, and I don’t want my services valued according to the lowest common denominator. You don’t either do you?
When someone calls and asks me off the bat what I charge, I ask “for what, exactly?” After all, I don’t even know if they want pure consulting or one of my more tangible services. And if they have no idea, either, they can end up getting the wrong thing, whether it’s me or someone else. That’s why there’s a client consultation. If they ask me what my minimum is, I say a dollar. Then I explain that it depends on what’s needed and what we agree on. I won’t talk price until we’ve done a consultation, because I’m not selling an interchangeable service that you can just pick up anywhere.
It’s not commodity selling. You’re not buying corn, where one bushel is like a next. The client doesn’t always see it before we talk, but I’m adding immense value, bringing unique competence, and part of that is assessing the real needs and shaping them if need be. Sometimes a client will actually ask for something they shouldn’t buy – not from me, not from anyone, but they’re missing something that would cost them less, and do more. I don’t sell things they shouldn’t buy, so I’m comfortable with telling them the truth. But to add value, I’ve got to assess their unique needs.
Plus, I want to be the guy they turn to down the road – not just a wham bam thank you ma’am. There are other things I can do for most clients, that they’ll recoup in returns many times over. I want them to have the benefit of that, and I want the repeat business. Price shopping on services is for a purely transactional sales relationship. It’s not for a consultative one. And remember, anything purely transactional can always be outsourced to someone cheaper than you. You can’t win selling commodities – you can’t win producing commodities. Ask a farmer what it’s like. All service businesses that intend to stay not only competitive but lucrative, and yes do good in the world, need to be consultative in their culture, and add value rather than cut price.
The mentality that motivates consumers to price shop is the notion of interchangeability of services – something borrowed from the product-world. But a marketing plan or a creative design work or an appraisal report process aren’t really products unless you turn them into products. They’re services, and services allow for a wide range of added value.
The misconception is so prevalent that even clients will sometimes tell me their own services are interchangeable with everyone else’s. That had better not be true, if you intend to do any real marketing. Seriously. The success of any marketing plan depends on your market differentiators. And even if the criteria of what you deliver is defined by law – like doctors, lawyers, appraisers, and real estate agents – you can add value in ways the other guys don’t. Do you guarantee a reply to all queries in 24hrs? Do you offer proactive status updates? Do you have extremely refined professional processes that involve your clients? Do you give them extra technical or informative deliverables or documentation that enhances your service? Is the level of consultation you provide above and beyond the competition? Where do you add value? If the answer is “nowhere” or “I don’t know” then that’s job one. It’s the very first step to your marketing. Nothing else matters until then, because you really don’t have anything to sell that I can’t get down the street for a dollar less. It’s back to price shopping, driving value ever lower, until some smart individual decides to add value instead of cut price, and charge a living wage, while beating you on something that makes the difference.
Listing your prices for services can short-circuit your attempts to add value by skipping that discussion altogether. It’s like starting the conversation with a discount. Do that, and everyone expects a discount all the time. Besides, it’s hokie. People think, ‘why didn’t you just quote your real price, instead of acting like it’s got a discount bundled in’. People who add value to services don’t have to play those games. That’s a habit picked up from product vendors who use sophisticated supply chains to drive costs ever lower, and most discounts are in exchange for something. It’s not really appropriate as a regular practice for a service entity that intends to survive, let alone thrive. Don’t tell me the price is $600 but you’ll do it for $500. Tell me what I get for $600 that I wouldn’t for $500, and how the difference benefits me.
When I was in Inspector school, the owner of the business responsible for our education explained that he cost more than his competition, and had clients banging down the door. I don’t want to give away his whole farm. But I’ll tell you what he told us, and I’ve taken it to heart. He said when people call and lead with a price question, he tells them the number and then immediately asks (before they hang up), ‘Now I’ve told you my price, can I have 60 seconds to tell you what more you’re getting for that price.’ Then he tells them the three ways his company adds value. Those are his market differentiators. If you’re marketing to an internet audience, those differentiators had darned well better be on your home page, buddy. No mistake. And if you *are* going to publish prices, either make it easier to get the “How we’re different” part than the price list, or embed those differentiators into the list itself. That’s called packaging.
Don’t say I’ll do a 1004 appraisal report for $350. Say you get premium 1004 service for $350 that includes: [list of your added benefits]. If it’s just the report, someone will do it for $325 any day of the week. And if I need 10 a month, that’s $250/month difference.
My wife is a hair stylist. She charges more for hair extensions, but the technique she uses lasts much longer with less damage and more flexibility, so the client is getting much higher value for slightly higher cost. She charges a bit more for hair color, but she uses a premium color line without the overpowering ammonia in the air, with less fade and more gray coverage. Again, added value. She charges more for hair straightening, but it lasts far longer.
What if you don’t have any market differentiators? Change your processes a little and create some – again, that’s your first marketing task. And not that I’m trying to pump my own marketing consultant services but, if you need help figuring out what that is, that’s part of what marketing consultants do, among many other things. Get one. Get me, if you like, for a few hours, and I’ll help. But if you’re lost, for goodness” sake, get someone.
Price lists for products? You pretty much have to, sure, unless (again) you’ve created unique, high-end products where the price isn’t the up front discussion but the added value is. Services aren’t products, though. Yes, it’s immensely frustrating to go to the store and find the things I need not marked. But you and I aren’t K-mart, are we? We’re not even a fish market, where it’s just about haggling. We’re consultants, you and I, or at least consultative, regardless of what service we’re providing.
Update: If you’re stuck in price compete mode, your choices are either upgrade (with some pain) your services, and potentially your clientelle, or get out and switch lines of work (or lines of product). When I ran my first computer business, back in the nineties, I built computers by hand, with individual high-quality components. When Best Buy came around, you get a computer with the same specs (with one integrated motherboard – i.e. lower quality) as the one with individual components, but for much less money. They sold on price, and it was a hard, hard sell for people who’d never seen a computer to look at anything but the spec sheet. I knew what they were getting, but they didn’t. Computers were the only major appliance you’d buy first and understand later. So I sold my inventory and switched industries. Sometimes you have to make a decision, but price selling isn’t a viable one.