Monthly Archives: September 2014

“It depends” is Not a Price but It Is a Killer!

By Talmar Anderson

Pricing is a challenging part of any business.  Making sure you are taking advantage of market trends, value delivered and demand from clients are all items we want to consider when setting a price.  And oh yeah, covering cost of goods, operations and…dare I say it? Make a profit!  A common issue that my service industry clients struggle with is how to have a set price for client consideration. “It depends” is a killer.  I promise that while start to expound on the different possibilities you are losing the listener.  “It depends” is to open ended and scares the buyer.  They worry that there will be no clear end on the investment.  Hourly pricing is the easiest because it is quantifiable and therefore most service professionals comfortable justifying the price when it comes to invoicing or proposals.  I would challenge this and suggest that you consider packaging to bring in more qualified prospects and improve your sales conversion ratio (how many leads turn into paying clients).

Packaging is the process of setting an inclusive price with a set expectation of delivery.  If you can find a component of your business deliverables and create an easy to understand package then your clients will be able to more quickly understand your offering and self-qualify.

A package should have:

  • a defined price,
  • details of exactly what is included (and depending on your industry possibly what is NOT included) and
  • a declaration of how exactly a client can add to the package as well as any price considerations.

As an example we can look at a website development company.  As the owner, you can take a backward look and case study review of your past clients and projects. Let’s say that you have decided that your company can create a quality product, with consideration of your costs and expense, of a delivered website for $5,000.  This beginning package may not be at your highest profit margin but is easily duplicated and is still a good step one for your entry level clients.

Once defined you can put that Package “out there” – on your marketing materials & website or as a rolling-off-of-the-tongue starting price point that is easily quotable in any conversation, amazing things will happen.  Several great benefits will occur:

  • Prospects can easily self-qualify.
  • Referral sources can make sure that leads will be more consistent with your potential target market.
  • Confidence and talking points come more easily to any team member that is part of a conversation representing your company.

EVERYONE can know that your projects start at $5,000.

This process can be replicated for other services or price points within your company. Consider packages based on average sales and even the high-end projects can be packaged.  If the website development company can also offer a full year of brand management, website development and content generation, this package can be spelled out to ensure you are in the running for those types of jobs.  Don’t worry about missing out.

The key to packaging is to not worry about what you COULD do.  Could the website designer create a logo for someone?  Sure….but let’s be known for websites if that is our core offering.  As you get in front of qualified prospects and existing clients you can expand on their needs and educate on your company’s other skill sets.  Packages will get you in the door but absolutely DO NOT have to be all that you offer.  Getting rid of “it depends” for fear of missing out will strengthen your credibility and allow clients to more easily connect.

The POWER is in the Numbers…so they say!

By Talmar Anderson

I frequently work with my clients on establishing what to measure.  Not just talking about profitability and revenues but the “specific-to-your-industry-and-your-business practice” metrics.  Whether inventory controls or scheduling hours to ensure we have enough employees to deliver on our contracts, measuring and then analyzing that collection of data is critical for success. But I don’t want to talk to you about how to do your math today (I can hear you letting out a breath saying “thank goodness”!)  I want to talk about WHY we measure. It is in these measurements that we take control of our companies.  It is in these numbers that we can find the power to lead destiny down our path.

So why do we have to spend so much time marking and collecting the details?  We document when, how or who does what in your company.  We document the dollars but also the time, the expense, and the frequency of items.  We sometimes even try to document the stress or energy exuded to complete certain task.  We measure to take control.  We measure to better understand.  We measure to allow for success.  How would we know we succeeded without a goal?

We measure so that we can compare forecast to outcomes.  Once we have outcomes we can assign value.  Again, values of not just profitability (though it is my favorite to really get control of and understand) but also of time lost (or fruitfully spent).  Opportunities lost or won.

What if…

  • We can decide how efficient we are at delivering on our clients’ needs?
  • We can understand that we ARE receiving enough prospects but we are NOT closing enough clients?
  • We can measure how much profitability suffers when an owner uses their time on deliverables?
  • We can find success when we measure a strong marketing investment compared to newly tracked revenues?

What could you do for your company if you knew the SPECIFIC answers to just these questions for your own company?  Where would you spend money? Where would you STOP spending money? With these results, you could move your company to where you originally envisioned when you went into business for yourself.

It is amazing what keys for decisions we can find when we look at our data.  Let’s use me as an example. I noticed the most unexpected detail my client information vs. profitability. It showed me a crazy coincidence…maybe?

I was sorting my top clients based on gross revenues over the last 12 months.  I was considering a new advertising campaign. I was looking for commonalities that could be helpful to target this specific market. I was motivated to effect change in my marketing efforts and future revenue totals.

At first look, it seemed as if the top of the list fell into my usual target market definitions.  Yes, they were all growing.  Most were hiring whether for the first time or as part of a full organizational structure strategy. It was split 50 / 50 down gender. But then I found the piece that surprised me.  The top 4 clients have offices less than 1 mile from each other.  1 mile!! It is not an exaggeration to say I have clients all over the MD/DC/VA region. They are spread out alllllll over the three states! I have a few throughout the US but have not had even 3 in such close proximity.

You may be thinking, well, they share information when they meet at a local coffee shop.  Maybe they all attended an event in their region?  Maybe they all were referred by another vendor they work with locally?  Nope, nope and nope.

Each of them came to me from different referral avenues or marketing.  All are in different industries.  To the best of my knowledge, none of them even know each other!

This allowed me to focus my advertising and marketing efforts and monies to a very specific geographical area – which incidentally further targeted research has found is rich with my target market. The ideal growth in this specific area allows me to plan to work with clients in a strategic manner saving time and energy.  Additionally, it can help build profitability by minimizing expenses.

Metrics allow us to define success and strategically change course.  Measuring the key elements of your business will relieve a HUGE amount of stress because you will KNOW where to spend your money to grow your company. Do you feel it? Do you feel the pooooowwwwwwer???!!!??

What have you measured in your business that was surprising? I’d love to know what you did with the information!