Power Pricing - Getting the Right Price for Your Products and Services
There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it. Finally, they decided that the only one who could solve the problem was a long-retired worker who knew the system inside and out. He came out to the power plant, looked around, picked up a hammer and tapped one of the generators.
Suddenly, lights came on all through the area. Overwhelmed with relief that the problem was solved, they asked how much they owed him. "$20,000," he replied. $20,000? For tapping with a hammer? "Well," he said, "tapping with the hammer is $10. Knowing where to tap is worth $19,990."
There are a couple of lessons to be learned from the joke. First of all, the value is higher when the problem still exists than after it has been solved. After all, if told he could restore the power for $20,000, officials would have written him the check immediately, without question. Afterward, the problem wasn't so urgent--it was solved. Quote your price and get agreement while the customer still feels the urgency (and the pain that you will remove). That's when the value is highest to them. Your agreement can include conditions and guarantees, such as the results you will obtain, and deadlines, if they want assurances about results.
Maintain a little mystery. If they hadn't known that all he did was tap with a hammer, his services would have seemed more valuable. After all, they got the result they valued--the power was restored. Focus on the results, not exactly what methodology will be used. Don't let customers look behind the curtain. (Remember the Wizard of Oz?)
If you are the only one who provides a particular product or service, or you have skills or training no one else does, the value of what you offer goes up. Highlight your exclusive set of training, education and experience. Use unique language to describe what you do. You can also create an aura of exclusivity by screening clients, and only accepting those who meet your criteria. This can work if you have a reputation already, but it can also help build your reputation, if you've got the guts to try it!
Consider what your clients are used to paying, and charge at least that much. If your clients are used to paying $100 an hour, and you come in at $50, you probably won't get the job. On the other hand, if you can show that you are worth $150, you may be able to charge more than the going rate.
Another way to get an hourly rate higher than others is to charge by the project, rather than the hour. For example, maybe you charge $150 instead of $100 an hour, but you get the job done in fewer hours. Get the client to look at total cost, rather than hourly rates. Once again, get them focused on results.
This issue comes up all the time in my publishing classes, where I remind students that they are not selling paper. They are selling the information printed on the paper--information that will improve the lives of the people who use it. Paper is cheap. Useful information isn't.
Keep in mind that the value of your product or service is related to the benefits your customers receive, and how they value those benefits. Present what you sell as solutions to problems, and you can charge premium prices for your excellent products and services.
Copyright Cathy Stucker. As the Idea Lady, Cathy Stucker can help you attract customers and make yourself famous with inexpensive and free marketing ideas. Get free tips, articles and more at http://www.IdeaLady.com/.
 Google News Updated : Thu, 24 Jul 2008 00:51:42 GMT The night Karadzic rocked the Madhouse - guardian.co.uk
guardian.co.uk - A man plays a gusle in a bar called Madhouse in Belgrade, where war crimes suspect Radovan Karadzic is now known to have frequented. Video: Karadzic's arrest sparks clashes - 23 Jul 08 Arrest of Radovan Karadzic: Why Now and Who's Next? Publ.Date : Wed, 23 Jul 2008 20:35:43 GMT Red alert! The cellphone warning has been issued - Los Angeles Times
Los Angeles Times - Now he's done it. Dr. Ronald B. Herberman, director of the University of Pittsburgh Cancer Institute, has said what no one else would -- no cancer experts anyway. Pittsburgh Cancer Center Warns of Cell Phone Risks Cancer researcher warns about cell phone use Publ.Date : Thu, 24 Jul 2008 00:07:36 GMT Report: Eagles call Packers about Favre - SportingNews.com
SportingNews.com - While the Philadelphia Eagles are taking it easy with Donovan McNabb in training camp as he works his way back from a shoulder injury, that hasn't stopped them from going after some potential insurance. Winfield a Favre fan AP Source: Goodell monitoring Favre situation Publ.Date : Wed, 23 Jul 2008 23:26:08 GMT Bloomberg, Gates pledge $375 mln against tobacco - Reuters
Reuters - By Christine Kearney NEW YORK, July 23 (Reuters) - New York Mayor Michael Bloomberg and Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) co-founder Bill Gates pledged $375 million on Wednesday to fight what they called a global tobacco ... Video: Gates, Bloomberg Pool Riches to Fight Smoking Bloomberg and Gates fight smoking Publ.Date : Wed, 23 Jul 2008 23:11:25 GMT 'Dark Knight' Christian Bale's lady sidekick: Sibi Bale - Los Angeles Times
Los Angeles Times - Like the Dark Knight/Bruce Wayne, Christian Bale is a real-life man of mystery. Averse to personal publicity, he is well-known for not wanting to discuss his private life. Christian Bale, Wife "Solid" at Knight's Spain Premiere Bale attends 'Dark Knight' premiere in Spain Publ.Date : Wed, 23 Jul 2008 23:54:18 GMT Hurricane Dolly Makes Landfall in Southern Texas (Update2) - Bloomberg
Bloomberg - By Demian McLean July 23 (Bloomberg) -- Hurricane Dolly was downgraded to a Category 1 storm as it made landfall today in southern Texas, where coastal residents weathered their first direct hit by a hurricane in almost a decade. Video: Dolly Pummels Texas Gulf Coast Dolly forces refining cuts, hits gas output Publ.Date : Wed, 23 Jul 2008 23:36:26 GMT Review: 'Step Brothers' - 40-year-old goobers - San Francisco Chronicle San Francisco Chronicle - Step Brothers: Comedy. Starring Will Ferrell and John C. Reilly. Directed by Adam McKay. (R. 95 minutes. At Bay Area theaters. For complete movie listings and show times, and to buy tickets for select theaters, go to sfgate. Video: The Stars of 'Step Brothers' `Step Brothers' Ferrell, Reilly reunite as duo Publ.Date : Wed, 23 Jul 2008 22:39:58 GMT RSS to HTML |
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