You are free to use the material from these articles in whole or in part on your web site or eZine (email newsletter) as long as you include the attribution below and also let me know where the article will appear. "This article is by Robert Middleton of Action Plan Marketing. Robert's web site is a comprehensive resource on marketing for Independent Professionals. For free marketing resources and valuable marketing tools visit http://www.actionplan.com"

Marketing Articles on Pricing and Proposals Value Pricing and Proposals I've touched on this topic several times and always discuss this in great detail with my clients but was surprised to realize that I had never written a complete Marketing Flash on the topic. So here goes: The first thing to realize is that you most likely are not getting paid what you're worth. This is not the easiest thing to get. If you're a service provider you probably put a lot of energy into giving and making a contribution. This is good, but you also need to take care of yourself. Many small service business owners play the "Lose-Win game." You lose and your clients win. This leads to frustration, resentment and burnout. Understand Your Value The first step in value pricing your services is to work at understanding what your service contributes to the bottom line of your client. I've worked with clients who helped their clients realize hundreds of thousands, if not millions in savings or increased revenues. For this they were paid a few thousand dollars. They were paid a standard hourly fee. You might argue that you don't want to be greedy. I want to argue that you are simply worth more! When you discuss a project with a client you need to find out, amongst other things, what your contribution will mean to the client. What are the opportunities? What might be lost if action is not taken? Don't Quote Hourly or Daily Rates You don't want to start out talking hourly or daily rates. "What's your hourly or daily rate?" asks the client. "I don't have one," you respond. "I base my fees on a project or solution basis. Once I know more about what results you want to produce I can give you a fee." Outline Project Objective in Your Proposals Too many proposals consist of a laundry list of exactly what you'll do for the client. This really is the least important part of a proposal. The key section is "Objectives." Now that you know what the client needs to be happy, those objectives need to be clearly articulated in your proposal. What exactly do your promise to deliver? What will you improve, streamline, enhance, optimize, reduce, increase, clarify or change? Measure of Success Once the project is completed, how will you know the results have been achieved? This is simply a restatement of the objectives from the viewpoint of a completed project. Objective: Increase the level of communication between departments. Measure of Success: The level of productivity in all departments has been measurably improved. (I realize these are rather general - substitute your own.) Choice of Yeses I learned this from a wedding photographer. He offer a basic, standard and deluxe service. He almost always sold the standard service. But people had the choice of three plans instead of a choice between yes and no. Almost all service businesses can offer some kind of choice. By the way, it is generally better to present the deluxe package first and then come down to the standard, instead of visa-versa. Reduced Price = Reduced Value When a client asks if you can reduce the fee you tell them you will be happy to. You simply need to discuss which objectives they do not want included in the total project. Hmmmm. People love to reduce price but hate to reduce value. If it's truly a budget issue, they'll cut where appropriate. If they are simply trying to get a lower price they will back pedal more often than not. Say No More Often You can't raise your income if you don't set your sights on bigger things. And what this means is starting to turn down projects that don't stretch you. Each year you need to let go of 10-15% of the lower end of your clients. This is not easy, but it's a prerequisite to growth. If you keep doing exactly the same thing for the same price over and over you'll get stale while experiencing a declining income. Many thanks to Alan Weiss of Million Dollar Consulting fame for teaching me these valuable lessons! What Are You Leaving on the Table? In a phone meeting with a client last week we discussed the renewal of her contract for a non-profit foundation. She was nervous because she wanted to raise her previous daily rate of $500 per day to $800 per day. Ultimately, she did even better than that by understanding & practicing a few fundamentals of proposals and persuasion. When I looked at her proposal, she had outlined in detail what she'd be doing on five separate projects. But that was about it. I explained to her that she needed to outline the current situation and the client objectives first and also include the measure of success for each project. I emphasized that she was not selling what she was doing, but the RESULTS she produced for the client. By letting her client know she understood their objectives on each project and assuring them what success would look like, the client would feel much more comfortable with her proposal. Then we went on to discuss her pricing. We looked at her previous rate, what other competing consultants were charging and the ultimate value of her work. "It might be tricky," I told her "but perhaps we should look at value-pricing this instead of quoting a day rate. This way it won't look like you've increased your rate by 50 percent and you can let them know that you are charging for the results, not the hours." Well she did it and it worked. The client was very happy with the proposal and when they asked how she arrived at the fee, my client said, "Well, I don't have a daily rate. This is based on the value of the project and the results." So instead of getting her fee negotiated down, she actually left the meeting with a total fee that was a few thousand more than she had originally estimated. The lesson? Start looking closely at how you set fees and seriously consider going the value-pricing route. It could put tens of thousands of dollars into your pocket this year. Marketing Flashes - on pricing and proposals Never give a prospective client a price on a project in a first meeting. Give yourself some time to think about it. When you quote too soon, you're likely to quote too low. Do fast turnaround on proposals. Try to do them in one day. This is possible if you create a proposal template with the basic format where you only need to fill in the specific objectives, methodology and measures of success. It should take no more than two or three pages. If clients ask if you can lower your fee for a project, never unilaterally reduce the fee unless they are willing to reduce the value of what they receive. People love to reduce fees but hate to reduce value. Hold your ground. Give your clients a choice of yeses. When doing a proposal, don't give a choice between yes or no, do what most wedding photographers do, offer a basic, standard and deluxe package. Most people will choose the standard package. And they'll often upgrade to the deluxe. Adding value to your services alters the perception of cost. A guarantee, extra information or services and access to valuable resources all make your services more valuable to the client while costing you little or nothing. In fact, it's the extra value that will differentiate your services from others. You're no longer a commodity. Return to Index of Marketing Articles These articles give just a taste of what you'll find in the InfoGuru Marketing Manual. Check it out!