The Price ISN’T Right
05 January 2012
Posted by: Douglas McPherson | Comments: 0
One subject that seems to come up a lot (an awful lot in fact) is that of the pricing of professional services. Is it too high (the client’s point of view)? Or is too low (the FD/managing partner/board’s point of view)?
The next question is invariably how do you set your prices? Is it by benchmarking, by adding value or by observing current market forces?
The one thing that should never be used is client captivity – the art of pushing up the price because the client has no alternative.
Take yesterday morning. Having had to leave for an appointment at the other end of the country very early in the morning I was forced to rely on the Roadchef closest to my destination for my breakfast.
They had me by the short and curlies. Starving, far from home, no local knowledge to use to find an alternative, restricted timeframe they took full advantage - £6.90 for a sausage bap and an orange juice.
Yup, that’s the lion share of £7 for a juice I know costs less than £1 and a super saver supermarket roll and a couple of sausages of such low quality they were bordering on vegetarian. And all because I had no alternative.
They got one sale but I won’t be back. Out of principle/spite/obstinacy I’ll find an alternative … even if I have to catch it myself!
OK, so it’s an irrelevant example and probably an unreasonable one given professional service firms:
a) are no longer able to consider themselves as being able to boast a captive audience
b) now feel pressured to build pricing structures on comparison rather than anything else
But there is a moral. Firms should always keep the fact their clients always have a choice at the forefront of their minds because nothing pushes a client towards the search for an alternative provider quicker than the type of pricing that pulls your leg not your loyalty.
The other rule to obey when pricing is don’t bump up the price to accommodate unnecessary bells and whistles.
Exhibit A: The new Special K box. Special K is already widely acknowledged by those interested in such things as being one of the UK’s most expensive breakfast cereals. Now they’ve silk gloss embossed their logo. Could that be avoided and the cost per box reduced? I should think so.
How many law firms and accountants have moved into swish new premises to be asked by the first client through the door “am I paying for all this?” While first impressions count and the client experience should always be a major consideration when it comes to premises and their presentation, the overall feel should be smart and professional rather than ostentatious and boastful.
The purchasers of professional services we interview while managing lead generation and client service review programmes are honest – they will accept ‘realistic pricing’ for high value advice and it’s that adjective – ‘realistic’ – that has to provide professional service firms with the best guideline for any pricing discussion.
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