How to price your services according to how much it is valued by your prospects
If you have a car detailing service and only charge $5 you’ll get every high school kid in the county lining up for your services…but the owners of Ferraris and Teslas and Rolls Royces won’t let you on their property…even if you are great at what you do.
Below is my reply to a fellow member of a private group I’m in who asked how to price your services according to the needs, wants, goals and expectations of the buyer so you don't leave any money on the table and begin to make every sale.
I’ve been in sales since 1997 and have owned The Sales Whisperer® since 2006.
This is the stuff I teach.
Who's Asking The Questions?
You need to establish right up front that you are asking the questions and they are answering them. If you show up to “pitch and present” you’ll at best extend the sale unnecessarily and at worst say something you shouldn’t, which will cause you to lose the sale.
(See what Tom Hopkins has to say about "pitching" in his interview on The Sales Podcast.)
Ideally your prospects fill out a Contact Us form or speak to an assistant first to schedule their call with you.
Either way they must answer a few key questions that you want to know to even schedule the call.
It could be as simple as
What are your top three goals / ideal outcome you’d like to achieve during your call with me?”
This primes the pump that you are going to be asking more questions.
What's Your Goal On The Sales Call?
During the call your goal is to ask questions they can’t answer. (I know how to write a sales script so I don’t Google that. I do not know how to beat a purple belt in Brazilian Jiu-Jitsu so I do Google that!)
When you ask a question they can’t answer they become concerned that they are vulnerable and they assume you have the answer…and they’ll pay you for that answer once they know how much not knowing the answer is costing them.
“Jonathan, you say you don’t know how to adjust the pricing of your offers based on the relative value of each prospect. Is that correct?"
“How long has that been an issue?"
“Who else at your company is concerned about this?" [I’m removing the “I need to talk to my spouse / partner / accountant objection.]
(It’s just me. I’m the owner.)
“In round numbers, what’s the average value of a new client to you?"
(Well, we did $300,000 last year and we work with about 20 new clients per month so each deal is worth between $1,000 to $2,000.)
“But if you quote the same price to an attorney as a plumber, how much money do you think you’re leaving on the table for each attorney-type client?"
(Heck, they could pay $10,000 or even $20,000 if we did it right.)
“Okay. Let’s go with the lower number of $10,000. How many of those leads do you get per month?"
(If we get 20 leads per month at least 5 of those could pay more.)
“So currently you’re earning $5,000 to $10,000 per month on customers that could pay you $50,000 to $100,000 per month. Is that what you’re saying?"
(Well…ahhh…I haven’t really put a number to it like that…)
“Understood. But using your own numbers and experience in the industry, let’s say you close those 5 leads per month on the lower amount of $10,000 each. Is that realistic?"
They Must Verbalize and Confirm Their Pain
“So that’s $50,000/mo in business vs. $10,000/mo now. That’s a difference of…[make them answer].
(That’s $40,000/mo I’m leaving on the table.)
“Okay. Now when you start quoting prices at 10x to 20x your current rates do you think you’ll be immediately comfortable doing that and can convey your quote with the confidence that your larger clients need and expect or they’ll hang up on you faster than a time-share salesman? That’s a huge shift that few entrepreneurs make on their own."
(If I could do that I would’ve already done it.)
“Right. It’s tough to coach ourselves. I have a coach. By the way, you know how you can tell you’re working with a great business coach? They have a great business coach. But I digress. Based on your own conservative numbers you’re leaving $40,000 per month on the table, which is how much per year?" [Make them answer.]
(That’s almost half a million dollars per year.)
“Wow. How would an extra half a million dollars change your life? "[Get them dreaming. Some call this “future-pacing.”]
(That would be a huge difference. We could buy our vacation home. We could put our kids in a better school. I’d get that motorcycle I’ve always wanted. We could hire more staff and expand…)
“So you have a $40,000/mo issue that could be as high as $80,000 per month, right?"
“What if I could help you eliminate that problem forever and help you raise your prices with confidence and ease and it would only require a $10,000 investment and we’d begin putting that money back into your pocket immediately? Would you see any reason whatsoever that would keep you from making that investment today?”
(Ahhh…I’d be a dope if I didn’t take action now.)
The Make Every Sale Process
That’s the process.
You have to find pain, like a doctor, then you have to find the source of the pain.
I may have a headache but my chiropractor adjusts my hips because of an alignment issue that is causing me to slouch when I sit and my slouching is causing a back, shoulder, and neck tightening, which is leading to the headache.
So find the pain.
Make them quantify their pain.
Then price your solution so it benefits you and them and that is how you make every sale.
Market like you mean it.
Now go sell something.