The first step to make a switch from hourly billing to value pricing is to believe you create value, and you should be paid for the value you create. While this may sound simple on the surface, it can be more challenging than it appears.
To create value means putting the customer in a better place than he was before, as a result of working with you — the application of your knowledge and experience. Another way to say it is that the customer is wealthier than he was before. The creation of value or wealth can take different forms. It is does not have to be monetary, at least not directly. It can be tangible (The customer can process an order 30% faster.) or intangible (Employees enjoy their jobs more.). Do you truly believe the customer is in a better place after working with you?
A Real-Life Example
In my business, we help customers create and reinvent their workflow processes. One customer was using a spreadsheet on an iPad to track employee activity at remotes sites. The supervisor would create a spreadsheet for each event. After the event was over, he would email the spreadsheet to himself and then spend additional effort to compile multiple spreadsheets to submit to the payroll system.
We created a mobile application to capture the data offline while onsite, and later sync the data to the server. The customer no longer had to compile the spreadsheets after each event. What was the value we created? The customer was able to retrieve the data faster, which means he can invoice his customer sooner. The data retrieved is more accurate so he spends less time reconciling errors in employee payroll. The supervisor is able to go home sooner and have more time with his family. I could list more.
The Value We Created
We did not create a mobile application for the customer (although we did). We helped him create value in his business. The value in this case is tangible in collecting revenue faster, reducing errors in payroll, and increasing the quality of life for the supervisors. These tangible items are the value (or wealth) we helped create. You could even calculate the monetary value of some of these.
Do you think of the outcome of your interaction with your customer in this way? Do you see the outcome of your “service” in the bigger picture? You are not simply providing a service for the customer. You are helping to change his business, his life and the lives of those with whom they interact (customer, employees etc.).
Question: What was or is the impact of something you regularly do for your customer? You can leave a comment using the form below.