At times, value pricing can seem complex. However, if you boil it down to the core elements it is listening to the customer, discovering the impact and then creating options. Matthew Tol is passionate about the fundamentals and believes you should expand discovery to include the meaning and feeling to the customer to fully understand the value landscape.
As a profession, lawyers may be the most resistant to value pricing due to their conservative nature. However, this is the very reason Michael Bradley from Marque Lawyers considers it a strategic advantage. The outcome for the customer is the first priority. If Marque cannot create value for the customer, they will not engage simply to make money.
In The Brain Audit, Sean D’Souza uses an analogy of 7 bags, or pieces of luggage, to explain the sequence the brain goes through during the buying process. Open the bags one at a time, in the right order, and the customer will buy. Skip a bag or alter the sequence, and the customer cannot finish the steps to make a purchase.
Having a value conversation with the customer is important regardless of the size of your business. However, as a solopreneur, it is essential for survival. You have to determine what type of customer is necessary to operate a profitable business. Then use the value conversation to identify and educate customers that you can serve and with whom you enjoy working.
After discussing the limitations of hourly rates in a Facebook group, Matthew Habuda decided to give value pricing a chance. He started with a small project and progressed to a Fortune 500 opportunity. Along the way, he had to convince the customer and subcontractors it was the right decision. He shares his results and why he will never bill by the hour again.
For over a decade, Chris Marston has been paying his team based on the value they create for the law firm. Each employee can choose how to serve a customer in an engagement from five different roles. The contribution of the role, the lifecycle of the project and the importance of the customer to the firm determine the compensation paid. His “value” model aligns how the company prices customers to how it compensates the team.