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The Real Goal of Value Pricing with Ben Furfie

The Real Goal of Value Pricing with Ben Furfie – 049

June 9, 2015 by Kirk Bowman Leave a Comment

Ben Furfie is a web designer who specializes in front-end development. Business wise, he focuses on lead generation for small to medium size businesses. Technology wise, he uses WordPress and the Genesis framework. He started out as a writer and then began to pick up the technology while working on magazine projects. He recently spoke at WordCamp in London on value pricing.

http://traffic.libsyn.com/artofvalue/049-The-Real-Goal-of-Value-Pricing.mp3

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First Exposure to Value Pricing

  • What is the most important thing you can share about pricing?
    • There has been an explosion of people becoming interested in value pricing, especially in the WordPress space.
    • They are misinterpreting the purpose of value pricing as a way to increase their prices.
    • The real purpose of value pricing is that it enables you to match your price with what the customer can afford and where they see the value of the investment.
    • In the first 3-6 months, there is a significant jump in what you charge.
  • What was your first exposure to value pricing?
    • His sales director was taking a value price approach, but he did not realize it initially.
    • He did not understand it as “value pricing”, just as a good way to price services.
    • He realized what it was called in August 2014 when he listened to the Art of Value Show per a recommendation from Carrie Dils.
    • He knew the concepts and not to use hourly billing, but he was not using real value pricing concepts.
    • He started with project-based fixed pricing.
  • Why did you decide to implement value pricing?
    • He recognized it as the model his former boss had been using.
    • That company had won a large project on the basis of a value-based presentation.
    • The key point of the proposal was to reduce the cost of visas, staff, accommodations, and food.
    • They replaced onsite IT staff with remote management with the same benefits.
    • It improved the quality and reduced costs.

The Rewards of Value Pricing

  • What have been some of the rewards from value pricing?
    • The first customer he value-priced wanted a new website.
    • He quoted the site and the customer another provider whose price was half of Ben's.
    • The customer called back after their website was hacked.
    • He learned about their pain points and why they wanted the site to get an idea of the value.
    • He tripled his initial price, and the customer accepted it because the customer saw the website as a way to create leads instead of a cost.
    • He explained that it was not the price, but a percentage of the return they were expected to receive.
    • To get results, they needed to invest.
  • What has been the range of customer reactions to value pricing?
    • He has won deals he did not think he would.
    • He has left money on the table.
    • He has lost deals when the price was more than the competition.
    • Value pricing should be bound by the value of the results.
    • When he reduced the price to try to win a deal, he still did not win the project.
    • He learned from the mistake by analyzing aftward, discussed with his girlfriend and colleagues and realized the price was out of sync with the competition, despite proving the value.
  • What are some of the factors you consider when setting a price?
    • Ask to who else are they are speaking.
    • Some will answer; others will not.
    • If you can understand your competitors, it will help with the pricing.
    • If he learns there are RFPs being put out, he will not submit a bid.
    • Make sure you are talking to the decision makers and know who has sign-off on the project.
    • Going through a purchasing department can kill a project. Ben prefers to work with small to medium size businesses to lower the bureaucracy.
    • Look out for red or orange flags.
    • If the customer describes himself as a DIYer, it is an orange flag.
    • How much pain is this customer going to create? Prices are usually higher for high-maintenance customers.
    • Do they have content? If not, it is a red flag, and they need to talk about how to make that happen. It could increase the price.

Discovering the Customer's Value

  • What are some of the value questions you like to ask a customer?
    • His magic question is why.
      • Why now?
      • Why did you not do it six months ago?
      • Why are you not doing it six months from now?
      • Why are they looking to do the project at all?
    • Any permeation of the question “why” that gives you greater understanding of the value they are seeking.
    • You can even ask, “Why me?”
    • The more information you have, the more you will understand the value.
    • Look for easy wins.
    • How are you planning to measure the value you are capturing from the project?
    • If the customer is willing to have the conversation, it is more likely you can help them.
  • How do you respond when a customer resists a value conversation?
    • He channels Curtis McHale.
    • If the customer is not willing to have these conversations with you, then it probably is not a good fit.
    • The power of “no” is real.
    • Find out budget and timing if possible.
    • With more information, you can recommend a better alternative to do their project.
    • Decide if the customer is someone you can turn around or not.
  • What are some of the questions you have heard about value pricing?
    • Does it work?
    • Do I believe my lies?
    • A lot of people believe they do not create value.
  • What is one of your best stories about creating value for a customer?
    • With a previous customer, there were some major changes in the way the industry worked.
    • They have been able to capture more and better leads from the history of the searches.
    • They have been able to stabilize the company and have kept two people employed in an industry where they cannot grow.

About Ben Furfie

  • Website: InboundCreative.co.uk
  • Twitter: @benfurfie

Filed Under: Episodes, Software, Switching, WordPress Tagged With: Freelancing, Value conversation, WordPress

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