The Real Goal of Value Pricing with Ben Furfie – 049

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.

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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