One of the biggest challenges small businesses face is getting clients to pay you what your services are worth and teaching them the value of your work. Potential clients often have an unrealistic expectation of what professional services should cost, and an important part of your job is overcoming that obstacle to obtain appropriate payment for your work.
Understanding Price Anchors
The source of price expectations in many clients stems from their past buying experiences. Psychology tells us that customers rely on previous prices they’ve paid, or heard about, as a reference point for deciding what your services are worth. This concept is known as a price anchor. When evaluating the price of your product or service as either “expensive” or “cheap,” people tend to automatically compare your price to prices they paid for similar goods or services in the past. If you’re going to successfully negotiate compensation for your professional services, it’s important that you understand the concept of price anchors, so you know how to deal with them.
Often you’ll find that the past service and price a client has in mind isn’t really comparable to yours. For example, a consumer seeking the services of a financial adviser may have a price anchor based on what the person paid for accounting services, or the closest comparable purchase experience. This creates a problem because the services you provide as an investment professional aren’t genuinely comparable to accounting services, such as preparing a tax return.
Overcoming Price Anchors and How to Value Your Work
So how do you get a customer to see past their price anchors and value your work correctly? To get clients to let go of their price anchors, get them to view your services in a different light, one that shifts their price expectations to a higher level. One way to reset a customer’s price anchor is to define your work by the value they receive from it, rather than just by the specific skill you possess.
For example, if a client wants to contract with you to design a marketing and advertising campaign for a new product, point out the benefit the client stands to gain from your services in terms of revenues generated, rather than just having the client evaluate your service based on your job title of “marketing copywriter.
Presenting what you do in terms of accomplishments goes beyond just telling the client the value and moves to the realm of getting clients to think about the valuable and intangible benefits of hiring you. For instance, instead of having clients see your job as simply helping to select investments, try to get them to appreciate the intangible value your work offers, and the fact that they can rest easy knowing they’ve made solid plans for their retirement.
Differentiate yourself from providers of less-expensive services by your appearance and the look and feel of your business. Upscale restaurants are able to charge higher prices in part because they don’t look like a fast food restaurant. Tailor your own look and the look of your office in a way that says your services are inherently more valuable.
As a small business owner, you already know how to value your work. It’s up to you to overcome your client’s price anchors and get your well-deserved prices. 4.3 million customers use QuickBooks. Join them today to help your business thrive for free.