Comments on: What’s Money Got to Do With It?

By: Max Entin

Max Entin — Sun, 28 Sep 2008 03:11:45 +0000

I agree with this completely. I’d like to add that what you charge often has a huge impact on how your customers will perceive you. You can be providing the same service for $100 and be percieved as a cheap alternative or for $1000 and be perceived as an expert. Many people, even though they are experts at what they do, think that they’ll charge little to gain some clients and spread the word but in the end end up frustrated. Charge what you’re worth and you’ll reap the benefits and your clients will think they got an expert.

By: Mark Nagurski

Mark Nagurski — Sat, 20 Sep 2008 13:33:15 +0000

I suppose the idea here is to turn the buyers decision from one based on cost to one based on value. In John’s example above, just about any small business would pay well for a mention in the WSJ but might baulk at the price without an idea of the expected outcome.

From a sales perspective reps are normally trained to talk in the future tense to help buyers envisage the true benefits and long term outcomes of their buying decisions. As marketers we can do the same by focusing on problem solutions rather than the mechanics of the service or the features of the product.

From @Michael’s comment above, $45 might be a lot to spend on a book but how much would you pay to be able to charge 10 or 20% more and attract even more business?

Returning to the original topic of the post, if small business owners look at their own services in a similar light then it’s not quite so difficult to justify (to themselves) solid pricing and clearcut payment policies.

By: Susan M. Kuhn

Susan M. Kuhn — Thu, 18 Sep 2008 00:28:43 +0000

YES! It’s not just results, but having the skills and experience to get the results, that justifies the pay. You said it — it took the skill developed over time to recognize the opportunity — and the experience (time in) to have the contact. That is what your charged for. A less experienced individual would not have been able to do what you did.

Analogy: I want a top surgeon who has experience curing what I have — not a less expensive new surgeon who read about it in a book! Both have a great education, but the seasoning that comes with time makes all the difference and justifies the difference in pay. The younger doctor might get lucky — but my money is on the seasoned one.

There is an old story of Picasso sitting on a park bench next to a woman who asked him to sketch her. He did it in 5 minutes…then told her it would be the equivalent of thousands of dollars. She was aghast, but he reminded her that it took him his whole life to be able to do a Picasso…..

By: John Jantsch

John Jantsch — Thu, 18 Sep 2008 00:11:21 +0000

@all – let’s inject another element to this conversation – price for some services should be a function of total value. There’s a story that I have and I’ve heard others express. I have charged customers a substantial amount of money for a result. I got a customer a nice mention in the Wall Street Journal and I charged them, well, a bunch. In this case, it took me 15 minutes to make the call and suggest the story, but it took me 20 years to recognize the story for what it was and develop the contact at the publication. The customer got tons of business directly as a result and had no issues with the value.

So, what about results based pricing and value?

By: John Jantsch

John Jantsch — Thu, 18 Sep 2008 00:06:46 +0000

@Michael – thanks for the tip on that book, but I went to Amazon and it’s $45 – are you kidding me – oh wait, maybe that’s what we are talking about here isn’t it?

By: Michael Hanes

Michael Hanes — Tue, 16 Sep 2008 20:18:15 +0000

While at the library the other day I by chance pulled a copy of “Pricing On Purpose – Creating and Capturing Value” by Ronald J. Barker off the shelf that speaks directly to this topic.

It’s been an interesting read and Ron does a great job of explaining through the study of pricing theory why it’s critical that companies move away from cost plus pricing to value based pricing.

The book starts off by answering the question: “Why Is Movie Theater Popcorn So Expensive?” and then leads you through a series of thought provoking exercises.

I think the book ties in nicely into John Jantsch’s message of “Create value for your customers and your customers will value you” and drives home how important the concept is from the customer perspective.

By: Corrie Wilder

Corrie Wilder — Tue, 16 Sep 2008 14:31:39 +0000

Hi John,

This post really hit home. Thankfully my business partner is very comfortable with the financial portion of our business, and she is helping me to become more confident when it comes to making money. Nothing makes me happier than a happy customer and regular user of my products; dealing with the emotional aspects of dollars and spreadsheets gets easier with every order that comes through.

Margie’s comment, too, is SO true. “Nice” does not mean “give away the store!”

By: Engago Team

Engago Team — Sun, 14 Sep 2008 20:43:26 +0000

If you charge, do charge for a service or a benefit the customer understands.
A customer will pay for what he can estimate a value for.
If not then he will feel cheated.

Thus present your services on the invoice in a manner the customer understands.

By: Jeffrey Summers

Jeffrey Summers — Sun, 14 Sep 2008 09:25:32 +0000

Amen brother!

By: Tom

Tom — Sat, 13 Sep 2008 15:20:58 +0000

John, great post.

I believe that it is easy to charge whatever price you would like as long as you know that your clients are receiving an amazing service and an unbelievable value. If you know that your service is driving your client’s revenue growth, then you look well beyond how many hours you might be spending on a specific task and instead align your prices with the large growth numbers your clients are sure to see.