In my experience as a Sales Trainer, one of the thorniest problems for a business is securing your price. Of course, you want to achieve a fair price for your services and the prospective client understandably wants to secure you for as little as possible. And so we now find ourselves in the tedious land of negotiation…
Let the games begin… there are a number of things to consider here:
This is incredibly powerful and should be taken very seriously. Assuming you have completed a thorough and comprehensive fact find with your prospect and loaded it with lots of value, we have to deliver a price tag that is commensurate with that value. It’s human nature to view the quality of a product or service by the price attached.
If you saw two suits or dresses or whatever hanging next to each other in a department store, one had a £100 price ticket and the one next to it had a £900 price ticket, with no other information available, which one would you perceive as the better quality? In your head, you have already processed the information and drawn your conclusion. Anyone remember the Stella Artois ad campaign… ‘Reassuringly Expensive”?
Translate that to your own world all of a sudden and how your prospect perceives you and your service? Are you offering them a Lada or an Aston Martin? Now there is nothing wrong with an old Russian Lada car if that’s what the client needs and has budget for, but what you’re proposing and what your charging needs to match. If you’re offering the best service then reflect it in the price tag. Anything less will be viewed with suspicion by the prospective client.
People will tell you that your price needs to be delivered with confidence and conviction and that is all completely true of course. Delivering your price apologetically will only get you beaten down.
However, we have to justify what we do to our clients two ways.
- We have to convince them that their needs are sufficiently important to need fixing now, not in six months or a year, but now. And we have to convince them that WE are the people for the job. All of this would form part of your fact find but not very helpful when actually landing your price, so how do we do that in real terms?
- A technique that has worked well for me is called the LTV or Life Time Value approach.
At Monkeys Paw ask the client what their AOV (Average Order Value) is? Let’s say it’s £1k. We then go on to ask how frequently this typical client would place that order? Let’s say an ordinary client would repeat this order once a quarter.
We then go on to ask how loyal their clients are and typically, how long would a client stay with you? They might say, some of our clients have been with us for 10 years or so. By asking those questions, politely and professionally with genuine interest, we have established the following:
One new client = £1K x 4 orders per year x 10 year lifespan = £40,000.
Once the prospect has confirmed and agreed our numbers, in my case as a Sales Trainer, I then go on to ask if they believed that their sales team would be able to sign one new client (that they wouldn’t have ordinarily signed) as a consequence of the training course I am proposing? Not one a month or once a year, but just one. And not one for each member of the sales team, but one between them all.
Do you believe they are collectively capable of that? They are very likely to say ‘Yes of course!” (if they say no, then he really should be looking for a new sales team and I can help with that!).
Now you have their agreement, your price suddenly seems entirely justified to achieve the £40k new business that they have agreed is very likely. Gaining their agreement at each stage makes your point much more powerful and hard to resist.
That is the Life Time Value approach to delivering your price. Adapt it to fit your world. Next time you listen to ‘Once in a Lifetime’ by the Talking Heads, remember this and think of me. Better still, get in touch. I deliver this stuff for a living!