The numbers say it all.
…at least, that might be true for your potential customers.
What are you saying about your company through your pricing?
While price may seem like an isolated component in your overall proposal, price communicates more to customers than we sometimes realize. Price not only does or doesn’t fit a client’s budget — it also indicates your level of experience and the quality of your work.
If you want to communicate high quality and ample experience, you need to price your services just right — not too high, not too low. Here’s what I mean:
How Pricing Influences Perception
One of my clients was trying to win a huge project. The payoff would have resulted in a good month or even a good quarter for the whole company. In an effort to win the bid, they put everything they had into it.
They brought the creative team on board, worked the diamond effect, prepared pitches, picked up the client at the airport, and even produced a video for the project. They pulled out all the stops.
Their prospect was impressed. It was a great pitch!
But they didn’t win the job.
Dumbfounded, my client asked me, “What should we do now?”
It was time to find out what went wrong. I recommended he call the client and say, “Thank you for this opportunity. It was great to meet you. Can you help me understand what we did well and what we could have done better in our proposal?”
He was uncomfortable about that idea for a while. He wanted one of the salesmen to make the call, but I advised, “The salespeople can’t do this! You’re the owner of the company. They’ll answer your questions when they’d just pay lip service to the salesperson.”
Finally, he worked through his fear and called the prospect. Open to giving honest feedback, she told him, “Your proposal was great! Your pitch was on par and we liked everything you had to offer. The only problem was you were priced too low. No one on the committee believed that you could deliver what you were promising at the price you quoted. You underquoted your services. We gave the bid to a company that charges about 30% more and promises to do less.”
This hit my client like a ton of bricks. They could have won the job and they could have earned more money! However, because they underquoted their services, they set themselves up to be perceived as low-quality and unreliable.
Everyone Makes Assumptions Based on Price
What happened with my client illustrates a principle we see at work every day for almost everyone. Price communicates an expectation of quality. The higher the price, the higher quality we expect.
Which should taste better: a $100 per plate dinner or a $5 dinner-in-a-bag? If you paid a hundred bucks, you expect it to taste better.
Which video director do you think would do a better job: the director who charges $1,500 a day or the one who charges $350 a day? Obviously, we’d expect a higher quality from the $1,500 a day director.
We make assumptions based on price… and people make assumptions about us based on price. The amount you charge communicates the quality your customers should expect.
How to Find the Right Price
What’s the right price for your clients? Pinpointing a reasonable price requires a delicate balance. Being underpriced makes you look under-qualified, which means you aren’t qualified. After all, if you’re priced that far below market value, you probably don’t have the experience necessary to inform your prices.
Overpricing sends another unhelpful message. Being overpriced makes you look insensitive.
In fact, certain clients are extremely good at being offended by your pricing. (Note: Just because they’re offended doesn’t mean you’re overpriced.) If you price too high, you’ll either set your clients up for disappointment or you’ll outpace what they’re able to pay.
To navigate the middle ground, spend more time on pricing expectations. It takes work to hit the right price point. Here’s how to do it:
1. Talk Price with Your Clients
It’s okay to have pricing discussions with clients on budget, particularly on higher budget items.
I get a lot of pushback from salespeople saying, “Clients won’t give us their budget.” I dig a little deeper and ask them, “How did you ask about their budget?”
They say, “Well, I asked them what their budget was and they said they’d rather see my proposal first.”
Maybe that was just a single level objection.
Establish a strategy for overcoming that objection. Explaining the value of sharing their budget and how you can deliver more when you know your price range. Don’t let a single level objection stand in your way of navigating price.
2. Bracket Your Proposals
Another strategy for finding the right price is to offer different price range brackets for various levels of services. In your proposal, list three ranges of services: a low, middle, and high level of solutions (and the corresponding prices).
Observe how your prospects react to each option. Watch their body language, listen to their words, see where the lilt is in their voice — it’ll give you clues as to what price range is the right fit.
3. Find Out What Others Are Doing
Most importantly, figure out what other companies quote, particularly when you’re quoting a job outside of your comfort zone. Ask for outside opinions on your price:
- Ask for the opinions of other experts.
- Reach out to colleagues or peers.
- You can even call me and let’s talk about what your pricing needs to be!
Make sure you’re not hurting your odds of winning the bid by trying to price your bid so competitively that you undervalue what you offer.
Price doesn’t just say something about you. Price says everything about you.
Be careful how you use it. Craft your price to accurately reflect the quality, detail, and full range of services you offer. If the numbers say it all, make sure they’re speaking the truth about who you are and what you do for your clients.