Feeling like you’ve got to reduce prices to try and win a new client is horrible. It saps your energy and enthusiasm for that client and ultimately for your business.
And if you do charge less to bring that prospect in, it can set a very difficult tone for your ongoing relationship – where you feel you aren’t being fairly paid for the work you’re doing. Because you’re not.
And, of course, the impact of your new pricing goes straight onto the bottom line. (Or rather, comes off it.)
But what can you do about it?
How NOT to reduce prices – but still win new work
In my opinion, and particularly relevant for any type of B2B consultancy or professional service provider – whether it be technical, creative, specialist or project management related – there is one most effective and achievable approach.
The better your positioning, the fewer alternatives your client will perceive they have and the more robust your pricing can be.
Step into your prospect’s mind
Imagine for a moment a lovely prospect with a need for an outsourced, experienced management consultant (or… structural engineer/digital strategist/surveyor/market researcher).
Lots of those about, so this prospect (let’s call her Claire) can take her pick – and she can stay in control of the buying cycle, and therefore, in control of the price. Claire’s first impression is.. Yay, plenty of choice, this should be fine.
Prospects will search online simply to compare other suppliers to a recommendation
But when it comes down to actually selecting a supplier, Claire wants to get it right. First, she gets a recommendation. Tick.
Then Claire does a spot of Google homework and finds only two firms (from the 25 that first rocked up using an organic Google search) that have what she thinks of as decent experience in her sector.
Which she happens to think is quite important. They’d understand the industry, the inevitable jargon, the competition and any rules and regs that are going to impact on her project. Without spending lots of time and money (hers) getting to grips with it.
Sector experience counts for more than you think
Of these three firms:
- One of them is a well-known, global operation with a head office in New York and 130 offices around the world.
- One appears to be UK based, about 14 people strong, based in Hampshire.
- The third one’s in London, with what looks like about 220 people.
All have professional, easy-to-navigate websites with clear copywriting and suitable client portfolios. No-one to rule out for just looking crap, muddled or digitally clueless then!
Your website can’t make you the sale, but it can lose you the sale
Now, our Claire has never been one for the global providers. Too expensive, hierarchical and you always get shunted on to dealing with the juniors.
So she digs a bit deeper into the two smaller, UK ones.
Draw parallels to your ideal prospects in your case studies
Looking at their online portfolios and case studies she finds that one of these firms has done a couple of fairly similar projects for her direct competitors.
Hmmm…. interesting. Worth getting them in for a bit of intel, if nothing else. Be keen to hear how they tackled stuff, or what they learnt that’s relevant to me.
So she sets up calls with both of the UK firms she found on Google. (The supplier that a colleague recommended will get shortlisted regardless).
What a prospect thinks when shortlisting suppliers
- One is quick to reply on email, quick to set up the call, bang on time and has three senior and relevant people on the call, including two directors. This makes Claire feel important.
- The other is pretty good on all counts and has one director, one senior bod and one junior on the call. This is fine.
The ‘phone call continues:
- One tells her all about their offer, lists their services, runs through an impressive client list of well-known brands and mentions all the different sectors they have worked in. They expand on all the other services they can offer (the word turnkey got used a lot) without seeming to notice that Claire doesn’t need – or have any remote interest – in these.
- The other asks Claire awful lot of questions about the wider context. What type of project does she have, what are the timescales, what are her biggest concerns, how does she like to work, what learnings has she or her firm made in similar projects and what do they look for in a supplier. Claire can feel them listening to her and attempting to understand her position.
Asking prospects’ about themselves, and what problems they need help with, is always a better starting place that telling them about your firm and what you do.
Claire talks a little more about her specific project and need. So what I’m actually looking for is help with…
- One firm asks even more specific questions and begins to challenge – gently but definitely – some of her assumptions or thoughts on approach, causing her to stop and think.
- Initial options for project structure are shared and the pros and cons discussed. She can hear them jotting down key points that are made.
- Claire feels almost as though the project has begun and she’s at the first scoping/briefing meeting.
- She’s stretched her own thinking, learnt stuff and is enjoying the pace.
- The other firm does some listening and explains in more detail about the big-name clients for whom they’ve done similar projects.
- They breakdown the process they would use to approach her project and explain how it works in more detail. They use the words we and us a lot.
- They give her some familiar industry names to contact directly for references. Claire is pleased, and makes a note to call them asap.
Challenging a prospect’s viewpoint – nicely and professionally – can demonstrate deep experience and insight. Which (if you provide professional services) is probably part of what they are hiring you for.
As they wrap up the call, Claire asks about pricing:
- One firm asks Claire to send a full and detailed brief through in order for them to be able to give her a full and detailed quote.
- They explain they will send through their rate card with the quote.
- Claire asks if they have any rough idea of the costs meanwhile as she’s putting the business case forward later today to the board.
- They explain they wouldn’t want to give her an inaccurate estimate, so promise to get a detailed breakdown of costs to her within 24 hours of receiving her brief.
- Claire feels disheartened by the amount of work she’d have to do to get a decent brief done when she’s not really sure they’ve pinned down the approach internally yet.
- The other firm gets out some paper (it’s a Skype call…) and sketches out the likely project stages, with ballpark ranges next to them.
- Fair enough, these are fairly wide ranges, but Claire finds herself trying the costs on for size and feeling confident that her scope and budget fit within those ranges.
- Claire feels they must have done this sort of work a lot to have the confidence to list ballparks, and feels reassured by that. It’s also helpful for her early stage business planning.
- They give approximate total costs for similar projects with clients in her sector, tackling specifically her problems – but without naming names of course.
- This firm explains to Claire the main factors that effect costs from their perspective within each stage. This is really useful and gives her a good idea of what to consider when writing the brief.
Giving a prospect even a basic insight into how a project is costed (even if you aren’t confident enough to give ballparks) will help them understand you – and their own project brief – better.
Getting the inside track to win new business
Hopefully this mythical ‘phone call between Claire and her prospective suppliers will have demonstrated two things.
- Smaller firms succeed at new business when they are tightly positioned and target customers who are the right fit for what they do. Prospects can clearly see when a supplier has real and solid experience in what they need doing, for firms which are like theirs. Find out how well positioned you are by answering these 12 questions.
- Any firm can improve their chances of winning new business by actively listening to the prospect from the very start. Be client curious. By asking careful questions, by adding value and providing useful insight or information that the client appreciates, they can soon gain an inside track on the supplier selection process. This will give them an advantage.
When a niche positioning and an active listening approach come together, you can price robustly, because you will be the supplier of choice.
And if you have a good reputation too…
Throw in a decent thought-leadership marketing strategy – so the client has heard you speak at a conference, read your articles and e-book or attended your workshops – and suddenly you’re the supplier they want to do business with.
And the one they will be prepared to pay more for. No more reducing prices. Bingo!
If you’ve enjoyed reading this post, or have gleaned anything useful from it, I ask just one favour. Please share it with those of your contacts that you think might also appreciate it – using the social sharing buttons at the side of the page. Thank you.
Or, if you’re stuck on where to start with positioning yourself to keep your own pricing as robust as possible, give me a call on 07827 297569. Nothing to lose – and an awful lot to gain.