Reset. Restart – Price with Confidence
A summary of the Price with Confidence workshop by workshop leader and programme mentor Lucy Paine.
Reset. Restart is a new programme of free business support.
Session Two: The Price is Right?
Recent data from Courier Magazine reiterates why this is a key topic for our business support sessions – 18% of businesses fail because of cost or pricing issues, and 29% simply run out of cash.
It’s an area that’s not as exciting as developing new ideas or making new products – generally no one starts a business to think about finance – but get it right and you have a successful company. Get it wrong and…
Don’t worry. Some simple prioritising will ensure you won’t fall off that cliff-edge.
- Know your costs
In the Reset. Restart sessions we’ve been delivering with Brighton Chamber and Business & IP Centre Brighton & Hove, we’ve been looking at the Cost Structure section of the Business Model Canvas. This is useful tool to help you outline your most expensive resources (hint: at the start this is likely to be you), the key costs and most costly activities.
If you are the most expensive resource – whilst also being the most important asset to make your business model work – you need to ensure you are focussing your time on the right activities that return the greatest value. That means tracking your time, reviewing your week of tasks and looking at what you could delegate to someone more skilled in that area to release your time for more essential business tasks.
That could mean outsourcing admin tasks, finance, or research – and many attendees to our workshop knew that they were spending time on activities that were neither the best use of their day, or the best use of their skills but had no idea who could help. The Brighton & Hove Chamber is always a good place to start with an enquiry like this – and we are also lucky enough to have two Universities who offer many ways to work with their students and academics, often full funded.
Get disciplined on understanding where your day goes and what you are spending time, and money on – create a P&L (profit and loss) sheet, use whatever time sheeting tool you like – but be honest about when you’ve spent too long on a project, gone down a rabbit hole tangent on some research or taken a whole day to do something an expert could do in an hour.
And when completing your P&L add in everything – software licensing, electricity, any annual subscriptions, your salary if you are taking one etc.
- Understand the market
How many organisations are in the same market space as you – the answer could look like a Venn diagram with a few companies doing similar things, maybe in different ways, potentially with a different client focus – but for your clients you might all look very similar.
How do they talk about pricing? Monthly subscription, project examples, team rates – or is price never mentioned?
If price isn’t mentioned look at how they describe their services – is it on a per project or on-going language? What can we learn from their websites, as well as company records through engaging with the BIPC team? The staff at the new Business and Intellectual Property Centre at Jubilee Library can help you to access a wide range of databases to support you to find competitor information for free.
- Remember your value proposition
The best way to avoid price becoming the focus of all your customer conversations is the strong pitch we talked about in our first two sessions. This is value based pricing and links very closely with our third topic of Your Perfect Customer (details of the free workshop below) where we’ll be defining how you build the customer persona with all the associated attributes.
If you know your customer and have a strong value proposition this allows you to target price to reflect customer value, ensure you have a strong competitive differentiation and deliver a product that meets and exceeds value.
- Define your routes to market
Using the Revenue Streams element of the Business Model Canvas define the potential routes to market, the associated model for each and which one you are using now, could easily engage or would like to explore.
- Don’t be afraid to experiment
Try a freemium approach – could you offer a 30 minute advisory service to open new conversations? What could you do that really helps you stand out while neither compromising your value proposition or confusing your perfect customer?
Could you partner with a company who doesn’t offer your services and work with them together on projects to help you both win new clients?
How about using landing pages to test messages into your customer base? Your online brand can be dynamic, play with that and learn from each experiment.
- Show – don’t tell?
You might want to avoid talking about money on your website or making that what you win or lose business on – and your value proposition is stronger when shown.
To help your customer base understand how well worth the investment you are, create case studies from existing client projects, get quotes, ask for ROI (return on investment) and impact stories from them.
The stories should focus on how easy you were to work with, how well you delivered the project, understood the brief etc – all of which never talks about how much cost, but by doing so all insinuates you are worth every penny of the unknown budget.
There are expert guides on how to write impactful case studies and client testimonials – this could be an area where you should get external support to get it right. But do also ask your customers to talk about you, share the story on their social media – become proud ambassadors, and great sales people for you.
You might want to be blatant about pricing – a key model for software as a service, or a product – have a page outlining what you get for each price point and how much is in each pot.
However, complementing that with how much your customers love you – which could also be through online review tools if you have enough transactions – is always a great plan.
- Don’t be afraid to talk money
You can waste a lot of time talking to people who can’t afford you when you start a business, or as we discussed in our networking session – you can initially end up being grateful for work at the wrong rate.
When a client says they have no budget ask them about the purpose of their project, the impact of the solution they are talking to you about, why they are having this conversation! If price becomes the sticking point it is very likely that the client has not understood your value proposition, or has not allocated enough budget to the project.
If a client is open with a budget within which you can’t deliver the level of solution they are requesting be honest, outline what that could achieve – maybe be creative and suggest some other options – but stick by your pricing model. You want a project success – and that always comes from shared expectations of cost, delivery and value – remember you want to exceed expectations.
If you missed this session not to worry – we have plenty more coming up, packed full of ideas all created to help you thrive in challenging times.
Expect a different topic over the next few weeks as we travel around the Business Model Canvas. And if you missed this session not to worry – we have more coming up, packed full of ideas all created to help you thrive in challenging times.
Read the first blog – Pitching it Right