Power Pricing - Getting the Right Price for Your Products and Services

By: Cathy Stucker
Submitted: 2007-01-17 12:17:57
Print this article | Tell a friend | For publisher | Social Bookmarking
Rating:
 

There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it. Finally, they decided that the only one who could solve the problem was a long-retired worker who knew the system inside and out. He came out to the power plant, looked around, picked up a hammer and tapped one of the generators.

Suddenly, lights came on all through the area. Overwhelmed with relief that the problem was solved, they asked how much they owed him. "$20,000," he replied. $20,000? For tapping with a hammer? "Well," he said, "tapping with the hammer is $10. Knowing where to tap is worth $19,990."

There are a couple of lessons to be learned from the joke. First of all, the value is higher when the problem still exists than after it has been solved. After all, if told he could restore the power for $20,000, officials would have written him the check immediately, without question. Afterward, the problem wasn't so urgent--it was solved. Quote your price and get agreement while the customer still feels the urgency (and the pain that you will remove). That's when the value is highest to them. Your agreement can include conditions and guarantees, such as the results you will obtain, and deadlines, if they want assurances about results.

Maintain a little mystery. If they hadn't known that all he did was tap with a hammer, his services would have seemed more valuable. After all, they got the result they valued--the power was restored. Focus on the results, not exactly what methodology will be used. Don't let customers look behind the curtain. (Remember the Wizard of Oz?)

If you are the only one who provides a particular product or service, or you have skills or training no one else does, the value of what you offer goes up. Highlight your exclusive set of training, education and experience. Use unique language to describe what you do. You can also create an aura of exclusivity by screening clients, and only accepting those who meet your criteria. This can work if you have a reputation already, but it can also help build your reputation, if you've got the guts to try it!

Consider what your clients are used to paying, and charge at least that much. If your clients are used to paying $100 an hour, and you come in at $50, you probably won't get the job. On the other hand, if you can show that you are worth $150, you may be able to charge more than the going rate.

Another way to get an hourly rate higher than others is to charge by the project, rather than the hour. For example, maybe you charge $150 instead of $100 an hour, but you get the job done in fewer hours. Get the client to look at total cost, rather than hourly rates. Once again, get them focused on results.

This issue comes up all the time in my publishing classes, where I remind students that they are not selling paper. They are selling the information printed on the paper--information that will improve the lives of the people who use it. Paper is cheap. Useful information isn't.

Keep in mind that the value of your product or service is related to the benefits your customers receive, and how they value those benefits. Present what you sell as solutions to problems, and you can charge premium prices for your excellent products and services.

Copyright Cathy Stucker. As the Idea Lady, Cathy Stucker can help you attract customers and make yourself famous with inexpensive and free marketing ideas. Get free tips, articles and more at http://www.IdeaLady.com/.

Article source: Expert Articles

Most Recent Articles in Negotiation category

  • The 2nd Secret That Negotiators Won't Tell You - Why They Object to Your Proposal - By: TK Chan
    Have you ever wondered why some people object to your proposal during the negotiating process and you are totally lost as to the reason why they do that? What if there is a truth in why most people behave that way and once the truth is unraveled, you would become much more effective in dealing with your negotiating parties in all situations?
  • Tips To Successful Business Negotiation - By: Nazeer Daud
    Successful business negotiation can be worth a great deal to your business. It can mean the difference between securing a contract and losing a contract, and has the potential to be worth untold amounts of money to your business.
  • The Mystic Art of Negotiation - By: Oscar Basurto
    IntroductionWhat is the reason, that we include a topic that may seem, completely materialistic? Because, life is also very materialistic but its foundations and principles are primarily, ethic and just. The negotiator, is not a merchant of the temple, because the things of the spirit, transcend any material value and cannot be bought.
  • If I Knew Being Brave Was So Scary I Never Would Have Tried It - By: Suzanne Freiberg
    I’m feeling really scared right now, not because I’m in a scary situation, but because I was brave and it was scary.In reality it was a little incident that brought me to this scary place; I had to assert my rights in a business dispute and request that someone else fulfill their obligations. Sounds reasonable enough.
  • Business Negotiation Tips For Small Business - By: Alexander Gordon
    Negotiations are things we do almost every day of our lives. However, many of these negotiations do not make much difference to us in the big picture, so we tend to take them lightly. However, when you are negotiating for the business as a small business owner, then it will be very useful if you follow the business negotiation tips for small businesses.
  • Persuasion Tactics in a Person-to-Person Setting - By: Michael Lee
    Persuasion is easier to apply during a conversation between two people, as opposed to communicating in front of a group. This is because in a person-to-person setting, the opportunity to better understand the point of view of the other party exists. You can nitpick and delve into every single detail, as opposed to speaking to an audience, where the interaction is usually one sided.
  • How to Read the Body Language of Buyers And Sellers - By: Michael Lee
    Nonverbal communication, otherwise known as body language, is just as important as the words that are being spoken in a conversation, particularly during a sales meeting or presentation. Professional buyers and sellers know this. They can tell when something is amiss or not right by studying the approach of the vendor or the client as he walks into a room and takes a seat.
  • Negotiation Occurs All the Time - By: Pj Germain
    By now you've been more aware of the times when you are in a negotiation with someone, whether it be a customer, co-worker, vendor, or someone at home. You've no doubt had one or two outcomes that were very different than what was available to you before the win/win training. You also probably had many negotiations that didn't result in win/wins, that went as they have in the past, or perhaps worse than usual as you tried new things.
  • 10 Points to Resist Rip Offs - By: Kurt Mortensen
    What might work wonderfully in one negotiation situation will not always be appropriate in another. The instant someone feels cheated, misled or taken advantage of, your opportunity to negotiate with her/him is over. Negotiation hazards tend to occur when you are taking a particular strategy too far.
  • What's the Difference Between a Negotiation, Arbitration, and Mediation? - By: Tristan Loo
    Negotiation. Involves two or more parties who are engaged in direct discussions with each other in a concerted effort of reaching an agreement. Both parties use persuasion and influence to get the other party to see things their way.