Pricing is a Human Activity

I like to talk about pricing. Different than billing, I believe pricing is a healthy way to ask for money from customers. The benefits include:

• Asking for money before you perform the service, which allows the client to make a judgment about the value of the service they are buying,
• Putting the service provider in the place of convincing the client of the value of what they offer before they have a chance to prove it with service, which allows the service provider to practice sales,
• Being creative with the perception of value of what you do, and how a client could pay for it (whether up front for a discount, or monthly drafts, etc.),
• Creating new services that could bring new value to a new market, thus creating new opportunities for additional profit.

There are many other benefits to pricing but those are just a few we’ve experienced over the 10 years we’ve been pricing. But there is one overlooked aspect to pricing that can be surprising - it has a lot of human components to it. That is, pricing brings out the fear and/or joy in asking another human to pay you what you are worth (or believe you are worth). That’s an intimidating proposition for a human. Humans often shrink away from stating their value to others for fear of being told their perceptions were not true.

Billing on the other hand can be done void of the human relationship. You can actually bring in a client, let them drop off their tax backup, and begin preparing a tax return without ever meeting them. The reason you can do this is because billing allows a firm to simply begin billing time to a client without ever setting parameters, or making sure they are happy, or making promises as to the outcome of the service. Just start billing the client in increments of 0.5 hours of time. Billing is done after a service has been agreed to which means a client can agree for you to serve them without knowing what the outcome of your service will be. That is messed-up. That is a great way to make sure you clients are not happy. Stop doing that.

If you are reading this, then I assume you are human. Let me ask you to lean into your humanness in selling your services. Stop billing, and begin the (often uncomfortable) process of selling your services with a price. Make promises to your clients, and ask them to pay a price up front before anyone does any work. It will change your company, and make you a better service provider. Do you need help with this? We do that! Read a recent email we sent out telling you about our new Strategy Jam Sessions service. We can tackle pricing together.