According to Cobb Value – a defining overview of industry standards, you’re worth more than you charge your clients. In face, pricing may be one of the issues that held you back the most in 2016, preventing you from having the business you desire. Preventing you, in fact, from having the business you MUST have to be able to best serve your clients.
Over the past several years, I’m mentioned several times that pricing is a huge issue for many of my clients, and for me, but I was not aware that it was such a wide spread problem. Businesses all around the country, due to errors in understanding industry standards, undercharge for their services.
What is Cobb Value?
Cobb Value is an industry standard by which values are determined for services, products, and relative fees charged. Once you reach that level of ‘value purity’ where you’re aligning with the value your clients expect, and charging what you’re due, this continuum becomes a balance mark by which your value increases. The basis allows you to increase your fees.
If you’re wondering how this all works, let me share with you a concept I’ve shared before.
You’ve probably had a client or two who asked about your fees, or challenged your prices. This is normal. Many may question your value, but once you understand the concept, your response will be quite different.
Let me share with you…
One of my favorite examples of this is a customer who recently asked me for a discounted price. As I presented the package to him, he shared that he just couldn’t afford to pay that much, and asked specifically for a cheaper price. I explained that he would be receiving less value, and consequently less overall results could be expected. He said, he wanted to start the services but could not possibly afford the fees, and I acknowledged his need and offered a lower priced package.
After a few days with the lower priced package, I had completed the arranged work, and he sent a message asking for more work to be done. I told him there would be added charges for the extra work, and he wanted me to charge per item – since he didn’t want to pay for the original package. I explained that per item, he would ultimately be paying more.
Several weeks with the new arrangement, he contacted me and requested more work, and I gave him the price. He continued asking for discounts, even though I was already giving him EXTRA work, in order to fix his problem. He had originally come to my services with quite a mess. A lengthy phone call and several explanations later, I’d heard him say the words about a client of his that I’d been feeling but not saying to him, “There comes a point in time when MY time is worth more than HIS business.”
My call was interrupted, so I asked to call him back later and finalize the project.
Here’s the deal…
In most cases, I will bend over backward to serve a client and help them meet their goals. Especially if the client is paying me for services, and I know what their expectations are from the start. I’ll move mountains to get you where you need to be. I expect you to make the same effort.
You can boost your income by improving productivity.
You justify your price by providing results.
Jonathan Fields, an author/blogger, offered the best commentary I’ve ever heard on this topic, after going with a throat surgery whom his insurance wouldn’t pay for, “I wasn’t paying for his time in the O.R. I was paying to be as far as possible from the guy who went first. I was paying for his 25 years perfecting his skills, thousands of patients, tens of thousands of hours, and tons of newbie mistakes avoided. I was, quite simply, paying not to be first.”
Reality Matters in Experience –
If you’re experiences, and you’re good at what you do, nobody is paying for your time to do the job. They’re paying for the experience you have, the education you’ve got, and the number of successes you’ve had doing what you do.
According to Cobb Value – smart clients want to pay for success, not costly mistakes.
Smart clients not only will pay you what you’re worth, they’ll listen to you, and do what you tell them to do.
Many will pay you to do the job for them, because they don’t want to have to do it themselves – even with you holding their hand, and telling them every single step to take. They just want the job done right by someone who knows how.
So the question… Are you charging appropriately, what your services are worth?
What are Your Services Worth?
I’m not about to tell you to charge more. I don’t think you should charge more, unless your services are WORTH more.
Before you do anything about your prices, under-priced, or not… You need to decide how much your services are worth. You need to find out how much your customers value your services. You need to figure out exactly what your price point should be.
One of the most effective ways to understand this is to review the Cobb Value Curve, developed by William C. Cobb, a consultant based in Houston, Texas who works with law firms.
The diagram above indicates with the horizontal axis, the volume of work available in the markets for your services. Whether you’re a lawyer, a copywriter, a web designer, or a virtual assistant serving professionals with your own services list, the relative value of the services you deliver, as perceived by your clients has a “mean” (or average) value.
Where do you fit in the Cobb Value diagram? Your level of expertise will be located somewhere on the red line. Your price should be determined by the median price indicator for the quality of services you provide.
You may consider your availability here –
The closer you are to 0% of your time is unscheduled, and you’re unavailable most of the time, the higher your price point should be set. If you’re just starting out, and you’re still learning the ropes, your price point will be lower, and you’ll have more variation in the services you provide.
The reality of what services you provide, the level of intensity you’re experiencing in your market, and the demand on your time, will ultimately set your price point.
You may even have to offer a flexible price point, designed to fill the specific needs of your clients.
Urgent needs requiring more of your area of expertise will be more valuable according to the Cobb Value Diagram. Price points will be higher, and ultimately – you’ll be worth far more than you are in a situation that isn’t relegated by a crisis.
Note: As a business owner, you may want to keep a few hours of your week available for these higher priced, and higher return expected clients, if you’ve got such an option. Many high-profile clients will pay more for urgent, high quality services, to get ‘placement’ in your schedule – take advantage of that!
But what about more common needs?
While making ‘the big bucks’ is always a good option, you may have a need to fill your schedule with ‘other jobs’ to keep a steady cash flow, and income. It’s okay to have minimal service projects that you offer, through your business, at a lower price point.
If you do get busy, these can be sub-contracted out to other, lower-skilled persons, with your supervision.
Many companies offer an apprentice positions and train newer skilled employees or contractors, who can and will do jobs at lower-skill levels.
The outcome is the same, because you’re the overseer on the job and you check the job for errors, quality, and value, but you spend much less time there.
How can you make this happen in your business?
Ask yourself where your skill levels rest? Are you at the top of the heap, looking out over the minions, or are you a minion?
Take some time answering this question and sort through the process of what you do, identifying your specific job, and how you get things done.
- Do you do it all yourself?
- Are you successful at what you do?
- Are you already making money?
- Should you be making more than you do?
- Have you already got the training?
- Do you constantly search for answers, or do you have them?
- Do you have the skills and tools you need?
- Do you have to ask others for those skills and tools?
- Are you always seeking more knowledge?
- Are you comfortable where you are with your career?
- Are you focused and moving toward your goals?
- Do you have goals?
- Do you know how to set goals for your business?
- Do you know who your competition is?
- Is your competition successful?
- How do you communicate value and expertise on your website?
- Do you have a list of people whom you market to now?
If you’re not making as much as you believe you should be making, or at least making what your closest competitor is making, then we need to work on moving your career in that direction. There are a few simple and easy steps we can take to make that happen.
Are you marketing to your Competition?
Or the Customer?
More often than not, when a client is having trouble bringing in the money from their customers, I find they are marketing to their competitors. They’re telling their competitors (those people who do the same thing they do) all the benefits of being in business, of doing what they do. They’re not talking to the customers.
Your competitors already have all that information and they appreciate you giving them more, but they’re not going to pay you to do so.
- You want to bring in customers.
- You should be marketing to customers.
- You should be telling your customers why they want to do business with you.
- You SHOULD be inviting customers to buy from you.
What differentiates you from the competitor?
Take your time answering this question, it’s important.
During the next few days, I’m going to be working with a few chosen, select clients, building their New Year Strategy for business development, and I only have a very FEW spaces left to do this. Most have already filled up.
I’ve extended the discounted consulting/coaching fee through Christmas – on the ad below.
Although it’s still at the low – coffee price – I don’t know how many more I can schedule between now and the first of the year at this price. Consequently, as soon as the schedule is filled, the price goes UP. After the first of January, these 1 hour sessions will be back to my usual prices, if not higher, because I’ve been adding clients.