At the beginning of each year, I ask myself again:
“What can I do to grow and improve my business?”
Call it a New Year’s Resolution; call it goal-setting; call it intentional planning. You can call it whatever you want, but the point remains the same…
You have to help your customers succeed in order to succeed yourself as an entrepreneur. That should be your focus this year, and every year in the future.
Recently, I’ve been reflecting on my answer to that question. That’s what brings me to what I want to talk about today. It’s something that’s been a game-changer for me and has been for quite a few years now: Value-based pricing.
There are so many industries, spaces and businesses out there where we’re truly selling value– not just a commodity. How do you translate that value to the right audience? How do you get it to stick?
You can base the process of value-based pricing on this one tried-and-true idea:
People will buy discounted money.
Let’s say that I tell one of my clients: “Hey if you give me $10, I’ll give you $100.”
In my personal experience as an entrepreneur, I can tell you that your customers will agree to that deal over and over.
I can also tell you that this process is a win-win: We get into business as entrepreneurs because we want to put money in and make more money. Win for you. You get to offer your customers genuinely valuable opportunities to buy discounted money. Win for them.
I remember when I first started to discover the process of value-based pricing myself.
I had a client who was a telecom broker. They brought me in to look at a huge problem they were trying to solve for a client they just landed, one of the biggest supermarket retailers in the country.
This retailer had a $h!t ton of phone lines, internet services and all these things going to all their different store locations. They couldn’t keep track of it all. At least, not in an organized fashion.
So, I looked at the breadth of the project. I looked at what they had and what it was costing them.
That’s when my client and I discovered the end client was overspending a significant amount of money on those phone lines and internet services.
To solve this problem for that supermarket retailer, we came up with a solution in the form of a database that would allow for inventory to effectively be taken and for the management of canceling those services that weren’t being used.
With the help of this new organized, efficient tool, my client was able to do their job effectively. They were able to help their client do their job effectively.
This was several years ago now, but off the top of my head, the application cost us around $25k to $30k. Today, that same application would cost around $50k to $60k.
Guess how much that end client saved, though?
Over a million bucks.
The value-based pricing process is how you win, every time. It’s in stark contrast to the dangerous game of cost-plus pricing. (Seriously, stay away from that.)
Let’s recap, shall we?
In short, here are the steps you want to take to start implementing value-based pricing for your business:
1. Ask yourself: What’s the problem we’re trying to solve?
2. Ask yourself: What’s the monetary value of this not getting solved? (Prove it. Don’t just make that number up.)
3. See where your client is overspending and by how much.
4. Happily offer to solve that problem for them, with X savings per year.
Value-based pricing helps you, as an entrepreneur, to create the maximum value for your client and solve their problems without reaching as far into the ether as you can to mark up your price.
How can I create maximum value for you. Chat with me today so I can help you reach your entrepreneurial goals in 2022: https://businessmarketingengine.com/contact-us/
To your success,
P.S. If you have 10 minutes every morning to grow your business, I can help. Tune in to my daily show, M-F at 8:15 a.m. ET for free advice on how to succeed as an entrepreneur: https://theenginebuildersshow.com/