Supply and Demand form one of the most fundamental concepts of economics – with price and value moving in line with the surplus or scarcity of a product or service. We can’t really argue with that, can we? Yet, we sometimes seem to be an industry that defies this rule, all whilst in possession of one business’ most sought-after commodity. Is this due to a lack of awareness, or appreciation, of the very game changing effect and value our service industry brings to business? Or (as I suspect) the lack of a coherent pricing strategy?
Do you have a pricing strategy in your business? – And is it well (and frequently) communicated? Does the right level of staff in the business have the right level of bandwidth within which to make critical decisions around pricing negotiation and agreement?
Firstly, it is incredibly important that all Consultants in your business understand the full capabilities of the company’s Service Proposition, having been comprehensively trained on the full suite of offerings - their structure, their compliance requirements, their benefits etc.
Further – and even more importantly - can they articulate the Value Proposition? To be focused on selling Value rather than Price, this must be clearly crafted and widely understood within your business. The Value Proposition is, quite simply, a crafted statement(s) that summarizes why a customer would choose to work with your business and service. The value proposition informs the overall marketing strategy; crafting and introducing your brand, telling your customers what the company stands for, how it operates and why it deserves their business. If you were to ask your teams today ‘what is the value proposition of our company and how are you taking that to your customers’ – can you be confident the reply will be the message that represents your brand and your proposition value?
At Elite Leaders, as part of our Advisory offering, we frequently discuss this topic - aligning pricing strategy directly to value. One of our partners, Jon Brooks, works with several of our members, supporting the creation of a strategy and he makes the following very salient points:
- First, understand what your client values about your service proposition – this is not always just the placement. The end-to-end process of recruiting key staff can be long and complex, what are their pain points?
- Secondly, communicate value in a way that gets your client's attention. Engage your clients in a two-way conversation and educate on the options available. Once it is clear what all the options are the client will start to share what is most important to them – and what they are willing to pay for
- Thirdly, we can create choice by designing a range of services to get our clients thinking. Going back to step one we can see the different parts of the recruitment process that clients are likely to value. When we build services that scale up and down the level of support available at each stage, then we have a great platform to talk about the value we create.
Pricing is the most critical component to maximizing your revenue. Harvard studies have found that a 1% improvement in your pricing can add up to 11% to your profits – calculate what that looks like in ££’s, it’s an effective internal message that puts the spotlight on pricing.
If you are planning any kind of event in your business, elevate pricing strategy in your board meeting agenda – anyone can buy GP, the smart businesses have a focus on maximising profit on each transaction. And don’t forget pricing is also a significant factor in branding and reputation in the market in which you seek to dominate.
