When you think of discussing pricing with your clients, what emotions does it generate?
If you are like most professionals, it creates a level of anxiety. While you hopefully enjoy the work you do, pricing often seems to be a barrier to success – it gets in the way of us winning work and creates tension between us and our clients. Most professionals can list multiple examples of where they would have won the job, if only the price could have been less. Or worse still – where pricing conversations with clients didn’t end well.
It’s true that when pricing is done badly it creates tensions between clients and firms. It diminishes trust and damages relationships. But when pricing is managed well, the opposite occurs. Pricing can be used as a means of strengthening client relationships and building trust.
Pricing is one of the most intimate parts of our relationships with clients. It’s the moment clients tell us that we are worth it – or not. All of our efforts to create value for clients, differentiate ourselves from our competitors, provide a solution that meets our clients’ needs in a cost-effective manner, all come together in that moment when clients ask themselves – “Is it worth it?” We can be quite passive in that moment and hope all our previous efforts justify the requested price. Or alternatively, we can actively influence our clients’ assessment of our price?
Ideally pricing should be done with the client rather than to the client
Ideally, we should develop our offering with them so that they can see the cost implications of the various deliverables sought and the desired work method. The alternative is that the first time a client sees our price there is the “surprise” at the end of our proposal.
So how do we use pricing to strengthen client relationships? After all, aren’t our objectives diametrically opposed – the client want’s a lower price and we want a higher price? The short answer is by focusing on the areas where our goals are aligned:
Clients want to know that the price is appropriate, given what’s at stake
- Let’s demonstrate we understand this and have consciously thought about the business case.
Clients want a range of choices rather than a single price being imposed on them
- Let’s provide them with a range of options so that they (rather than us) can decide which represents best value?
Clients want to contain costs
- Let’s demonstrate that we have empathy for this and have consciously thought about ways of keeping costs down.
Clients want to avoid surprises
- Let’s provide them with certainty where we can and work with them to manage any remaining uncertainties.
We shouldn’t be scared of engaging in pricing conversations with clients. Rather we should actively embrace these situations, seeing them as an opportunity to align objectives and strengthen our relationship. When we actively embrace opportunities to discuss pricing with our clients, we may not always get it right, but we will get better at it over time and this should not only result in a better client experience, it should also drive more profitable growth.