How to put a value on your work
Price is one of the biggest elements in your sales process, economic engine and business health, writes Pete Baker.
How do you determine the pricing for your products and services?
The recommended retail price will help. However, you still must decide which products to sell and how much to charge for installing them.
The product offering and price position will also have a substantial role in (further) establishing your brand identity in your market.
Early in my custom integration (CI) career, I had a great opportunity to work for one of the premier companies in my state. I was very excited to sell the ‘really cool gear’ and join this great team.
I had been working in CI for about three years and didn’t have the confidence and swagger that many of my older competitors had – but I was hungry.
As I submitted my first proposal to the boss for approval before sharing it with the client, I was told to add an additional line item in the proposal to account for small parts costs.
The amount was not enormous, maybe 3% of the total. It covered legitimate costs: wire, emitters, speaker back boxes, pre-construction boxes for volume controls (this was 20 years ago), etc.
Years later when I had my own integration company and had to write cheques for these items, I came to understand how quickly they add up.
The problem was, none of my competitors charged for any of these items. Potential clients would compare my proposal with those of my competitors then ask about my charge for wire and materials.
Granted, many of the other companies might have built this into their ‘labour’ costs, but our labour costs were also higher. We had extremely talented and experienced technicians. Most had worked as stage hands or sound engineers.
In 10 years with this company I became very successful at selling systems that were expertly installed by talented craftsmen. I learned early on that it is not all about price. It’s about value.
If the client wanted exceptional service, support and craftsmanship we could deliver. We did not discount our prices or reduce the quality of our service.
A few steps can be taken to establish pricing that is a good value for the customer and ensures financial health for the business:
Identifying your target customer
Your target customer may not be the same as for your competitor next door.
Equally important, your customer segment may not be everyone in need of a product or service that you offer.
If you are a car dealer specialising in European imports, not everyone purchasing a new car will want or need your 12-cylinder supercar, and that’s OK .
What benefits are you delivering?
Take time to clearly understand the benefits that your brand brings to your customer.
Some of the benefits my previous integration company delivered were:
- 20 years’ experience aimed at
delivering expert craftsmanship on
- a lifetime warranty on the wire and
- commitment to an easily used
system – our tagline was “we make
Once you establish these benefits, it should become part of every sales presentation and marketing activity.
Establish your value
Carefully evaluate and identify the value you offer customers – experience, team, service/support, etc.
Commit to your brand value
Once you have established the value you can offer, be proud of it and defend it. Don’t be willing to put a ‘sale’ sticker on your forehead for the next meeting with a potential client.
Once you understand the benefi ts you can off er and the value of your brand, you are better prepared to establish a price for your services. Benefi ts + value = price.
Once the pricing has been established, be prepared to back it up with value and benefits.