Monday, June 11, 2007

Outside-In Pricing -- Because Good Clients Don't Want To Insult You

One of the best parts of pricing on value is the ability to use difference pricing strategies with different clients. One of the most interesting to us and yet the one that scares the heck out of professionals is outside-in pricing. What is that? Outside in pricing is about looking outside of the four walls of your office building to determine what your work is worth to the client. Did you ever think to ask your client what it is worth? Why not? (Because you are scared to death what they might say . . . that they might tell you they think you are worth half of what your firm needs you to charge to make everyone rich.) Well, that is what we do sometimes. . . . and it works great most of the time.

Think about it this way: There is psychology on your end -- the fear that they may not value you as much as your ego desires. Just the same, there is psychology on their end -- The fear of looking cheap or insulting you with a low price. Actually, it is a great way to see if 1) You have done a good job communicating the value proposition, and 2) whether or not they really value you anyhow. Wouldn't you rather know BEFORE you took them on as a client?

Here is another benefit: Just think of how much easier your life would be if you never needed to fill out a time sheet again. . . . you and your client just agree to a price and off you go! No counting, no billing, no collections, No Hourly Bull! Why did you choose to be a professional? When you graduated law school was your stated goal to have the highest effective hourly rate in the profession? Was it your goal to bill more hours than your colleagues? For most people I know, it was to be happy, balanced and make good money. What is good money? I guarantee that you do not think of "good money" in hourly rate terms. You think about what you take home and you look in the mirror and think about whether you enjoyed work this month, whether you saw your wife and children enough. . . and you balance it all and ask yourself "was it worth it all?" At the end of the day, no matter how you bill, you are asking yourself these questions and not "how much do I charge per hour and how much did I bill?" If you did, you either need a life or a brain transplant.

Outside-In Pricing teaches you to communicate value, understand how customers value what you do, and free you from counting your life in 6-minute increments .Repeat after me: "Increments are Excrement! Increments are Excrement" . . . . . yeah. . . you're getting the hang of it now!

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