In the last blog post I focused on the first two C's. Now, it is time to give the last two some discussion. Just as a reminder, here are the 4 C's of Value Pricing:
These last 2 C's are really funny. . . . everyone thinks they "get it" and most people don't have a clue. for instance, most attorneys I know insist hey have great communication skills and yet most seem to be socially inept at the same exact time! Simply amazing! Wall Street Journal please take notice, self-awareness in Lawyers is at all-time lows! Communication as a part of Value Pricing is critical. See Below:
ATTORNEY --------------- CLIENT
Value starts here ----------- and ends up here
The first two Cs are focused on the creation process that all starts with the service professional. Value Pricing is based on PERCEIVED VALUE . . . . in other words. . . your value does not really exist unless the client can see it! So many lawyers miss this point in their practices today. . . they get mired in the details of a legal matter while sitting behind their desk all day and go home so proud thinking they added so much value to the client (even though the client had no idea how hard they laboured to find that needle in the haystack) and the next thing you know the client is calling you complaining about that huge bill you sent them!
When you use a fixed price model, it forces you to COMMUNICATE the value of the services provided. Remember, if you priced based on value and fail to communicate the value to the client, you will certainly not be able to CLOSE the deal. What does this mean? Well, If you did a good job of Comprehending Value then Communicating value should be easy. You are simply taking what you comprehend and stating how what you Create meets the needs that you Comprehended! If it is a perfect marriage you will have a winner. This is different in every scenario, so what is most important here is to watch your client, their body language, questions, etc, and make sure that you got the value proposition right from the beginning. If not, try to understand why and create a proposal that meets their desired needs. Remember: Value is SUBJECTIVE. . . . you need to Communicate the value to create a greater appreciation for your wisdom.
Sounds easy, right? OK. . . . well try to add as much value as you possibly can, price accordingly, and try to sell on a fixed price against all of those other lawyers who "underestimate" how long it will take to quote a lower price and get the business! Well, it is easy really. The first thing you need to understand is that you are not a commodity. . . . . well. . . you are if you think you are, and then you don't deserve to have more than anyone else. But if you have a special skill or talent or quality and you realize it, than you have a "special sauce!" At Exemplar, we leverage the unique skills and talents of our entire team to create a "you can't get than anywhere else" effect. This has everything to do with closing the deal. . . because it is your job as a professional to communicate how unique and differentiated your services are . . . so that a price comparison between you and your competition is apples and oranges.
Here are some common problems that people deal with and how to address them in closing the deal:
Remember -- People are not really price sensitive, they are value sensitive. If someone questions the price, you need to be smarter and realize it is really a value objection: Reinforce the value proposition, differentiate, and reassure!
Offer Solutions: Be creative. If your attempt to communicate value is not successful, you should be creative and see if you can solve their problem or accomplish their goal with "less lawyering" With a little creativity and listening skills, you will often find that clients did not want the kitchen sink!!! So stop throwing it at them!
TIP: KNOW THY VALUE!!! Never lower your price without taking away corresponding value. I could write a blog on this topic alone. It is behaviour modifying. . . if clients think they can squeeze hundred-dollar bills out of you by trying to negotiate, they will do it every singe time. Know thy value, price accordingly, and stand behind the value you add. At Exemplar, clients know we are not cheap. We tell them up front we are not the cheapest shop in town. I personally tell some clients that if they want to shop at Wal-Mart for their lawyer I can refer them to a few down the street. People get what they pay for and they know it. . . . clients who do not want to pay you highly will not value you highly (assuming you follow the 4Cs and did your part!).
Don't be afraid to walk away: Remember: Inventory at the supermarket does not lose self-esteem if it is sitting on the shelf for an extra hour. . . neither should you.
Losing Business To Wal-Mart: former Wal-Mart shoppers end up being our best clients. . . . they first go to lawyers (some at big-firms too!) who underestimate the deal by so much in order to get the business. . . . they think they win. . . the client gets SCREWED. . . and they come to Exemplar never to return to a billable hour firm again. Integrity is more important to clients than saving a dollar. Thanks big-law for sending business our way. The breaches of integrity in our profession can become a wonderful referral source!
Put this on your wall over your desk: It is the formula to success. . .
I feel much better having a free hour to develop better business than to work for a client who does not Value my expertise highly!
When I feel good about what I do, I produce better results for my client.
When I am Valued highly, I feel good about what I do.
When I get paid well, I feel Valued highly.
When I Comprehend, Create, and Communicate Value I get paid well by the RIGHT clients!
Are you getting my drift? If not than you deserve to be blown away by you competition. If so,
you are on your way to success in a Value Priced Model.