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If you want any help with implementing value pricing in your firm feel free to connect with me on LinkedIn and I'll send you some resources.
Mark has done a brilliant job of explaining Value (-Based) Pricing in easy-to-follow terms, but I feel Tallula has shown she has missed an important point when she adds "... value can be incredibly subjective."
As Mark has carefully explained, Value is ENTIRELY subjective! The value of your work only exists in the mind of the Client, at least until the results are delivered and the tangible return on their investment accrues.
But you will be setting, and the Client accepting, your value-based price before work has started. Hence your value-based price ALWAYS relies on the 'perceived value' the Client shares with you during the Sales Conversation.
David Winch
Sales, Marketing & Pricing Consultant, Cambridge
Doesn't this just turn us into "snake oil sales (wo)men".
Using psychology to try and make our clients think they are getting something more than before.
I used to go to the motorcycle museum for the annual Accountants Club conference and an overriding memory is one of these value pricing experts asking the audience who has managed to charge the most for converting a sole proprietor to a limited company and some "accountants" were falling over each other boasting about how many thousands of pounds they had charged.
Never went again.
I would be appalled to think that anyone, Accountant or any other profession, would claim that trying to charge more than a competitor was "value-based pricing". The "expert" should have nipped this 'mine is bigger than yours' playground shouting match in the bud. It is those folks who should never have bothered going to the conference again.
Value-based pricing gives the client a very good return on their investment. If they had been charged x thousand for work that ended up making them x million, they would have been delighted.
At the other end of the scale, if your work saved them a total of just one hundred, it would be unfair to charge more than ten or twenty for it.
The 'winner' of that expert's challenge should have been the Accountant who solved the biggest problem!
David Winch,
Sales & Marketing Consultant, Cambridge
Value pricing has been around for years nothing new as is cost plus, anyone who bothers to read ANY basic book about pricing methods will tell you that.
What these 'commentators' don't tell you because they are not in the front line anymore is that it just doesn't work on all clients only some of them.
But that's the beauty of being a 'consultant'
It would be interesting to see an R&D claim guy whose just pocketed a £20K fee actually tell his client it only took him say 10 hours to do the claim etc
If the fee of £20k was for securing a Tax Rebate of £200k, the client wouldn't have minded if it had only taken them 10 minutes! They'd still be delighted!
If you think otherwise, I don't believe you really understand what value is.
David Winch
Sales & Marketing Consultant, Cambridge
How you make money determines everything about your marketing and sales GTM strategy. Christof and Wholley outlined the following business goal considerations for startup founders to use as a determinant for the basis of pricing.