Are the prices you charge winning or losing you business?

A strange and surprsing  thing happened to our firm earlier this year, we started losing every bid for which we tossed our hat into the ring.

First it was a year long public relations  project from the European Commission (we were in the final 2) . Then it was the bid for the PR campaign of a public utility,  and later,  a  one  month intensive media  training session for a team of  crisis communicators. There it was,  three out of three, all  back-to-back, all major losses.

There were a few possibilities pointing  their scrooge like fingers as to the reasons why? Had our competitors gotten better? Were our  RFPs missing the target?  Had we grown complacent?

I never for a moment thought about price until a prospective client called us after our  presentation to say we had the most incisive of all the proposals  his executives  had seen, he then asked me  to lower our price points  to match what our closest competitor had put on the table.

This was the eye opener.

 The realities of a new global economy meant a few adjustments in price, the question was how to go about doing it.  Naturally my first instinct was to lower prices just to be able  to compete  but since I have  never devised my firm’s pricing as a ‘fly by the seat of my pants’ activity, I decided to give some real thought  to the issue.

Like other committed small businesses, my  team  works long and hard  at  bringing  our sleuth of services to market and pricing is based on the  often dedicated  and invisible  work needed to execute a project,  our  expertise, the service agenda, the opportunity cost  and yes even the  financial risk.  When we look at pricing  just as   a mix of marking -up costs, maintaining margins, matching competitors, or  doing things the way they’ve always been done, then we miss the point that pricing  is really a  strategy: one of survival and growth, yes even in the toughest of business climates.

So to the solutions for the tough times for small businesses, I came  up with new ground rules:

1. Know your value and what you can offer;  set  value based prices
2. Acknowledge that each client is different with divergent needs and a one size pricing   is not the best strategy
3. Offer targeted service versions to meet specific customer needs, I call it a Bronze, Silver and  Gold package.  A good, better, and best version that is designed to capture different customer valuations. In the end  the customer decides 
4.  Over deliver; this never hurts and ensures you’re the top of mind choice for your client

Focusing on better pricing (not necessarily lower draconian cuts)  is not easy. It requires confidence, an enormous  amount of follow through on your service promise and the requisite expertise, you’ve got to be better than your nearest rival;  you must be super service oriented. 

Each day I say a thank prayer to that prospect (now client) who gave me that wake up call. Since then,  we’ve won 5 out of 7 bids, seems like we’re back on track.