Tuesday, 16 June 2009

Price Matters A LOT (But Not To Your Customers)

money with wallet

Sure, the cost of your services is important. In fact, it’s critical. But it’s critical to you, not your clients.

Your rates are important because they need to cover your own costs, plus provide additional profit to feed you and do all the other things you need money for. Things like growing the business, advertising, equipment, training, staff, etc. Far too many small businesses fail because the owner, in setting fees, underestimates not only the cost of goods and services to be delivered, but ignores tacking on extra profit to fund the important aspects of business maintenance and growth.

But the biggest problem many new business owners have, is that they don’t understand how to sell their services based on any criteria besides price. Many photographers and designers striking out on their own (full time or freelancing part time) enter the marketplace and try to get work by undercutting or matching the low price end of the local market. You can certainly do that, but a low cost business model means that you’ll need lots more clients buying lots more goods and services, to match the net profits of someone with fewer clients and fewer jobs but with higher rates. So if you’ve decided you want to be in the low price, high volume end of the business, then this article is not for you. Thanks for stopping by, tune in again next time. If, on the other hand, you would prefer to have a few high-paying clients, then you’ll want to know how to compete in the marketplace and not use a low price as your selling proposition.

What’s Your USP (Unique Selling Proposition?)
Start by being different or unique. If you provide something that no one else does, then there is simply no competition. There are lots of ways you can be different, beginning with your finished products as shown in your portfolio. You can offer add-on services that your competition doesn’t offer. You can stay current on the latest design techniques, or hot “looks” and trends, and then show them off to your clients and prospective clients. Done properly, this kind of thing lets your clients know that you’re always on the cutting edge and if they see something they like, they can be confident that you can recreate something similar for them.

Keep in mind though, there’s a common thread among those who charge a premium price… it requiresthat you also deliver premium service. You can’t just have unique designs or photographic treatments, and be a slacker when it comes to getting back with your clients or meeting their deadlines. Do your best to meet or beat promised deadlines, and then, if you really want to blow them away, put in a little extra effort and deliver some extra treatment of their project. Maybe it’s a bonus design. Maybe it’s the photos they requested but you throw in a few samples of what their shots would look like with a bleach-bypass treatment or a high-pass filter.

Another thing to remember about being unique is to make sure you don’t name your special effects, designs, or image treatments using terminology used by others in the industry. Use a descriptive term that makes sense to amateurs but that is not something everyone else in the industry uses. Let’s say you’re a photographer and you offer high dynamic range (HDR) imagery. You might be surprised how few “pros” are doing this, so that alone might be enough to set you apart from other local shooters. But, even though it’s the industry-standard term and your customer probably doesn’t know what it is, if you call it “HDR,” then they can (and often will) contact other photographers and ask, ‘can you do HDR photography?’ And lots of photographers receiving a question like that, would answer ‘yes,’ do some quick research, and take away your customer. Instead, if you refer to your HDR photography as wide gamut exposure blending, or the graynar technique (or any name you make up) then it will remain unique.

One of the most important things about commanding a good fee for your work, is to never be afraid to say no, and another is to never reduce your price without taking something away. In your early meetings with your client, find out what they want. Listen hard to what seems to matter most to them. If you’re a good listener, you’ll walk away with a bullet list of job requirements and you’ll come back with your proposal and price. If they try to talk you down from that price point, you can say, ‘Sure. I can do it for your price, but I won’t be able to provide you with as many designs as I normally would.’ Or, ‘that rate would work if we cut the photo session down from 2 hours to 45 minutes and we delivered fewer proofs.’ And keep in mind, if they won’t come up with your fee and refuse to reduce their requirements, you must walk away! No matter what they promise you’ll benefit by being their vendor (extra customers, exposure, etc.) it doesn’t matter. Set your price and stick to your guns. The clients you lose are those you don’t want in the first place.

Another nice post by Larry Becker, here’s a YouTube video that kind of puts things in perspective… how many clients do you recognise!


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