When the going gets tough, increase your prices!

Posted on:10. 11. 2013

By Cliff Findlay

It amazes me how many companies and individuals are willing to work for free, especially in the B2B market. Free projects on the pretence of further future work, tenders, proposals, sales meetings, pipeline calls/emails, the list is endless. A perpetual stream of chasing clients in the hope that they throw you a bone instead of giving it to someone else.

Let me explain the five key reasons why people buy, in order of likelyhood:

  • Pain now: They have a problem and they desperately need it resolved. If it’s expensive so be it, as long as it gets fixed properly.
  • Pain in the future: They realise that if they don’t get something done now they could suffer real issues later on. Prevention is better than the cure.
  • Pleasure now: Spontaneous buying based on want rather than need.
  • Pleasure in the future: Spending now to provide a smile at some date in the future

‘Hmm, that’s interesting’: The least powerful driver and it requires a fair amount of convincing.

People need an emotional reason to buy and the pain/pleasure factor is the most predominant. I would also go as far to say that the ONLY reason people buy in a business to business (B2B) environment stems from the first two factors; with consumers probably making their choices more based on a balance of pain AND pleasure.

So in terms of a B2B sale:

  • If a potential client is still thinking about it, they aren’t in enough pain.
  • If they need more information, they aren’t in enough pain.
  • If they have to speak to their boss about it, their boss isn’t in enough pain.
  • If they need another meeting before they decide, they aren’t in enough pain.
     

Often replies such as ‘we haven’t made a decision yet’ or ‘we need more time/information’ are simply a delayed no! This is normally a waste of time and these prospects should be dropped. Ask them a simple yes or no question and DON’T keep them as a ‘potential’ or ‘pipeline’ opportunity as this just offers nothing but false impressions to your business.

Also, when it comes to pitches and tenders we would seriously consider that you take a step back and look at how many you get involved in, how much time and effort they take and how many you actually end up winning. Due to the time and resources involved (both of which cost you money) this process can be fraught with disaster for any business and in our mind it is a structure left over from the BC days (Before Crash). If a business has contacted you after looking at your website or sales collateral it means they already trust you enough to take on the job. So what on earth could you do in a 3 week, drawn out pitch process that you can’t do in an hour’s meeting or phone call with their key decision makers? If you can’t convince them after an initial chat, you probably never will and you’ll just end up wasting a lot of time and effort.  And if they need a lot of convincing is that really a good place to start a relationship off from?

Of course, some industries are based on tenders and sometime it can be the only way of winning large pieces of business. All I am saying is, if you can avoid this approach to new business then do so.

So is there a better way?

In our mind there is. If someone pays good money for something it means that they trust the provider to deliver a quality product or service. Therefore getting a client to start paying as soon as possible is essential so they can start to value you and your input/product/service. Even if it is a small amount – get them paying. If they are unwilling to do this, yes you’ve guessed it, they aren’t in enough pain and therefore should possibly be disqualified as a potential client. Or you need to look at your sales process and see how you can get clients ‘into pain’ quicker.

Equally, if your market is being dictated by price, stand out and actually increase your prices and then tell the market why you are more expensive. Clients that want the best product or service on offer will come to you as they’ll understand why you are more expensive and probably won’t try and chip away at the price. Higher prices also equals: more trust. Would you trust the company that keeps on dropping their prices in order to win your business, or the one that gives you a price and tells you to speak to a competitor if you don’t like it? Lowering prices = we’re not doing well and we’re desperate for business.  Which in the client’s mind means, they’re not that good at what they do otherwise they’d be fully booked.

If your business has a process or service that most competitors give away for free, then charge for it. Stand out. Explain that the others give it away for free because that’s what budget organisations do and if that is the kind of company they wish to work with then you aren’t for them.

In a time when most companies involved in a B2B market are desperately chasing business, it’s time for you to stand out. It will take balls but hey, business isn’t for the fainthearted. Go on, give it a go.

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