A few years ago, one of my competitors, a consultant located in Ohio, would have his prospects call me to compare his prices to mine.
At that time, he knew I charged more than twice the fee he quoted: "$1,200 per day."
Although I was always concerned about not winning business, I never put two and two together and connected my disappearing prospects to this guy's manipulations, until he disclosed his strategy to me, in a moment of boastng and rare transparency.
Here's the kicker.
Ninety-plus percent of the time I billed for was on-site. So, if I had a client in Cleveland, I wouldn't break out a separate fee for traveling time or for preparation time. If I quoted $2,500 a day, plus out of pocket expenses then that was exactly what the client paid.
My competitor, however, charged this way. He'd bill for three days at $1,200. One day was on-site and two days were off-site.
But, by his own admission, he really didn't expend two days of effort when he was at his office; perhaps only an hour or two.
So, his actual rates were higher than mine, though he appeared to be cheaper by more than half!
What an interesting sleight of hand, don't you agree?
His strategy demonstrates a few crucial things for the coach, consultant or services provider:
(1) You can and perhaps must bill for off-site time as well as on-site.
(2) You will face price competition so it always pays to appear reasonable in your fee setting.
(3) You may want to consider engaging in a form of "value billing."
The last point warrants elaboration.
Many lawyers bill for the value of their output instead of for the clock time it consumes.
For instance, a letter might take ten minutes to compose and to print, but a lawyer will typically charge an hour or more for this service.
Let's say he bills at $300 per hour. He simply can't afford to charge only $50 for the letter, because he needs a return on his investment in education, office overhead, and he even has to pay for malpractice insurance in the event he sends the wrong letter out on your behalf!
So, the billable time units are at variance with the actual time units expended, but this is fairly well known.
My counterpart in Ohio did the same by customizing a workbook for Client #2 that he developed under subsidy from Client #1.
All he'd do is change the cover page and a few references in the manuscript. Yet if he only charged for the time he spent spent in customizing. he'd dramatically under-sell the value of the product.
Ideally, we would charge and be paid exactly what we're worth based on what we contribute. But that seldom happens.
To assure we come closer, we need to be creative, especially when it comes to expressing and billing for time "on the clock."
Dr. Gary S. Goodman is the best-selling author of 12 books, over 600 articles, and the creator of numerous audio and video training programs, including "The Law of Large Numbers: How To Make Success Inevitable," published by Nightingale-Conant-a favorite among salespeople and entrepreneurs. For information about booking Gary to speak at your next sales, customer service or management meeting, conference or convention, please address your inquiry to: gary@customersatisfaction.com.
No comments:
Post a Comment