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	Top Ten Pricing Potholes

	by Tom Varjan

It has happened to us all every now and then -- being UNDERPAID for our services. Unfortunately, this problem is rampant in industries like freelancing or consulting. These people tend to perform tasks for a certain price -- and often end up being traded like sacks of potatoes. But here are some common TRAPS that you can avoid, by being smart about your pricing policy.

REVEALING FEES ON YOUR PRINTED MATERIALS

As soon as people can see your fee, they make a mental note if it and start comparing the prices charged by other people in your field. You have just educated them to FOCUS on price -- rather than the value of what you are giving them, the end result. They rank you according to price, rather than the benefits you can offer them.

USING TIME AS A BASIS OF YOUR FEES

There are only 24 hours in a day -- and as long as your fees are tied to time, your income is LIMITED. The best way of avoiding the Wal-Mart syndrome (high volume and low margin) is by charging for the VALUE your offer. Time-based fees will almost always end you up in downhill negotiations.

DISCUSSING YOUR FEES TOO EARLY

You must postpone the mentioning of your fees until you have convinced the buyer that your product or service can IMPROVE their quality of life or the way their business runs. Doing otherwise is putting the cart before the horse -- and almost guarantees the loss of the sale.

VOLUNTEERING FEE REDUCTION

Sometimes buyers may push you, saying that you have been doing this for many years, so you can do it quickly and effectively. Then you can say, that it would be PREMATURE [options: dishonest, unethical, disrespectful] of me to you to pull a figure out of thin air, which could be light-years out of your ballpark.

TALKING WITH ANYONE BUT ECONOMIC BUYERS

The way to recognize "non-economic buyers" is that they keep pushing you on fees and on details. They focus almost exclusively on the steps you will take rather than the goal you will accomplish. They do not raise their sights to more long-term and strategic heights -- that is the altitude where "economic buyers" congregate. Make sure that you are talking to someone with the FORESIGHT to see the value in what you have to offer.

SUBMITTING RFPS

Be careful, for you can waste an awful lot of time and money on a "request for proposal." The corporate, government, and non-profit committees issuing RFPS often have no real power -- they are simply gathering information and must seek approval from others before hiring you. Get to the real buyer -- the one with the real decision-making POWER.

FORGETTING TO ASK ABOUT BUDGETS

If you have a hard time getting some buyers to understand the value of what you offer, then ask about budgets. Explain the value of the improvement you bring to the table, and ask what the buyer is willing to INVEST to realize those improvements.

TAKING THE COMPETITION TOO SERIOUSLY

When you are in a bidding situation and the buyer is about to give the job to another firm, then ask for some information about that firm. Find out what that firm is PERCEIVED to be able to do better than you. The buyer may overlook some added value you offer but nobody else does. Make sure that the buyer fully UNDERSTANDS what he or she will not get by rejecting your offer.

NOT PRESENTING VALUABLE ALTERNATIVES

You do not have to conform to specific expectations, just because the buyer says so. Being CREATIVE can often win you client that you would have lost by being rigid. You want to offer some innovative and valuable alternatives -- in how you structure the project, bill the client, the value-added services you provide or some other important selling point.

NOT BUILDING RELATIONSHIPS WITH REAL BUYERS

This is vitally important. You must take time to build relationships with economic buyers -- and make them understand that you are not a vendor or supplier but a PEER. Your relationship must be based on mutual TRUST and respect -- otherwise you fold up your tent, get lost, leaving buyers with their problems.

Tom Varjan helps service businesses to improve personal and organisational performance. You may visit his website at www.di-squad.com or contact him at .

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