The Economy Is Tough? Time to Raise Prices!

Wait, did you read that correctly? I meant lower prices, right? Times are tough and we want to make it easier for people to buy from us, don’t we?

No, I don’t live in a bubble and I’m not completely crazy. I understand that times are tough, people are tightening their belts, and spending is down, but we all want a piece of what budget is out there. I just don’t think discounting the price of your services is the way to go. Actually, I am going to make a case for raising prices.

For those of you who know me or have read my blog (hopefully I will have an opportunity to know you one day as well) you know I am not a huge fan of negotiating. It has it’s time and place but I have always been of the mindset that if I understand my customers’ needs and they understand how I can help them and trust that I can, most of the things that are the basis of negotiation have become a foregone conclusion. It’s all about closing at the right time. (Hey, maybe I should write a book about closing deals. I can call it Closing the Deal: Hot Sales Strategies That Will Make You Money.)

So why raise prices? Wouldn’t that just put the price negotiation right back into play? My feeling is that it would not. What I believe it would do is eliminate the customers, the people who buy from you but aren’t really in it for the long haul, and bring out more clients, the people you will partner with for success and who are willing to make an investment in doing it right. Here are a few experiences to illustrate my point.

I have mentioned in the past that when I started out, my main goal was to help people. As a result, I found a lot of people who needed help—they needed a miracle actually. They would come to us at Randolph Sterling with a few hundred dollars hoping we could find the one client they needed to help them stay afloat for another year. My intentions were good, I wanted to help them, so I would lower our prices to maybe allow us to work with them for six weeks rather than four. All that did was delay the inevitable. The problem wasn’t that they didn’t have that one client to save their year, their problem was that they truly had no idea what their value was to the world. The one client we would find wasn’t going to save them. They needed a complete overhaul.

I found that I had priced our services to try to be all things to all people, which we certainly are not. If you want a strong inside sales team to help you define your ideal client, develop a strong relationship and help your sales team continue to grow the business, we are the ones to talk to. If you are looking for a $10/hr. college kid to telemarket for you, we are not the people for you. If you want a sales manager to help you build process for your growing sales team, work directly with them on their own personal development, and run a sales meeting where the entire team gets involved, grows, and holds each other accountable, we are the people to be speaking with. If you are looking for a consultant to give you a report on general ideas or a trainer with the latest 12 step program to building sales clones, we are not. If you want your sales reps to interact with other sales professionals in a roundtable meeting where they are all learning, teaching, and working together to achieve more professionally, give us a call. If you want another networking event to hand out business cards, we are not the resource for you.

I realized that by trying to help everyone rather than working with the growth minded clients we needed to be working with, we had put ourselves in competition with everything that we are not, so four years ago, we decided to raise our prices to reflect the solutions we provided for our clients.

The best way I can describe the results is that we went from working with people who would ask “tell us about what you do” to people who said “this is what we are looking to do.” They knew that we were in it for the long haul and that we were a partner, not just a service provider. I also noticed that clients and prospects started speaking about us using words like inside sales team instead of telemarketer, outsourced sales management instead of consultant, and peer advisory group rather than networking group. They realized that those other groups, while good for some, were not really competition for the type of work that we are passionate about.

I know it sounds strange to recommend not going after every piece of business you can during this time of recovery, but before taking that smaller job or discounting your prices, consider the time that project will take, how long it will be until you get paid, and other factors that may eat into your profits. I’ll bet most times you will find that you are probably better off saying no to the person looking for the cheap solution and using that time to find the client who is a better fit.

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