Pricing. We can't tell you the number of times we've heard business owners or product managers wrestle with the question of how much to charge for what they sell. This can be especially difficult if you are in a service-based business, where, even if you've created packages, you're ultimately selling your time. What if the client takes longer to make decisions than you thought? What if they aren't good at deciding what they want, and their brief to you is terrible? What if they expect unlimited, time-consuming phone calls...for free?
Like every facet of your strategy, pricing decisions are ultimately on you. With a physical product, you can look at the costs associated with producing or acquiring the product, storing it, selling it, and shipping it to the customer. It's worth looking at "product you" the same way. One big mistake we see with new consultants or service providers, is that they charge an hourly rate that sounds high enough...if they're working 40 hours a week, for 40+ weeks a year. If you're a solopreneur, this simply isn't realistic. You need time to run your business, doing bookkeeping, accounting, and paperwork, or meeting or conversing with partners who do those things for you. You need time to sell to your customers (or you need to make enough on your service to pay a sales person to help). You get the picture. So how do you know the appropriate rate to charge? What if the client schedule has slippage or they delay the start of a project, so the dates when you thought you would be making the income are "missed"?
First, think about your costs - whatever overhead you have, whether it's rent, your cellphone bill, professional associations, networking meetings...the list could be endless, if you let it. Then consider how much you want to make every year, net of fees or taxes. Add it up. How much vacation will you take? How much selling time will you need? (A good rule of thumb is that you, or someone, will probably need to spend at least five hours selling for every hour you deliver, especially with new clients). Divide this by the number of hours you realistically expect to spend delivering the work. That's your charge-out rate.
What about cost overruns? You can have a series of up-charges for clients who have scope creep every time they come with a project. Truth be told, though, in most cases you want to avoid this, because the aforementioned newcomers to the market will bend over backwards for very little money, in an attempt to build their client base. Your client may come back to you after they've been stung by these inexperienced competitors, but they'll have spent their budget, and you can't get that project back. Instead, build in some wiggle room that you can live with. In our own case, we let new clients know that we have standard pricing that we apply to projects, and we estimate the scope according to their brief. When we have more experience working together, and they become a repeat customer, we will consider more favourable pricing, but we never discount out of the gate. We also explain at the start that the pricing we charge is adjusted for their second project - if they turn out to have an issue with scope-creep, we'll raise the rate we charge them in future. This means we can stand firm on the charge-out rate, and make it up on the honour system, later. Of course if there are costs that have been incurred, like space rentals, that had to be paid twice, we expect them to cover those costs.
Explaining why a price has gone up for project two isn't always easy. When you need to do this, consider using the airline seats discussion. Although they may get their weekly or monthly paycheque no matter what, as a service provider, you get paid when you work. If you have blocked time and turned down other clients for that time period, you can't "sell that seat" to someone else. The risk is that they will go elsewhere, to someone who is willing to under-charge for the work involved, but wouldn't you rather have that, and search for a client who's willing to pay what you're worth?
If you're finding it hard to make time to think about strategic questions like these, because you're so busy working in the business, that you can't work on your business, why not join our 5x5 Sharper Focus Business Challenge? One question, 5 days a week, for 5 weeks, and you'll be on your way to making better decisions. Just click the link at the top of the page!
It’s Shrove Tuesday, or as some like to call it, “Pancake Tuesday”. Originally, on this day, Christians made their confession in preparation for Lent, the days that lead up to Easter. They were forgiven for their sins, or “shriven” – hence, “Shrove Tuesday”. They also finished off any tempting foods – rich fats, eggs, cream, and so on – as they prepared to emulate Christ's 40 days in the desert. Pancakes were an easy way to do that. Nowadays, all that remains for many people is the idea that today is a day for pancakes.
Why all this religious explanation in a blog where we usually talk about research, strategy, and customer understanding? Because just like Shrove Tuesday, what you tell your customer about yourself (the preparation, scorekeeping, and effort) isn’t the most important part of your story – what your customer believes about you is. That’s what they’ll communicate to others, and that’s what will impact the reputation of your company, your brand, or you. Give them your best, make sure they know your true story, and maybe they’ll remember more than the pancakes.
Look at those fresh new messages and materials. So exciting! New initiatives to launch. Shiny new toys to play with. But winter has dragged on, and your spring-themed campaign seems ill-timed just yet. The tools and techniques you've been using seem tired and trite. Or are they?
Marketing and sales often encounter a kind of ennui with their campaigns just before the change of season - and especially if the season doesn't seem to be changing as fast as it should. The common refrain is, "Our customers are tired of this! We've told them all about this already!" The reality is, you are not your customer's only focus. (There, we said it. Right out loud.) So while it may be true that they've heard your message, and that they're not sure you'll have anything new to say, this doldrums of delivery that you're in, is something you can change. In fact, it may not be that they are bored at all...it may be you who is just tired of sounding enthusiastic about the same old message. What are you to do?
Bear in mind that in sales, marketing, customer service...nearly anything that requires you to be customer-facing, attitude is altitude. Look for ways to recharge your batteries so you can put one last push on, before spring really does arrive. Start integrating a few new spring pieces of clothing into your wardrobe. Get a new haircut. Launch a new fitness routine. Begin a course that will make you sharper for the upcoming season. All of these will give you a feeling of accomplishment that will lift you up.
Next, check your assumptions. Visit clients and get a recap of their recall of key messages you've delivered this cycle. Make sure you correct any misperceptions so you're starting from the same page when new selling models or tools are introduced. Consider any knowledge gaps as you visualize who is ready to receive the message of your next campaign, and who can use just a bit more personal attention to get them there.
Lastly and most importantly, remind yourself and your team of your achievements. Consider a celebration and final team incentive challenge as you wind down winter and get ready for spring. Because although it might not seem like it on a stormy day, the sun really is on its way.
"I'm buried in data. How can I make sense of it all?"
"When should I do research?"
"What's the right way to answer these questions?"
Does any of this sound familiar? Over and over, we hear product managers, marketers, even CEOs, asking these questions. Over the past 17-plus years, we've helped hundreds of them get clarity by working backward from their end goal. This is the question we ask, to get started:
"What decision do you want to make?" or "What action can't you take now, that you'll be able to take if you have more clarity?"
Most often, if you can answer one (or both) of these, you'll be in a much better position to map out the research you need. When you've answered them, you'll know:
You'll be able to decide whether you can sort this out yourself, or if you need help. You'll know if the answer needs to be quantified, with numbers (such as for a forecast), or if it needs a qualitative approach (getting your engineering team to see customers' frustration as they try to use feature X). And you'll waste less money, time, and effort getting something that's useful, practical, helpful, and actionable.
Whatever your questions, we're happy to work with you until you see everything you need.
Does this sound familiar? For me, I’m always surprised when I hear this, although I hear it over and over again. The easiest business to start is one that solves a problem, one that people will pay to have solved. Whether that’s creating delicious homemade cakes that make the person celebrating feel extra-special, to measuring air quality and helping clients to put systems in place to improve it so they can breathe better, or even providing custom home renovation services for someone with ideas but who’s all thumbs – businesses that solve problems or challenges are simply easier to sell. That’s because you don’t need to invest as much time educating the customer as to why they would want to solve that problem in the first place. They’re already actively looking for a solution!
Of course, the next step is a bit trickier: you also need to have the wherewithal to solve the problem. If you’re not a baker, or an environmental scientist, or handy with tools and building materials, none of our examples are going to be a fit for you. So what CAN you do? This is an area where mind-mapping can come in handy. The mind-map is a great tool for capturing a lot of free-flowing, uncensored ideas. Set a timer for 15 minutes – no more. This is more work than it sounds, and by then you’ll need a break from thinking. Get yourself a large piece of paper, or a white board, or a large expanse of wall and a stack of sticky notes. Start by writing down all the things you can do, that solve problems for people. Capture everything. Don’t try and narrow it down yet. What sorts of things do people ask you to do already, because you’re good at them, or you know how to do them in a unique way, or because those same people don’t know how to do them for themselves? Keep writing. If one “job” makes you think of another, great. Write that one down too. Just keep going until the timer tells you to stop. Although it might be tough to get started, I’m pretty certain you’ll be on a roll as you move toward the end of your 15 minutes. Ideas always bring more ideas.
Now, go get a drink of water, or a cup of tea, or take a little walk. Then come back to your mind-map. It’s time to start sorting. Which ones do you really like doing? Which are you uniquely qualified to do, more than most people? And here’s the million-dollar question: which will people pay you to do? Often the things you’re best at, or that are most enjoyable, don’t obviously intersect with what customers will pay for. It’s up to you to find that intersection between work that works for you, and work that’s lucrative enough to make a living. So while I never advocate working at work you dislike every day, if something feels like a real calling, AND you feel like you’re fairly compensated for doing it, you’ll be much more likely to stick with it when your business hits its inevitable valleys.
Do you have some ideas that look like they might actually be the start of a business? Great! Next time let’s talk about ways to see whether customers really will pay what you think they’ll pay – or in more technical language, defining and validating your value proposition.
Are you planning to grow your business this year? Or do you just want to make more money from the business you're in? Those are the first two questions to explore. If you haven't already, take time today to figure out what you want, and it will help you get off on the right foot for a strong 2018. Imagine if this time next year, were busier and more successful than ever!
These are the 14 Questions that will help you get there:
If you're not into DIY, or you'd like help putting your plan together to answer one or more of these, we'd love to help. Whether you need strategic research, a facilitated strategy session, coaching, or a workshop, we're looking forward to seeing you succeed.
Have you received advice that starts like this?
“All you need to do”
“You only have to”
Me, too. I also get requests all the time for advice on how to live the life I do – unapologetically mine, in line with my values and priorities. And many of the people who ask those questions, are looking for answers that start with one of those three phrases. What’s the problem with that? Only this: having a great career is no easier than having a bad career. Both are work. Hard work. The good news, is that the work is worth it, if you get to have a rewarding, rich life along the way. And it’s important to realize that every day won’t be sunshine and lollipops.
The truth is, no life is ever easy. We will all have struggles and setbacks. Every overnight success story has many, many steps and stumbles that led to that moment of achievement that everyone gets to see. In the world of the striver, there are always many people watching every wobble along the way…some cheering, some jeering, and some just wondering when they will just give up.
“I wish I could work for myself like you do,” they say. “Then I’d be in control of everything.”
If you’re embarking on a journey with the vision of never being accountable to anyone else, let me let you in on one of life’s big secrets. It’s very likely at some point, that your vision is going come to a screeching halt. (Unless you want to live in a cave, on a mountaintop. In that case, have at it.) You can be the pilot of your own destiny, that much is absolutely certain. However even the most powerful individuals in the world have responsibilities and commitments to others. Most of us want a richer, fuller life, that lets us be more, give more, share more, and enjoy more. We want to have time with our kids, or our partners, or to serve in our communities. We want to be secure in the knowledge that there will be food on the table. And we want to know that we’re able to contribute our best work, every day.
Living the life that you choose means you must make choices about where to invest your time, talent, and resources. That part isn’t a choice. It’s an obligation. To be everything you want, you can’t always do everything you want. Sometimes things won’t go your way. Families, partners, collaborators, and customers all want different things from me, and sometimes all at once. And they will from you, as well. The one thing I’ve learned (and you can, too), is that I must choose how to handle those requests. And I can live with that. Can you?
Megann Willson is one of the Partners at PANOPTIKA, where we help you see everything, so you can make better decisions.
This is a re-blog of Megann's post on LinkedIn this week.
“I believe you.” Have you ever experienced how much of a relief those three words are, when you’re surrounded by doubters? How you might not have even realized how much their negativity was weighing on you? At that moment, you don’t even need the supporter to do something to help the situation. They’ve done enough by simply acknowledging your truth. Many of us have experienced the empowering sensations that those three words can elicit.
What you might not have considered, is that this tiny but powerful message is also a tool you can use, two different ways. The obvious, is when it seems someone close to you is getting a lot of negative pushback on their idea, their opinion, or their statement of a situation. If what they are saying is reasonable, plausible, and they’ve given you no reason in the past to doubt their words, this is a time when you can firm the bonds of your relationship by simply using those three small words. You can do it very publicly, or you can do it quietly. Either way, believing is a valuable gift you can give someone.
The other way you can use “I believe you” is much less common. I recommend you use the statement on yourself. When you know you are right, or you have an important message to deliver, or you’re worried how your truth will be received because it might fly in the face of common practice, get yourself to a mirror. State your case. Look yourself deeply in the eye, and say it. “I believe you”. Say it until you do believe you. The results will be worth it. Believe me.
You made it! You're on top of the world. But this isn't where the learning happens.
Think about the most important lessons you've learned. Did they happen when at the moment you achieved your goal? More likely, they happened afterward, as you reflected on your struggle. You may have even had a richer learning experience when you didn't achieve your goal. Think about all those "I'll never make that mistake again" moments you've had. Win or learn, mistakes, failures, and struggles mean you will enter into the next challenge stronger and more able to deal with the difficulties you may face.
What does this tell me? That each roadblock or difficulty prepares you to be even better next time. That the reward for the journey is the journey itself. And that you'll gain experience and confidence, no matter which path you take, or no matter how everything turns out. Now that's something to be on top of the world about.
Do you have a long list of things you want to do, and never enough time to get them all done? Take your time!
No, I don't mean slowing down, although that can be helpful if you use the time to plan, prioritize, and jettison unhelpful commitments. I'm talking about making sure you take the time back, that others want to take from you. That unwieldy list of meetings? Ask for an agenda, and figure out whether there is something you need to learn or contribute. If your presence is simply to be another "warm body" in the room, you may be better off using your time and talent elsewhere. And what about those well-meaning colleagues, neighbours, or friends, who just want "a couple of minutes", when you've scheduled time to work on an important project, or study, or follow through on some other commitment you've made to yourself or others? This is truly a time when you need to take [back] your time. Make sure you have a polite response ready, such as "I've made a commitment to work on something right now. Can I call/email you when I'm done?" or "i'm working to a deadline at the moment - let me put some time in my calendar for you for when I'm finished, so I can give you my full attention."
Your time is valuable, as are your commitments to yourself and others. You owe it to yourself to take the time you've allocated. Remember: someone else's lack of planning doesn't need to be your emergency.
Megann and Steve, Partners in PANOPTIKA, are working for our clients every day to help them see everything they need to know to make better decisions in their complex business environment.
Want useful advice for better business decisions, delivered direct to your inbox? (It's like a free coach who comes to you!)