
I'm the guy with the white t-shirt - do I stand out?
I recently read a great article by Jason Blumer on the importance of creative pricing and getting out of the time and materials business.
It was a tad overlong for my infant-like attention span (think: “and to summarize my position, I would like to say … oooh something shiny! Pretty! Uhm, what was I saying?”) but well worth the read and I encourage everyone to give it a shot.
Jason drives home some great points about the importance of aligning goals through strategic pricing (aka pricing on purpose, aka value pricing, aka goal-oriented pricing) and all of the surrounding issues.
With me, he’s preachin’ to the choir and, of course, the choir always loves the good preachin’. Lay it on me, Mr. Blumer!
It got me thinking along a tangent though.
All the folks out there in service firms that are still billing by the hour are killing their businesses. In fact, it’s even worse than that.
Billing by the hour is killing the service industry.
How can I make such an outrageous claim?
It’s somewhat a matter of perspective. I help businesses become more profitable through effective and efficient usage of CRM.
In that role, I work with a lot of small and medium sized businesses and get a first-hand view into what’s happening out there. And it ain’t pretty.
The internet has changed the game for all of us. I’ve written about this previously so I won’t re-cover it here except to add one sobering thought for all of us:
Even if you have a one in a million idea, there are at least a thousand other folks out there on the internet – just a click or two away.
There’s little to no differentiation out there.
Most service firms have visions, missions, values and messages that are completely interchangeable. You could swap corporate names in and out of their marketing literature like some kind of demented fill in the blank, Mad Libs exercise designed to point out how similar each firm is to their competitors.
Combining this lack of differentiation with pricing by the hour guarantees a slow and steady drive toward a competitive landscape filled with “me too” solutions at increasingly lower prices.
Oh, I can hear some of you saying “But damnit, we ARE the best service firm and we do truly partner with our customers! Those other guys are just saying that but we really do it!” or even “But damnit, we ARE the experts in this particular field!”
Ok, ok … I believe you.
But – you don’t need me believing you. You need the customers and prospects to believe you.
And just like driving by a block full of McDonalds, each one looking nearly the same, how can your customers and prospects tell which one is going to provide the best experience? The best value for their dollar?
Hint: they can’t.
Pricing projects based on value received and offering a money back guarantee is a good start to standing out from the “me too” crowd.
Again, it’s a good start. It’s not an end game solution.
When done correctly, pricing projects based on value will change your culture and change what drives you. It enables you to discover what you really love to do and are good at and can make money at.
*This* is the start of true differentiation and will serve you well in the coming years.
If you aren’t prepared to do it, don’t be surprised as customers steadily start going to the low cost provider over the next five to ten years as they can’t figure out any other reason to choose you over your competition.
I’ll leave you with this quote (first introduced to me by confidant and fellow game-changer, Ed Kless):
“If you don’t like change, you’re going to like irrelevance even less.” General Eric Shinseki, Chief of Staff, U. S. Army