‘Designing Strategies’ Newsletter
November – December, 2012 Volume 9 – Issue 50
Negotiation to get the perfect pricing strategies for products and services can be challenging. This has never been more true than over the past several years. Potential customers try harder to squeeze the last drop of blood from the rocks we call our businesses. We want to be fair, but we also want our value recognized. And, of course, we all want to be fairly compensated for our efforts.
A young woman I met as an interior design student is learning these lessons today. Like many young professionals, she graduated into an environment where jobs for entry level designers are scarce. During the transition from student to emerging professional, she married and now has a two-year old son.
Anyone with children knows the challenges to find quality, affordable daycare for their most valued treasures. Options are many, few are affordable. Many amount to little more than parents paying someone to plunk their child in front of TV all day. Nothing is provided to stimulate or educate these young sponges who are so eager to learn.
My friend, Charli, decided to take a professional detour. She moved away from interior design for the time being. To take care of their need for quality daycare for their son, she started an in-home day care center. Building Blocks Early Learning Center LLC is an in-home childcare center focused on education. Taking on a limited number of children provides controlled peer socialization and one-on-one education experiences.
Not a typical daycare service provider, Building Blocks pricing strategies were to set fees a for premium offerings. Building Blocks Early Learning Center was not just set up to be a typical baby sitting service. Charli’s plan is to introduce educational experiences to the children. Like any budding entrepreneur, Charli is attempting to find families to enroll her first group of children. She finds parents thrilled at the services she will provide, but questioning higher fees for her premium services. The conundrum: hold the line on fees, or discount them to get customers to sign on the line? After rejecting several families for various reasons, and interviewing others who want premium services, but at low fees, she began reconsidering her strategy.
Fighting frustration and questioning her business plan, Charli decided to amend her pricing strategy. Rather than make drastic cuts to her fee schedule, she amended her fee schedule and the wording in her contract. Instead of a ‘fee only’ approach, she now uses a lower fee schedule, and specifies extra costs. Parents now agree, in addition to paying a slightly lower fee, to provide snacks and other items needed to run Building Blocks. This strategic change netted her three new families in a just one week. Her fees are the same, just laid out in a manner that parents are more willing to accept.
If need be, rethink your strategies. If things are not going according to plan, don’t buckle under to customer demands or question yourself. At signs of hesitancy over your terms or pricing, consider other options. Is there another way to generate the same revenue, but in a different format? Consider breaking a project or sale into phases, or bill in phases.
Before just reducing pricing, think about what services you can remove. Simply reducing charges without reducing services at the same time is a poor strategic choice. We all deserve fair compensation and should never devalue our worth. Customers often think that every price is negotiable and that there is unnecessary ‘cushion’ built into proposals. Don’t succumb to this kind of thinking. Believe in the value you bring to customers and set your prices accordingly.
Remember: not everyone is your customer. Some you just need to let go and move on to others who will recognize, and pay for, your value.
VISUALIZE — ANALYZE — STRATEGIZE
Maurer Consulting Group
812 Westridge Road | Akron, Ohio 44333
PH: 330.666.0802 | email: tlmaurer@maurerconsultinggroup.com | https://www.maurerconsultinggroup.com
