In business the question of pricing is always central to day to day operations in one form or another!
In the case of title insurance where premiums do not vary from one company to another there are other fees involved in the transaction that do. The business decision on how to price those fees is one way that Hallmark Abstract can differentiate ourselves from other firms.
In other industries where price can vary and perhaps bids have to be placed in order to win business this question of pricing will run central to the day-to-day decision making.
The following article was written by Adrian Miller who ‘is a Business Growth Architect, sales consultant, trainer, author, avid traveler blogger, columnist, hockey mom, amateur photographer, theater lover, movie goer and networker extraordinaire.
She launched her sales consulting business 26 years ago and since then has worked in pretty much every industry and with companies large and small.’
Effective pricing is a slippery slope. You fear that you are pricing too high and then the opposite, too low. Just like Little Red Riding Hood, we want it to be “just right” but it can often come out wrong.
- Will I lose the business because of my fees?
- What if they go with the competition because they charge less?
- I’ve lowered my price so much I wonder if I’m going to be able to make any money at all?
These questions and others just like it cause us to wrack our brains each and every time that we write a proposal or submit a quote and have to include a price!
It shouldn’t be that difficult! Now, I’m not some pricing guru (and I am certain that there are some out there) but there are a few things that I’ve done over these 27 years that have stood me in good measure. Perhaps you will find them helpful too:
- I know my competition’s “rack rate” and although I don’t know how and if they discount their prices, knowing their base price is often enough to help me establish a project budget.
- I truly understand the scope of effort that my project will require. There is nothing worse than charging a discounted price and then discovering just how much time and work the project will entail. (Ya gotta ask QUESTIONS before giving a price!)
- I understand and believe in my value. (That’s a BIG one.)
- I’m not afraid to walk away from a project if the prospect is simply not willing to pay for it.
- I am open to negotiation on price but that doesn’t mean simply caving in on their demands. They give a little, I give a little and we all come to a happy agreement on what is fair.
It’s not easy, it requires stamina but you can get it right. The simple fact is that if you don’t, you run the risk of having an unprofitable company and working yourself to death for very little.