Do you feel like you’re letting your clients take more from you than is genuinely fair payment? What does your pricing say about your brand?
Where you position your brand on the pricing scale can have long-term consequences on your marketing, on how you approach your different target audiences and on how you talk about your business.
Whatever the business reasons behind it, a radical change in where you have placed yourself along that scale can be damaging to your brand’s credibility unless it’s handled with care.
For those of us starting out in business, or introducing new aspects to our offer, ensuring that pricing doesn’t damage our brand is a real challenge.
Working out how much to estimate for any project was always the hardest part of being an account manager in a creative agency and now, working out where to set my own fees for my clients, it certainly hasn’t got any easier.
Set my pricing too high and I count myself out of contention. Set my prices too low and I’m not only underselling myself but also undervaluing the expertise of all of us who offer similar expertise and services.
A few years ago, I think at the beginning of the GFC, I listened to a client bemoaning the actions of a competitor who had completely revised their fee structure to be about 60 percent of their industry norm. As a consultant, his services were, on paper, very similar to my client’s and his credentials were pretty much comparable.
The competitor did well from the change in the early days, but the tactic wasn’t without issues. Although he did not operate in a way where he cut corners, the cheaper pricing made his clients worry that, when a project didn’t go 100 percent perfectly, perhaps he had actually cut corners. He also found it harder to secure high calibre contracts as the pricing created a perception that he may not have the capabilities needed.
But not everyone who looks into buying your products or commissions your work is able to make experienced judgements. If your client has never purchased the products or services you offer before, it can be hard for both sides to know what’s fair and reasonable.
I recall shopping in the local Big Fresh in Johnsonville when I first came to live in New Zealand. There was a smattering of familiar brands I recognised from the UK but, with many that were new to me, I had to re-train myself in the noble art of grocery shopping. So, I made a conscious decision to start at the cheapest and work my way up until I found the one I liked.
I started off being relatively brand agnostic but, like many of us, I soon developed a pattern of favourites and go-to brands that won my trust.
The same was true with things like clothing, household goods and homewares. At first, all I had to go on was price and the way the brands presented themselves to me in store, barely influenced by advertising or experience. Looking back, I can’t quite decide whether to reconcile those experiences as confusing or liberating, but I’m thinking it was probably the latter.
There are plenty of us that appreciate a good deal. But the impact of taking a risk on a bargain basement product or service varies depending not only on your personal finances, but the wider consequences of making a costly mistake. If we buy cheap items prepared for the fact they may not last as long as their more expensive alternatives, we’re fine with that. But if a product fails to live up to the expectations it set for itself, the likelihood of us engaging further with that brand are diminished.
In the retail arena, continuous offers are now the norm. When did you last walk through a mall and not see at least half a dozen sale signs?
Discounting is not necessarily inevitable in all sectors but it feels like you have to be pretty strong willed not to give in to the temptation.
For those of us who charge for our time, do you discount to win a new client? Or reward them later down the line for their loyalty? Or never at all, because that’s the cost, take it or leave it.
I suspect there is no silver bullet to resolve this issue and it will be a perpetual dilemma. But at least we’re all in the same boat, hoping we never have to sell part of ourselves to seal a deal and that fair play will always win out.