Power Pricing - Getting the Right Price for Your Products and Services

There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it. Finally, they decided that the only one who could solve the problem was a long-retired worker who knew the system inside and out. He came out to the power plant, looked around, picked up a hammer and tapped one of the generators.

Suddenly, lights came on all through the area. Overwhelmed with relief that the problem was solved, they asked how much they owed him. "$20,000," he replied. $20,000? For tapping with a hammer? "Well," he said, "tapping with the hammer is $10. Knowing where to tap is worth $19,990."

There are a couple of lessons to be learned from the joke. First of all, the value is higher when the problem still exists than after it has been solved. After all, if told he could restore the power for $20,000, officials would have written him the check immediately, without question. Afterward, the problem wasn't so urgent--it was solved. Quote your price and get agreement while the customer still feels the urgency (and the pain that you will remove). That's when the value is highest to them. Your agreement can include conditions and guarantees, such as the results you will obtain, and deadlines, if they want assurances about results.

Maintain a little mystery. If they hadn't known that all he did was tap with a hammer, his services would have seemed more valuable. After all, they got the result they valued--the power was restored. Focus on the results, not exactly what methodology will be used. Don't let customers look behind the curtain. (Remember the Wizard of Oz?)

If you are the only one who provides a particular product or service, or you have skills or training no one else does, the value of what you offer goes up. Highlight your exclusive set of training, education and experience. Use unique language to describe what you do. You can also create an aura of exclusivity by screening clients, and only accepting those who meet your criteria. This can work if you have a reputation already, but it can also help build your reputation, if you've got the guts to try it!

Consider what your clients are used to paying, and charge at least that much. If your clients are used to paying $100 an hour, and you come in at $50, you probably won't get the job. On the other hand, if you can show that you are worth $150, you may be able to charge more than the going rate.

Another way to get an hourly rate higher than others is to charge by the project, rather than the hour. For example, maybe you charge $150 instead of $100 an hour, but you get the job done in fewer hours. Get the client to look at total cost, rather than hourly rates. Once again, get them focused on results.

This issue comes up all the time in my publishing classes, where I remind students that they are not selling paper. They are selling the information printed on the paper--information that will improve the lives of the people who use it. Paper is cheap. Useful information isn't.

Keep in mind that the value of your product or service is related to the benefits your customers receive, and how they value those benefits. Present what you sell as solutions to problems, and you can charge premium prices for your excellent products and services.

Copyright Cathy Stucker. As the Idea Lady, Cathy Stucker can help you attract customers and make yourself famous with inexpensive and free marketing ideas. Get free tips, articles and more at http://www.IdeaLady.com/.

In The News:

Pelosi's hostage negotiation  Daily Journal Online
9 Tactics for Better Remote Negotiations  Harvard Business Review
The Art of Negotiation  Harvard Business Review
How to negotiate smartly  Deccan Herald
Principled Negotiation: Art of Conflict Management  Construction Week Online India

Managing the Sales Negotiation Process

How many times have you heard:"You've got to drop your... Read More

Just Ask!

Ask and you shall receive & knock and it shall... Read More

7 Tips for Bartering Products and Services

What better way to gain a new customer than by... Read More

Negotiating Tactics: How To Strike A Negotiable Opening Shot

There is no right or wrong to fire up your... Read More

Negotiating Technology Contracts

Have you ever tried to negotiate a deal for software,... Read More

How Barter Can Help Your Business Online or Offline

How Barter Can Help Your BusinessBarter trade is a powerful... Read More

The Art of Haggling

Did you know that at one time in this country... Read More

Negotiating Tactics: Don?t Let ?Good Guy ? Bad Guy? Control the Sales Negotiation

Counter one of the classic negotiating gambits by addressing it... Read More

Resolve Conflict In 6 Easy Steps - The BEDROL Method

The principles of Negotiation can work for you in any... Read More

Negotiating: Forcing vs Compromising

Forcing is a hard-nosed approach that makes heavy demands from... Read More

Negotiate to Your Advantage

The hardest and most important part of any negotiation is... Read More

Guidelines for Ambassador Appointments

Ambassadors to other countries are a vital part of international... Read More

Negotiate Your Way to a Better Salary

1. Be persuasive: It's hard to force your boss to... Read More

Neogtiation: How to be Right Without Making Other People Wrong

What exactly are we trying to accomplish by proving to... Read More

Barter and Its Benefits

What is Barter? Barter involves 2 parties. Each party wants... Read More

The Ultimate Truth in Persuasion

OK, so you want to improve your persuasion power right?Why?... Read More

Negotiating Skills: Ask For More Than You Expect To Get

It creates some negotiating room, and you might just get... Read More

How to Negotiate Effectively

You may be thinking, "Gary, I am a mom, housewife,... Read More

The Art of Negotiation in 535 words

I want to get better at negotiation, but where to... Read More

Dont Be Afraid Of Silence

In any conversation with two or more people, there is... Read More

Do You Want a Paycheck or a Passion? 10 Qualities Managers are Looking for in Hiring You

Based upon my research of over 300 managers in the... Read More

30 Tips for Keeping Meeting Expenses to a Minimum

Money makes the world go 'round. And when it comes... Read More

So Whats Your Argument?

Arguments aren't always bad things. Sometimes They're used to convince... Read More

Can a Corporate Executive Really Use The Beautiful Mind; To guide decision making?

I would like to comment on the "A Beautiful Mind"... Read More

Suppliers as Your Partners in Cost Reduction

This article is one of the many articles still to... Read More