PART 4 OF OUR PROGRAMME FOR PROFITABLE GROWTH

Set your prices at the right point

This week we talk about pricing and I am going to give you a number of ideas about how to arrive at the best price and avoid leaving money on the table. 
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Nine times out of ten a dissatisfied client will cite “price” as being the reason for their dissatisfaction but this rarely turns out to be the case. Lack of communication is the number one reason for dissatisfied clients and frequently lack of communication on costs. So the first tip is to keep the client informed about progress and about costs – clients don’t like surprises any more than we do.

So, how do you go about setting a price for a piece of work? Easy, you estimate the hours to do the work the client needs and then apply the charge rate (the one you set at the start of the year) and bingo you have a price. OK but no one ever pays full charge rate so you knock a bit off. Sound familiar?​

There are a number of drawbacks to this approach:

• The price arrived at using this calculation does not take any account of the value of the matter to the client
• Partners tend to view this as the top price from which they discount down 
• It does not recognise your innovation, creativity or ingenuity
• It does not align reward to results
• It places all the risk on the client and 
• iIt also limits your income potential!

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