Want to fail at pricing? Easy! Just apply the following logic:
– Understand that you are underpricing
– Charge a little more with each new client
– Once the price is set, lock it in forever. Inflation? Scope creep? Never heard of them!
That’s the poisonous pricing tactic I call “inching”, as it only increases the price a little at a time, inch by inch.
Here’s why it’s dangerous:
- It’s disconnected from the value you bring, so it leaves a lot of “money on the table”, especially as that value balloons.
- It’s unstable, so when the market changes you have no idea why the prices that worked so well are starting to be rejected. Usually, that’s where people slash prices and start the process of “inching” from the new level.
- It’s quietly destructive, so as your costs grow keeping the price at the same level “eats” into your profits until they go negative and you effectively start “paying” the client to work for them.
- It erodes reputations: clients hire specialists because they want to borrow their confidence. “Inching” is such a servile, limp approach to pricing that it makes us look less confident (and therefore less useful) than they thought we were. In turn, they slowly start to doubt our work as well.
Remember: The goal of your sales is not to get jobs, as in “something to do”. It’s to make profits while keeping the clients happy and coming back for more. Period.