The Issue With Billing For Value or Charging What Your Worth

4 replies
"Billing for value" or "Charging what your worth" is being heavily pitched.
I keep seeing this and you likely do as well.

It is really being hammered by everyone selling coaching.
It is also being given as advice by some that feel bad for guys and gals
that undervalue themselves..

Is this a bad thing? Not really...
Much of it is well meaning
but how it is being interpreted and implemented is causing heartache for many.
Mostly because they are ignoring reality and misunderstanding a few things.

Let me use an absurd example to drive the point home.

My cell phone company charges me $55 a month for my plan.
With this plan what can I do?

- I could call 911 if someone was trying to kill me...
- I could receive a call from my children if they were in distress...
- I could call a tow truck if I was stranded on a cold lonely highway...

Under those circumstances my phone plan has enormous value.
Should my cell phone company then bill me for value?
What is having your life saved calling 911 worth?
Should I send the cell phone company a check for 10k this month?

Imagine a sales rep on the phone with me saying
"Peter, what is being able to call 911 worth to you?"
and trying to justify price on that?

So what's my point?
It is that you cannot ignore market reality.
Basing your sales pitch on unending questions about "what would it be worth to you if..."
is not the best use of your time without some other things being considered.

Not only is it not the best use of your time it will only get less effective as time passes.
Thanks to all the coaching courses teaching this pitch of "what would it be worth to you if..."
there are very few business owners that have not heard it twice this week.
In automated webinars it is one of the highest points of people bailing out...

Am I saying you cannot bill for value? Yes you can
that value is NOT what YOU place on it
it is what the prospect places on it...
It does not matter if a service will make someone 10,000 dollars net.
It matters what value the prospect places on making 10,000 net
and what he is willing to give up to do it.
Maybe his wife has cancer and he would value free time over more business.

Given these facts what is your best course of action to get higher prices?

Narrow your pitch to people who place high value on the outcome of your offer..
You have heard this expressed in different ways but maybe it did not click.

Things like "previous buying habits dictate future buying habits" are very true
because they provide an indication into what someone values.
It's not 100 percent accurate since peoples live change but it helps.

For example:

A guy that regularly drops 10k on coaching is doing it
because he values it for some reason.
It might not even be based on results or why you think he values it.
He may just like to brag to his friends about how he just attended that expensive course in Vegas...

In short, you cannot ignore market reality nor will any prospect assign value to your offer based on what you think of it.

Also the same prospect that sees no value in your offer today might do
anything to have it tomorrow based on his circumstances.


When I say you cannot ignore market reality I do NOT mean that if you see hundreds of providers selling web sites for $100 that you should sell them for $100 BECAUSE the market reality is that most real businesses spend much much more on a web site.

The market reality is most low-ball offers you see actually do not sell any better than mid to high end offers, you just see them more. Real businesses have no issue spending decent sums on coaching, products and services.
#billing #charging #issue #worth
  • Profile picture of the author treka
    I think there are a lot of factors involved in pricing and as a profession we do often undervalue ourselves (personally I find I do it because I know how easy a service is or how little time it will take me).

    Pricing is always hard. You cant charge too little because you do to a certain extend undermine your credibility. If somethings too cheap you worry about its quality.

    On the other hand some businesses just don't have the spare cash or don't see the kind of return required to justify a high priced service.

    I try to tailor my pricing to each customer. It depends on their city, their industry, and how long I'm spending on a service (my time is still worth something).

    At the end of the day you need to be bringing in a positive ROI for your customer. If you're not you're not doing your job and it's not fair to your customer. Price based on a fair ROI.
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  • Profile picture of the author Claude Whitacre
    In the past, my pricing for selling has always been a matter of testing at different prices. I was self employed and could sell at any price I liked.

    First example, I was selling (maybe 1976) a vacuum cleaner selling door to door. Everyone else was selling it at $449. I started raising my price to see where the sweet spot was. First I raised it to $499...ten $599...then $699...then $799. My sales dropped off dramatically at $799. So I knew that $699 was the most profitable price to sell at.

    A couple decades later, another vacuum cleaner price test. Everyone in the US was selling it at $999. I sold at that price for a month, to get a base line closing percentage. I raised the price to $1,295...then $1,499...then $1,799. The $1,799 price killed sales. I went from closing 41% (cold calling) to less than 15%. This was maybe 1995 or so.

    Selling my local online marketing service, I was selling at $3,999 for a couple years with no price resistance. That seemed wrong. I should get an occasional person rebel at the cost. So I raised the price to $5,999. There was no drop off in sales. The only reason I haven't raised the price again is that I simply think it's a fair price for what they get.

    If you can afford the time to test, the customers will let you know the ideal price to sell at, because eventually it will cause them to not buy. Then just back it up a bit to the last price where they were still buying.

    I'm pretty sure I could add a "expanded gold service" with a few extra bells and whistles and sell t for $9,999. But I feel good about the price as it is.

    Possibly the worst way to price your services is by marking up above your cost. Your cost isn't a factor. You aren't going to be talking about your costs with the client, so they don't matter. It's what the people are getting, and how much they feel that's worth. Usually we arrive at that value based on something similar, like Yellow Pages advertising...or a new employee hired to do what I do.
    One Call Closing book

    What if they're not stars? What if they are holes poked in the top of a container so we can breath?
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  • Profile picture of the author ewenmack
    Found this wall art matching what you said...

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  • Profile picture of the author misterme
    Thing about value is the value has to be worth more to the buyer than the selling price. And the reason I say that is because... let's say you're selling something for $100. Well, then, that competes with anything and everything else the buyer can buy with that $100. So you could say there's competition for that $100 all around you.

    That being the case, the consumer looks to put the money where they can get more out of their $100. That includes the value of keeping it right where it is in their pocket. So if your value proposition is worth more to them than what that $100 can buy elsewhere and worth more than keeping it in their pocket, then you can become their top choice for where they'll spend it.
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