Pricing is a Process, Not an Event

Source: The Rainmaker Academy

The following includes excerpts, reproduced with permission, from a blog entry by Glenn Hunter.

Conventional wisdom says: Withstand the urge to lower fees. Maintain price integrity. But this is not a hard-and-fast rule; rather, it needs to be observed in moderation. Progressive firms' leaders need to realize that from a marketing perspective, pricing is not an event, it's a process. Viewing pricing as an event, firms are encouraged to stand firm on fees. In practice, viewing pricing as a process, winning firms apply moderation to such rigidity.

Concede prices only when it makes sense for established clients and highly valued prospects. But, it is imperative that under no circumstances do firms stop marketing aggressively. A full sales pipeline is the best offense against fee pressure. Fundamental to strengthening a practice is acquiring clients with whom the practice wants to work. Clients fitting that description are often called “A” clients. Filling your client list with “A” clients yields more satisfying work and more interesting engagements.

Clients that beat you up on prices risk demoting themselves to “B” clients, “C” clients, and worse. The reason that you want a full pipeline is to have the option of firing “C” clients. Clients who undervalue the firm's contribution will question fees. Clients who recognize the firm's overall value contribution will march over the dying carcasses of inferior competitors to benefit from your expertise and superior service.

Price integrity is important. However, client selection is a higher priority. Recognize that a short-term, challenging environment may result in fee concessions. But, a long-term marketing process enables quality firms to communicate and demonstrate excellence in specific specialties. Clients who truly recognize the value will eventually be ready to pay for it.

For the complete blog entry, read “Absolute Price Integrity in Moderation.”

From The Rainmaker Academy, http://www.therainmakeracademy.com, December 30, 2010.