In my experience, implementing value pricing requires a massive shift in mindset and approach by small business owners.

That said, it’s an opportunity to break free from the limitations of traditional pricing models – charging by the hour, for example, presenting your services differently and creating the opportunity to earn substantially more.

Here’s how to introduce value pricing effectively in your small business:

Know Your Value:
It’s imperative to understand how much your product or service makes a difference for your customers and be able to communicate and measure that change. Quite often, the focus is on what you do – your systems, process, methodology, and not how much better off the client will be after you have delivered your service.

Segment Your Clients:
Categorise your clients into segments based on how your services meet their needs, urgency, risk of inaction, readiness to pay, and ease with doing business with them.

Create Value-Based Packages:
Move away from charging by the hour (as it does not serve you or the client) and create packages that meet the needs and budgets of your different client groups.

Offer Choices:
This is crucial when submitting proposals. Present options of increasing value – a series of yeses, I call it. It’s much more effective than offering one fee.

Educate Clients:
Change takes time, as we are all creatures of habit and doing what is convenient. Communicate the benefits and illustrate how your other clients have valued the transition of moving to a value pricing model. Less stress of looking at the time used up and a greater focus on the end results.

Selling Conversation
I cannot emphasise the importance of developing good selling conversation skills – listening, asking questions, looking and observing cues. It’s the only way to determine their needs and wants.

The more you listen, the better your client or prospect feels understood, and if you can communicate the value you can add and the results they can achieve, your relationship can be better.

Price the customer and not the service:
No two clients are the same. The mistake frequently made is that during your conversations, you think you know what the client can afford and quite often make up your own stories of whether you feel they can afford your services or don’t have the money.

I’d encourage you to help your client to focus on the results you can provide working together – for instance – a future of greater clarity, working with a different client group, increased confidence or increased fees.

At the end of the day, your client understands the risk and priority more than you ever will. Price the client, ask for the business and allow them to decide.

Scope creep and change orders
Be clear about the boundaries before moving forward and performing the work, and if the scope changes have the conversation immediately. However, that may be easier said than done.

I recall speaking to a fabulous interior designer who was passively coerced to spend more time on one client’s project at the cost of her other clients; she was losing so much as it seemed like she was paying them to work for them.

Pricing by value is what any given client will pay for a particular service if explained correctly, but the biggest problem is often not the client’s resistance but the noise between our ears.

By following these steps for every client, your firm will be on its way to pricing on purpose that is profitable and feels congruent.