#TuesdayTips

Pricing – Value – Money … this is always one of the hardest things to determine.  How do you set a value on your service?  Most of my life as an employee there wasn’t much room for negotiation.  In corporate sales, I was always paid a decent base salary plus commission that were pretty much set by the company I worked for.  In one position, I was paid a very generous salary and achieved a great deal more than the target outcome, but then my employer decided I was too expensive.

In my own business, I come across people who will debate the price, then experience the value and tell me I’m worth more.  I come across other people who  walk away as soon as they hear the price – and never even think about the value.  I know I’m not alone in this, because just about every business owner I talk to faces the same struggle.

Mindset is important because business is 80% psychology and only 20% strategy.  Most of the business owners I work with have their strategy pretty well under control, but the psychology is where they get bogged down.  I hear a lot of people saying things like, ‘I’m just not sure that I’m worth what it is that I’m asking,’ or ‘I always feel the need to discount,’ or ‘I feel the need to actually give more than I’ve agreed to’.  Others use statements like, ‘I don’t know how to sell my product – I’m really good at telling them about it, but when it comes to asking for the money, I really struggle with that’.

The problem is not the product or service they deliver, it’s their understanding of the value they bring to the table.  Mastering the mind-set of the confident closer gets rid of that procrastination, get rid of that overwhelm, and gets rid of that doubt about your value so you project confidence – and are received with confidence.

Your Perception IS the Reality You Project

When you present your business it’s really like a performance –  and the purpose of a performance is to influence the audience and move them.  The thing is that we don’t think about business presentations that way, we think about them as a means to an end, or more income, or reaching a target.   You know, I’ve got this appointment today, I’m meeting this person and I’ll try to convince them to buy.   We don’t usually see it as reaching out to influence people and they pick that up.

You see, the vital fact that you need to understand is that perception is projection. You may have heard that before, but I want you to really slow down and think about it.  Perception is projection. … But you are unable to perceive behaviour in someone else if you are not capable of it yourself. 

You’ll have heard the comment that when you point your finger at someone and call them names, there are three fingers pointing back at yourself.  That’s because the faults we’re most aware of in others are the ones we are prone to, and it’s often the reason why parents are so hard on their kids – they’re projecting their own traits and so they’re hyper-sensitive to them in others.

What About Josie?

Remember Josie, the hairdresser I wrote about the other day [Link to Part 1] – she had fallen into the vicious cycle of discounting her services to attract clients.  The problem was that this meant that she needed to see more clients to make the same money and every time she did this her perception of the value of her service plunged lower.  I could see that before long Josie would have discounted her Salon out of existence.

I have to admit that I staged a scene to help her understand the value of her work.  You see, Josie really was a great hairdresser, and she ran a great Salon but she was seeing her work as something people chose because of price.  I sent a friend in who really needed to see a great hairdresser who would help her find a hairstyle that looked great and fit her lifestyle.  I knew that Josie could help her, and I asked this friend to be really enthusiastic and pay more than she was asked IF (and only if) she was genuinely happy with the outcome.

Well, Sarah was delighted with her appearance once Josie had finished with her hair and shown her how to style it easily.  She raved about Josie’s efforts, she admired herself in the mirror, and when Josie told her how much the service cost Sarah was (genuinely) outraged.  “You can’t charge that little!  It’s impossible!” she said.  “You’re an artist and you should charge like one.”  Sarah paid twice the price that Josie asked and as she walked out, she told a client who was just walking in, “I have just had the amazing service and the best value haircut I’ve ever imagined!” – and she meant it.

What Happened Next?

We’d already worked out what Josie needed to charge in our coaching sessions.  The problem was that Josie was convinced that no-one would pay that much.  Sarah’s comment gave Josie the courage to quote the price we’d agreed on to the client who had walked in as Sarah left.  Her response gave her the courage to do it again … and again … and it wasn’t long before she really did discover the joy of owning a business.

The point of telling this story is simply that Josie is like many business owners – they can’t charge the prices they need to, because they don’t value themselves as they ought and Perception IS Projection!

Meta Description: Pricing-Value-Money – how your understanding of these can lead to success or failure and how they can turn your business around.

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By popular demand we have turned many of our multi-day workshops into multi-week online courses with a live day to kick them off. Learn more at https://businessgrowth.mykajabi.com/masteryoursales

#TuesdayTips

It’s a pretty consistent fact around the world that approximately 50% of small businesses fail within the first two years of operation and only about 8% of them make it to 10 years.  Michael Gerber discusses the reasons for this at length in “The E-Myth Revisited”, but I’d like to discuss it briefly here and tell you a story to illustrate it.

Are You A Technician?

A lot of small businesses are started by ‘technicians’ who are very good at what they do, and angered when they think that their employer doesn’t value them enough.  The accountant who leaves a big firm to start his own practice because he knows he’s being charged at $180 per hour, but only receiving $90, the chiropractor or physiotherapist who knows what each patient is being charged, but only receives a percentage of that fee, or my friend Josie, who is a hairdresser.

Josie worked in Angie’s Salon and she was paid $15 an hour.  At the end of every week Josie saw that her income is far less than the total takings that Angie has in revenue.  She worked out what each client paid for her services and compared that with her weekly wage and said to herself, “How come Angie gets paid this much and I’m only getting $15 an hour and I work much harder than her.  I’m a much better hairdresser than she is and I see more clients!” 

After a while Josie decided to start her own Salon. She knew that she is a really great hairdresser, in fact, she loves hairdressing so much she told herself that this would not be work!  She worked really hard, put in long hours (all that administration as well as hairdressing!) and to encourage people to come in she started discounting her services. Josie was now working much harder now than when she was employed by Angie.  When we sat down together and looked at Josie’s numbers in a Business Coaching session, we worked out that her new pay rate as a business owner was $1.20 an hour.

You see, what Josie didn’t understand were all the other tasks that Angie did behind the scenes.  Things like rent, utility bills, doing the payroll, looking at how she’s actually going to get business walking in through the door, (Angie’s clients didn’t just show up with their money on the day she opened the Salon!), and managing stock levels.  Josie only saw the big picture with all the zeros at the end of the week’s takings, she didn’t even consider the rest of the picture.

In this classic example of the standard Small Business Owner Josie went from scoffing over $15 per hour as an employee to buying herself a very stressful job for the bargain price of $1.20 per hour!  Wasn’t that a great move?

Josie was down – but she was not out!  She had signed up for a 2-day Confident Closing workshop that I ran because she was determined not to go back to being an employee.  She was going to make this work!

We started by laying out all the bad news … the tasks she had to do, the bills she had to pay, etc – and then the good news … the clients she already had, the staff she had working for her and so on.  The picture was pretty ugly, but with all the facts in front of her, Josie could see clearly why she was feeling so stressed and she could make a plan to get out of it.

Find out what happened next … Part 2

Meta Description: What many small businesses owners don’t consider before they start their business and how this leads to despair and failure.

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By popular demand we have turned many of our multi-day workshops into multi-week online courses with a live day to kick them off. Learn more at https://businessgrowth.mykajabi.com/masteryoursales

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