Comments on: Answer to case study: How to answer a classic objection to value pricing

By: jak675

jak675 — Wed, 31 Dec 1969 19:00:00 +0000

I can appreciate the answer. It is short and to the point. But doesn’t put a slight guilt trip on the person posing the question? If the client was trully focused on this project, then ‘other’ things would be irrelevant.

-Joe

By: MarkB

MarkB — Wed, 31 Dec 1969 19:00:00 +0000

Yes, I’m not sure if his answer is really THAT elegant.

“Wouldn’t you rather get the result using as little of your time as possible?”

Sure, and I’d rather not pay $100k for it, either. ;)

But I appreciate the approach, and understand how it works. Similar ‘value over volume’ approaches have worked for me in the past.

By: bbolte

bbolte — Wed, 31 Dec 1969 19:00:00 +0000

I’m not sure that answer would clinch it for me either. It’s an obvious answer to the objection, but still sounds slightly dubious. But then, I’m highly suspicous of nearly everything.

By: Anonymous

Anonymous — Wed, 31 Dec 1969 19:00:00 +0000

The answer is witty, but doesn’t really answer the question. The question is more or less “Why are you worth $100k?” The answer is “Because paying me $100k will make you $1M.” Or whatever other value proposition you offer. Entrepreneurs think dollars and cents (sense). Being witty with them will only work on those of them who can appreciate it. The rest will think you’re being condescending and will probably fire you on the spot. Unless you’re a world-renowned consultant, I don’t suggest using this approach.

By: transio

transio — Wed, 31 Dec 1969 19:00:00 +0000

By: LetterJ

LetterJ — Wed, 31 Dec 1969 19:00:00 +0000

Part of my “needs analysis” that I do when first talking to a client is to find out the average transaction. If possible, I find out how many customers per day they usually serve, etc. This lets me ask questions like, “If my services can bring you just 3 more customers per day (which results in $x), would my services be worth the price I’m asking?” Oftentimes, $x is a fraction of what I’m charging.

The question needs to be tailored to the client, but oftentimes, asking a couple of questions early on can give you the information to create these types of questions.

Another example. If a business gets phone calls asking for directions to their location or for basic information like, “Do you carry product y?” and gets 15 of those calls per day and pays the person answering those calls $12/hr, you can figure out what reducing those calls will save the client.

If you’re doing value based pricing, you need to state the benefits in terms of the value as well. That’s part of doing value based pricing.

By: NZ Joe

NZ Joe — Wed, 31 Dec 1969 19:00:00 +0000

It doesn't actually answer the real objection. In this situation I think the real objection is that the buyer doesn't believe that they will receive $100k value in those few hours. His handling of it does little to convince the buyer they will realise this value IMHO.

By: EvilDog

EvilDog — Wed, 31 Dec 1969 19:00:00 +0000

I am sure that the consultant is very proud of what he is getting paid and his snappy reply more than shows the extent of his ego. I believe that the recipient of his services would do well to do a bit of research before plunking down that sum of money for so little time spent.

Unfortunately, people are sold on the idea that if it is expensive, it has to have value associated with it. Would you pay a barber $600 to cut your hair? Obviously not, because you know that you can find the same service for about $10 most anywhere. Yet there is a barber (not hair stylist, mind you) in Beverly Hills who charges $600 for a simple haircut. I am not making this up, this guy claims to be the hair cutter for the stars in Hollywood and charges this outrageous fee. Incredibly this guy actually stays busy charging this rate. Personally, I don't give a rat's ass whose hair this guy cuts, he is not going to bilk me out of $600 for a lousy haircut. It is only common sense.

Now my point here is that most of society, at one level or another, is incapable of making an educated decision about how to spend their dollars. Hence the effectiveness of advertising and why so many people feel the "need" to drive expensive SUV's and to keep up with the Jones's.

Automatically equating high prices with value is nonsense. In truth, most people are just to lazy to take the initiative to do a little homework and extract true value from their money spent.

You can expend all your energy arguing over how much that consultant's work is worth by how much money he saves his client. If this is true, then why doesn't he offer the client to work on a commission basis, say 10% of money saved (or earned) for the client as a result of his work AND be willing to pay out of his own pocket should his advice fails to produce results. Betcha he never offered that for anyone! Wonder why . . . :)

By: aneitlich

aneitlich — Wed, 31 Dec 1969 19:00:00 +0000

EvilDog,

Would you rather be right or successful?

By: Joseph

Joseph — Wed, 31 Dec 1969 19:00:00 +0000

If the consultant could give the advise that only he would know and no one else knows, that’s one reason. The other thing is, maybe also that because he’s a world-renowned consultant, it will somehow boost the company’s image for hiring him, maybe intimidate other competitors.