Think Like a Business Owner

John Tabita

In my recent article, If Your Client Says Your Price is Too High, He’s Right, I made the case that, if you don’t understand value from the client’s perspective, you’ll never figure out why the client thinks your price is too high or what to do about it.

I also contrasted the two very different types of people who decide to go into business for themselves—The Entrepreneur and The Technician—and said that The Technical starts out by looking at his skills and abilities and asks himself, “How can I sell this?”

But that’s completely backwards. Here’s what sales guru Jeffrey Gitomer says about why people buy:

It never ceases to amaze me that companies will spend thousands of hours and millions of dollars teaching people “how to sell,” and not one minute of ten dollars on “why they buy.” And “why they buy” is all that matters.

Why clients buy and why they pay your price boils down to one vague, hard-to-define concept called value. And while “value” may be difficult to grasp, this much is certain. Value’s not something you establish by talking about how long it takes to build a site. The client cares about hisbottom line, not yours. Establishing value means addressing what matters to him or her, not what matters to you.

Figuring that out means getting inside your client’s head. Here’s where those of us who are technically-minded struggle. You need to think like your customer. And since your customer is a business person, you need to think like a business person thinks.

Thinking like a business person is more that just understanding their buying motives. It’s understanding what type of people they are, and what their struggles and concerns are. Steve Jobs once said that “marketing is about values.” So understanding what your client values is the key to “providing value.”

Freedom and Independence

Business owners want control of their financial destiny. No one goes into business for themselves unless they think they can make as much, if not more, than working for someone else.

For most business owners, money is a driving factor, but it’s not “all about the money.” Many people go into business for the freedom it provides or will provide, such as being able to retire early. For others, it’s knowing that their income is not dependent upon a job or a boss that could fire them at a moment’s notice.

The Need to Succeed

Business owners care that their business succeeds, not only because of their personal aspirations. Many people start a business because they saw a need and became passionate about filling that need.

With the need for success comes a certain amount of competitiveness. Winning or beating the competition is often an underlying motivation in much of what the typical business owner does.

Learn to think like a business owner. Talk to ones you meet to gain insight on what makes them tick. Because, as Angelos of Prickly Pear Media so nicely put it, “We have to put ourselves in the client’s shoes, and if we cannot think like they think, we will ultimately fail in selling what we want.”

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  • Boabramah Ernest

    Sometime the mentality here is crazy, the client know the big guys will charge a hefty price and will avoid them. But when they are dealing with a freelancer like me, even if the price is far below the big guys, they will still say my price is too high. That, sometimes make me go crazy. How do you deal with a customer who says, I do not have the money you are charging, I will pay you less but I want a quality work.

  • http://healthinfo.co Health

    he’s right, I became a businessman is not easy, I had to look for capital in order to make a greater effort in order also to provide future jobs.

  • http://code.ikreator.com Neal

    John, I’m glad you keep talking about this. This is helping me. Great advice.

  • http://raym31.home.comcast.net Ray

    ‘Value’, as perceived by the client, is a trickier subject that explained here, so I have to disagree. It is ALWAYS a good idea to start by value selling: ‘this work will deliver these BENEFITS (not features) to you… as such this price is a bargain.’ But really that hardly ever happens because clients approach you, and in that approach they come with a preset ‘frame of mind’

    1. If, as mentioned in this article, the client is seeking ‘value’ then the clients would seek the BEST work based on portfolio/technical merit and not price. Thus big (presumably better) agencies would win out over freelances 99.999% of the time.

    2. If a technical approach to figuring price is supposed to be avoided, then by that logic a freelancer could start by charging as much as a full agency if his/her portfolio was comparable. This is especially germane if you were to, say, have been the big shot designer AT an agency who is now starting out on your own ( so essentially the agency’s portfolio (or pat of it) is your portfolio. Since that WAS your work, you would be providing the same value as the agency thus command the same price.

    But the truth is clients that approach freelances are PREJUDICED based on the fact that they EXPECT you not to have as high an overhead cost, and that you will pass those savings along to them. In effect, they presuppose the freelances bottom line for him or her. That’s not all… have you had a client that’s begins talks by saying.. ‘this should only take you a couple of hours?” The client, in many cases not a tech person, has made the judgment of the amount of time a certain technical labour should take… once more estimating finances value of the freelancer.

    3. Just for fun. Read WANT ADs for tech jobs ( say: graphic designer) vs biz jobs ( say: Sales Associate) . 11/12 Tech jobs will say things along the line of ” Team/ independent/ create/build/ explore” ( and make little or no mention of pay) while the Sales Assoc ad will have (Make money/ Earning potential/Salary figures/driven/motivated) and make vague or no reference as to what is being sold. There is a notion in society that sales folks are a *$$holes, and will not do anything unless the proverbial monetary carrot is dangled in front of them ( and consequently they are paid for even mediocre performances cause…c’est la vie) , while techies just ‘love’ to create and that in itself is their reward and consequently they receive lower pay for even stellar accomplishments (under the excuse that they should understand about the clients bottom line). You have a bottom line too. This is THE FIRST THING that need to be addressed when doing business (from a tech point of view). YOU ARE PASSIONATE ABOUT TECH, BUT CASH MOTIVATED. After that your work should speak for itself.

    If, after that, you chose to offer lower qual. for proportionally lower cost so as to fit the clients ‘budget’ ( tho I generally rather pass on the client than do this.. not because of the money , but because it may become the mode/level of work you are associated with and then you clients come to you to give them THAT lower level of quality.. while clients that desire your top level never consider you.)

    Taking a ‘technical outline’ to price figuring allows for an answer wen the client.. that already has a prejudged idea ask “WHY wont you do it for a nickel , like I want you to”

    Then there is relationships. Clients will put up with mediocre work from someone they ‘feel’ for or are comfortable with. Bedside manner can make a big difference. Sadly many technical people are not socially adroit.

  • http://www.mclanka.com Supun

    It is not easy,I think so many businessmen haven’t Freedom and Independence to get direct decisions,

  • http://topaffiliatemarketingmodels.com/ daledupree

    great post it gives me something else to consider, i know companies that charge $500.00 dollars per hour, for doing what I do for 60.00 per hour but at times I am being told my prices are to high.. I was just ask yesterday, if I would be willing to do it for $15.00 per hour.

  • http://www.authenticstyle.co.uk Will

    Great advice here. I could certainly do this more and I think I’d get better results from it.

  • http://bangwebworks.com Web Design Concord NC

    Boabramah, I have experienced that as well. What I have found is that is a warning sign and I will bow out of working with that customer. If a customer doesn’t value my time and experience and the benefits for them that I bring, they won’t ever be happy. Even if you lower your price to try and make a deal, they will still feel they paid too much. You’re going to half-ass the work so they don’t get the full benefit of your expertise and in the end they can look and say “see you did a substandard job”. If after I work with the customer to help them understand the value to them of good web design and seo (both go hand-and-hand – they are not separate projects to me) they still don’t want to pay a fair price. I will politely and professionally explain to them that our companies are not a match and I wish them the best of luck in finding someone who will give them a good site for the price they are willing to pay. A few times after doing this I’ve actually had the customer call me back to their office and give me the work for my bid because they saw me walk away. They talked to other companies who would work in their price range and they could tell there was a difference in experience, customer care, and quality and decided that the difference in price was worth it in the end. Best regards, Steve

  • http://www.maxilista.com Johny

    Great comment Ray! I am really new in all this. I think i am starting to GET IT only now… Cheers