Value Based Pricing Doesn't Mean 'Blindly Raise Your Prices'
One of the biggest misconceptions I deal with occurs when I discuss Value Based Pricing. Sometimes people believe I'm simply using the Value Based Pricing tag to really say 'Just Raise Your Damn Prices'.
As much as I believe a lot of agencies could raise their prices, that's not what I mean here - ask any of our Accelerator Members, they'll tell you that 9 times out of 10, I encourage them to keep their existing prices when we first start working together.
Value based pricing doesn't mean raise your prices, it means price based on the value of the project and not how long it takes... If you want to know more about this transition, you'll want to check out our Value Based Pricing Blueprint.
For today, I want to uncover the only pricing strategy you'll ever need...
So... Are you ready for it?
Here it is:
Price as high as you can, where your clients still feel they're getting a great deal.
To be completely clear about what this means:
The main objective is that your clients feel like they are getting an amazing deal. You should never go into a client relationship with the client feeling liken they've been stung or that they're not getting good value - this is the most important part of your price.
The second most important part of your price is that you're profitable!
And when you combine these two factors, you get the strategy...
Price as high as you can (this is the profitability part), where your clients still feel they're getting a great deal (this is the client value part).
Sounds simple simple... Because it is.
However, there's a key ingredient you'll need to do to increase the value that could be.
Educating Your Clients On The Value You Can Bring
Typically agencies are bad at this.
Often I'll find an agency owner who is frustrated that she can't truly get her clients to understand her true value. The truth is, frustration doesn't help...
Education starts with empathy.
We need to understand why our clients don't get the value we bring, and this starts from knowing what they currently think or know - this is a case of Ask, don't Tell.
Once we have a greater understanding of what our clients currently know or think about the value we can bring, the education can begin.
Our job as agencies isn't just delivering new things, it's also solving existing problems. Some of the best value we bring to our clients lies in spotting, and correcting problems that could have a hugely negative impact on the business in future.
One thing we often come across at World Products is clients that already have an Amazon Ads agency that appear (on the surface) to be doing well. The ROAS they achieve is OK and their ACOS (important Amazon Ads metric) is very low - all looks good. However, we know that this can be very damaging for the brand. It means the agency is optimising ad spend to make them look good, whilst leaving the brand vulnerable to attack from competitors - in a competitive category, the end result is losing market share.
We make sure we educate our clients on this aspect, which is why we consistently win clients that already have an amazon ads agency in place.
The point here is clients need educating... Here are some items to educate them on:
- What problems do they have that need solving?
- What results can you bring to the commercial performance?
- What other residual benefits can you bring to their business?
Educating Yourself On Your True Value
If you're reading the above questions are think - I have no idea what value we bring!
Then you need to educate yourself first.
I've written plenty about this in the past, and have summarised the best bits into this Blueprint here:
Also, if you want to know more... My friend Chloe Fox and I are doing a webinar on pricing tomorrow (Tuesday, 21st June) - you can register your place here:
Becoming An Authority Agency
For those of you that don't know me, I'm Oliver Duffy-Lee and I run a company called Authority Agency.
Our mission is simple, we want to help as many scale-up agencies to reach and win high quality international clients as we possibly can, whilst also helping the founders to get more time back in their life at the same time.
If that sounds like you, there are 3 ways we can help you immediately.
The OD-L Podcast
Every day I share my thoughts and insights I have from working in the agency world for over 10 years - each episode is always less than 10 minutes.
You can check that out here: https://open.spotify.com/show/4n7hdfxdRYMz0XAWd06JPQ
We also run a free Facebook Group and every week we put new training in there for all of our members.
Agency Growth Audit
If you want to move faster, you can book an Agency Growth Audit with one of our Scale Specialists. It's a super-quick, free call where we'll help outline what's slowing your growth and show you what's possible in the next 90 days.
I'm very happy to be here on your journey to building the agency of your dreams.
If you ever need any advice, send me a DM.
To your success,