A friend of mine told me the title line the other day when we were discussing a business matter. He told me that since the economic recession, he always looks for a deal, no matter where he goes, or what he buys. He told me that he is always trying to get at least a 40% discount on whatever it is that he is buying.
I had lunch with the CEO of a large accounting firm the other day and he told me that his business has changed significantly in the past 3-4 years with many, if not all of his clients wanting a reduction in fees, a flat labor charge as contrasted to time and materials billing. The accounting CEO mentioned that many firms in the accounting space in which his firm practices have reduced their fees to retain clients. The CEO mentioned that he was not going to reduce fees, however, he was searching for new market areas in which to practice.
As I reflected upon what each of these individuals said, it became clear to me that all of us have become more aware and cognizant of price. However, price is only one component in the equation. VALUE is the key that most business owners should be searching for, irrespective of price. Why, you ask? Well, here is the answer. Value is the worth of the service or commodity that you are buying. The value to one individual is different than that of another. As a business owner, you must constantly be in tune with your customers and be sure that you understand what your clients view as your value proposition.
The Accounting CEO stated that he had lost some former clients who sought similiar services based upon price alone. He further stated that his clients had found other service providers which were cheaper monitarily, however, was he was unsure of the value they provided.
I have mentioned on this blog previously that our firm uses a local travel agent for all of our travel needs. Yes, we pay an additional fee for her services. However, her perceived value is worth the fee that we pay– after all, I am the one who writes the checks. In fact, at the end of the day, the travel agent is usually able to find me a better deal than what I can find on the web– be it time of departure, landings, hotel location, car size. That is worth money to me and our firm. Additionally, if something blows up in the middle of a client engagement, I have her to work the problem, not me or one of our consultants 5000 miles away from home.
As you consider the value proposition, consider what it is that you are providing to your clients. What is the real value that you provide? How do you know and how do you measure that?
I was in a restaurant the other day and visited with the owner. He had previously told me that he was raising his prices because of increased food costs. His new menu had increased food costs, however, on one particular breakfast entree, he also included the price of toast. This had previously been an additonal up charge if you wanted toast. I did not have a problem with this, because A. I like toast with breakfast and B. I did not like to be charged additional for toast. However, now that the toast is priced within the entree, I perceived additional value.
Think about these ideas as you work your value proposition to your clients. You may be amazed at the results!