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fresh experiences on marketing topics for the B2B enterprises and more

Mind the tag! Setting the right price for your services & products

In over 10 years of working in an IT-related field I’ve seen major progress in company images, external and internal partnerships, even in the way companies promote themselves. A single chapter remains overlooked: the price!!!

Surprising how an aspect so important to a company’s market success – the price – is given so little attention in companies’ strategies and even in specialized literature.

A starting point…

There are many ways to set prices, but before we get to that, let’s see to a sensitive issue: which is the real cost? Did you evaluate it correctly and step by step? Do you keep an evidence of the costs of product development in your company? Do you know, for instance, what will be the impact of bringing a new man to the development team or of an updating of the technical infrastructure? These are sensitive subjects which you have to work on with your team in order to carefully monitor the costs at all times.

We have had the occasion to see countless examples of companies complaining of lack of profitability with certain products or services, when in fact the profitability problems were related to other areas of the business. The truth was that they weren’t correctly calculating the costs for each product, service or business field, thus the profitability evaluation being erroneous.

Work with numbers is, by definition, a field that belongs to engineers, and so, surprisingly, not exactly a hobby.

How can the price be determined?

Regardless of the way you calculate your prices (by the hour, the day, or for the project or product as a whole), once you know your costs you will be able to control them and have a effective tool on profitability.

Before you skip to the price, it would be useful to find out what’s the “going rate” in your line of business (see the article about benchmarking), how they form their costs and what “package” does the product come in, what are the sales fluctuations, etc. All of this vital information should one way or the other influence your own pricing strategy.

You company price policy should answer questions like:

  • Do you want to work at high price/rates or high quality? However tempting it might be to rush in and say quality, see what the cost for quality is, before going for it!
  • Which companies would you like as clients? To which ones can you sell at the target price?
  • What are the additional products or services you can sell in order to maximize the profit of an integrated solution?

A healthy contradiction

There’s a lot of “classical ”literature regarding pricing, so I will not insist on this in particular. But, as usual, I have a different view on price: unlike the classics I will not advice you to sell at the highest price, since I think a greater goal is to sell at the price that helps on maximizing profits.

However, in order to determine the price that will maximize the profit, I always suggest that we start with the highest reasonable oneJ. It’s much easier to lower the price than to try to increase it afterwards, in establishing a ling-term price strategy.

When the price works for business development

When it comes to pricing, we should have two ground rules in mind:

  • Never increase the price more than is “reasonable” and “justifiable” in the eyes of the client. This carries great impact on how you are able to convey value to your customer.
  • Sometimes a deal can be accepted at minimum level of profitability, in particular if we want to get a certain client. Make it worthwhile! If you sell low, make sure you get most out of working with the client (references, testimonials, case studies etc)

There are many applicable pricing strategies which respond to the needs of every business, including when it comes to promotion programs. I do not recommend them! The price is a tool that must be used with caution otherwise it might turn against us. We can use such strategies when there is so much competition in line of business that pricing remains the only “fighting tool”, but even in such cases I recommend that it is used with caution.

Presenting the price

The price is presented to the client in the form of the price proposal or the company’s overall proposal. The proposal’s format and the way you present it are very sensitive aspects.

The price must be easy to understand, easily perceived as a value, not a number written on paper, it must be justifiable in terms of the client’s needs and possible investments.

How do we increase the price?

The most frequent issue I’ve encountered it’s not how to increase the price, but how we give the client an extra discount. In reality, the increased performance is dictated by price increasing, not cost lowering and other restrictive measures.

And, most important, why do we have a problem with demanding a higher price? The main issue is value. We do not perceive or do not know exactly what the value we offer the client is. Though the understanding of the value we offer is an internal evaluation process, in a future post we will speak about different ways of increasing value. Before the next post, you might consider asking yourself: how much is your product or service really worth for a client?

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Filed under: b2b marketing, Best Practices, how to, Price, , , , , , , , , , , , , ,

The Power to make your Point or Successful Corporate Presentations

This marketing tip is different from the ones about strategic planning and focuses on minor actions, which can have great impact on marketing and sales. It refers to corpoate presentations, in particular the famous slide-shows or Power Points.

The client’s boredom and endurance test

If you ask clients to tell you what they think about company presentations they’ve seen, most of them will say more or less that they’re “a necessary evil”, a complete boredom, a step they have to take in order to get to the truly relevant discussions. Most of the times, these presentations do nothing more than bore the client with stories about the wonderful accomplishments of the furnishing company, their list of projects or abilities, preferably with as many technical phrases involved, etc..

Have you ever asked your clients what they think of your company presentation? Maybe it’s a good time to do it!

What’s the point?

In fact, what is the purpose of a company presentation? For the sake of that presentation’s success, have you set some goals as to what do you expect to accomplish with it before actually starting to create it or before exhibiting it in front of a client? To this question, we usually get an answer like:

  • To impress the client
  • Because we have to have one
  • Because everybody has one
  • Etc.

In all of these justifications, where does the “point” stand out? Isn’t the point our need to sell and win that client? Moreover, if we have to win that client, what is the need to which he wants a solution? Did you find out about the client’s needs before making him watch 30 slides or some demo on topics that might not be of any interest to him?

The 99.99% rule

99.99% of company presentations are boring and 99.99% identical to their competitor’s. 99.99% information the client can obtain from other sources as well. Think this is not a scientifically proved fact? Than which was the last company presentation to impress you?… point made.

What should be in it?

The client will tell you! So find out what is it that the client wants to know about your business. What will influence him in working with you in the future, what does he know about the type of solutions you provide and if he has a real need.

In conclusion, it should contain everything connected to the client and his needs and almost nothing about how big, good, successful or interesting your business is and so on. Many clients are likely to change their minds if the image of your company you provide for them is that of an organization too big, too diverse and with too many clients. They’ll start worrying about becoming one of the many, just another line in a PPT containing 100 names is not the kind of partnership they desire. They’ll leave happy that they’ve met with a successful organization and unhappy they haven’t found a communication and business partner in you.

Information on how the potential client’s market is evolving, his challenges and alternative solutions to his problems. This is the kind of information he seeks and the kind that will get his attention. Notice that it’s information regarding his company and business!

When size and shape matter! Advice in the form of numbers…

Though the content is important, the length of it and the shape it takes are also of vital importance.

  • No more than 15 slides, covers included
  • No more then 3-4 ideas on each slide, with a maximum of 3-5 words used to state each of them
  • As many diagrams as possible, illustrative and well organized
  • No more than 20 minutes for the whole presentation

There are even ideas and successful marketers who think you should not event have a PPT presentation but a video one, a more interactive approach… well, whatever suits your customer. Find out!

When are company presentations not necessary?

Before rushing to hand-over a company presentation to a prospect, ask yourself: is really necessary to do so?

Most of the times, the client has no use for it from the very beginning of your relationship, for instance to get the first meeting, but will use it as a justification for delaying an appointment or putting off a decision regarding a deal with your company. If a client asks you for a company presentation on the first encounter, without knowing you at all, it becomes clear that he wants a delay, and you’d better look into the real reasons for this request.

My advice is to never send a presentation until it’s very clear to you that your products or services deal with one of the client’s specific problems, which the client has expressed it as such and requested your presentation.

Do not send the presentation via e-mail unless you already know the potential client agreement, and especially if you don’t know which purpose is it going to serve. Always ask for feedback after this, requesting information that would help you improve the presentation onward. This is why “Did you like it?” is not an appropriate question in this case, but rather “Did you find it useful?” and “What useful information did you got out of it?” or “What have you learned about us from the company presentation?”.

The best advice: during the first meetings with the client, put the fact that you have a company presentation out of your mind. Talk about you for 5 minutes at most and find out as much as possible about your client before drowning him in information about you company!

When are corporate presentations required?

Presentations are never indispensable… surprisingly. If the clients will be interested in your company, they’ll ask what they want to know and evaluate you as a partner according to their own ideas and standards.

Why must you then still have a company presentation? Because sometimes the client asks for one, after you’ve become familiar with each other and he wants to have an “argument” to support you in his company or in front of his partners in the start of a business relationship. But even in this case my advice is to offer to meet everyone involved in the decision-taking and discover their needs and don’t let your presentation speak of your client’s business! If this did not made any sense 🙂 , let me try to give you a clue: generally do talk as least as possible about you and as much as possible about your client’s business in any communication initiatives.

Filed under: how to, Marketing Tactics, , , , , , , , ,

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