We all know that price is the major lever for profit improvement. Although profit is essential to the sustainability of our businesses, price alone does not deliver profit. Profit is an outworking of many other inputs including resources, costs, risk and relationships.
In a professional knowledge practice, profits cannot be consistently generated unless our clients choose to pay for the value we create for them. Once a client understands our expertise and our approach, there is potential for a match. If there is alignment between what the client is looking for and:
the problems we solve/the opportunities we help to realise;
the way we deliver; and
the value we create
the potential for relationship between us and our client is significant.
Profitable pricing is not an end in itself. It is only a tool, a very important tool, to assist in delivering what really matters; long-term relationships with clients who are the right fit.
It is the relationship factor which is a key driver for sustainable profits. At Innovim, we believe that alignment is a crucial component of relationship. Alignment is important at so many levels e.g:
Between the client’s needs and our expertise.
Between the project objectives and the outcomes we can produce.
Between the experience that the client hopes for during the project and our ability to help the client feel that way.
Between the quality that the client expects and our commitment to deliver.
Between the fee that the client is prepared to pay and the value we can create.
If there is potential to create alignment on price as well as on the other important factors that constitute the relationship, why would we not seek to generate that alignment?
When we impose a fee on a client after the event, the possibility of alignment is not totally eliminated but it is remote. Even if we stipulate a fee based on a menu or list before we commence a project, the potential for alignment may not be optimised.
When we listen carefully to the client, ask good questions, understand what the client is trying to achieve, have a conversation about value, agree on project objectives and then propose a series of options for scope of work and price, then alignment is a strong possibility.
Pricing is a key plank in the profit sustainability of our businesses. Pricing is also a key element in our relationship with our clients.
Alignment on pricing is possible if the client:
has been empowered to make a choice;
is satisfied that the fee payable is fair for the value to be created;
understands that there will never be a surprise about price; and
knows that we guarantee the quality of our service.
Aligned pricing! This is one of the things we believe in at Innovim. Our customers who have made the leap tell us that it is a beautiful feature of the relationships they have with their clients.