Boeing’s 737 Max issues highlighted the company’s sacrifice of safety for financial performance, resulting in a tarnished reputation. The prioritization of profit over core values also damaged the FAA’s credibility and revealed a lack of accountability for top executives. This downfall serves as a reminder of the importance of maintaining core values and prioritizing them over short-term financial gains.
Rethinking Your Pricing Model: Maximizing Margins and Providing Value
Many entrepreneurs tend to adopt hourly rates or markup over costs as their pricing models. However, there are other ways to think about pricing that can be more beneficial to your business. To do this, focus on two key aspects: the value you provide and your customers’ Best Alternative To a Negotiated Agreement (BATNA).
Selling products on the web.
When selling products online, consider the value you offer beyond just low prices. By distinguishing yourself from competitors, you can avoid competing on price alone. For example, offering detailed information on products helps customers make informed decisions. Consider offering a subscription-based support line for personalized advice to keep customers loyal. This will make them more likely to buy from you and increase repeat business.
Selling Knowledge
Businesses that offer expertise, like consulting, should consider pricing based on the value they provide. Niels Bohr’s story about charging $10,000 for knowing where to place an “X” illustrates the importance of recognizing the value of knowledge. Instead of charging an hourly rate, consider charging based on your knowledge’s impact on the customer’s business. For example, charge a small percentage of the cost per product, benefiting you and the client.
Selling Vistage
As a Vistage Chair, I help CEOs make better decisions, and the value we provide is substantial. When justifying membership costs, consider the value of better decision-making compared to hiring a consultant. Vistage membership can offer an ROI of 200% or more, making it a valuable investment for business leaders.
So what are you going to do?
To improve your pricing strategy, assess the value you provide and your customers’ BATNA. This exercise can help you maximize margins and deliver better value to your clients. Brainstorm with your product and sales teams to identify opportunities for pricing adjustments or to eliminate commodity products or services. Reach out to me for assistance in enhancing your pricing model and increasing your margins.
(c) Copyright 2021, Marc Borrelli
Recent Posts
The Downfall of Boeing: A Lesson in Core Values
Resolutions, Here We Go Again.
In reflecting on 2021 resolutions, the author scored themselves in three categories and sought to improve success in 2022 by addressing friction points. Drawing on advice from social psychologist Wendy Wood, the author identified areas to reduce or increase friction in their failed resolutions. By making these adjustments, the author aims to enhance their goal achievement and encourages others to consider friction when setting resolutions.
You need to take an extended vacation. No, seriously, you do.
COVID has taken a toll on all of us. If you have not taken an extended vacation in a while where you disconnect, you need to now. You and your business will benefit.
Becoming Famous in Your Niche: The Success Story of Linn Products Limited
In a previous discussion, I highlighted the importance of being famous for something. Being well-known in your niche can help you: Concentrate on your strengths Connect with your target audience Communicate your offerings more effectively Receive referrals Identify...
Understanding and Optimizing Your Cash Conversion Cycle
Understanding and optimizing the Cash Conversion Cycle is crucial for business growth, as it impacts cash flow and the ability to access external capital. This cycle consists of four components: Sales, Make/Production & Inventory, Delivery, and Billing and Payments. To improve the Cash Conversion Cycle, companies can eliminate mistakes, shorten cycle times, and revamp their business models.
Discovering Your Niche: Why You Need to Be Famous for Something
As an entrepreneur, it’s crucial to specialize in a specific area and become famous for something, allowing you to generate referrals and build your brand. Understanding the “job” you’re hired for helps you stand out in the marketplace and communicate your value proposition effectively. By providing value to your clients, you can adopt a value-based pricing approach, ensuring your business remains competitive and maintains a strong market presence.
Rethinking Your Pricing Model: Maximizing Margins and Providing Value
Rethink your pricing model by focusing on the value you provide and your customers’ Best Alternative To a Negotiated Agreement (BATNA). This approach can help you maximize margins while delivering better value to your clients. Assess your offerings and brainstorm with your team to identify pricing adjustment opportunities or eliminate commodity products or services.
Do you know your Profit per X to drive dramatic growth?
I recently facilitated a workshop with several CEOs where we worked on the dramatic business growth model components. One of the questions that I had asked them beforehand was, "What is Your Profit/X?" The results showed that there this concept is not clear to many....
The War for Talent: 5 Ways to Attract the Best Employees
In today’s War for Talent, attracting the best employees requires a focus on value creation, core customer, brand promise, and value delivery. Clearly articulate your company’s mission, identify your “core employee” based on shared values, and offer more than just a salary to stand out as an employer. Utilize employee satisfaction metrics and showcase your company’s commitment to its workforce on your website to make a strong impression on potential candidates.
Are you killing your firm’s WFH productivity?
Productivity remained during WFH with COVID. However, further analysis found that hourly productivity fell and was compensated for by employees working more hours. What was the culprit – Meetings. Want to increase productivity, have fewer meetings.