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Casual Articles - Your Fees - It's About Value - Not Time
As a kid, I liked the teams involved in the current World Series, the Detroit Tigers and the St. Louis Cardinals. Al Kaline was “Mr. Tiger” and represented what baseball is all about. And even though Ty Cobb played before my time, when you think of the Detroit Tigers, the legendary “Georgia Peach” has to come to mind. Advancing through the years, no baseball fan could forget manager Sparky Anderson, who after winning the World Series twice with the Cincinnati Reds in the mid-seventies, led the Tigers to a championship in 1984.The Cardinals were “the team” in West Tennessee where I was born and reared. Along with listening to their
If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more
Five years after helping a client to sell his business, I received my final check and placed a call to the person who represented the buyer. In discussing the history of the transaction and tying up loose ends, we came to the conclusion that a sale isn’t complete until you have survived the negotiations and the closing, cashed the final check, confirmed that the statute of limitations has run out for all contingencies and verified that the new owner(s) are happily making money.Good deals don’t just happen. They take preparation and work. Often a great deal of work and years of preparation are consumed before a sale can even be c
And to some extent, the statement is true. Every place is different. Businesses are made up of people and every person is different.
However, if you have done your homework, if you've developed a level of trust with your client and if your client - wherever you are - perceives your product or service to provide the same value that clients in ____________ perceive, you can charge the same as you can in _____________. If your clients won't pay what you think your product or service is worth and you're blaming them - you're blaming the person. Your clients make buying decisions made based on perceived value, THEIR perception of value, not yours. If your customer doesn't perceive the value, they won't make a purchase. Period.
So the question isn't, "Why won't they pay?" The question is, "Why is there a disconnect between your perceived value and theirs?"
Let's say you're Jane Doe, an internationally recognized oil and gas attorney.
Situation #1: ExxonMobil wants to gain the approval of the Peruvian government to drill off their southern coast. If they receive the approval to dig it would mean hundreds of billions of dollars to ExxonMobil and the company has asked you to assist them. They've asked you to attend a 1 hour meeting they've scheduled between the CEO of ExxonMobil and the Peruvian government in an attempt to gain drilling approval.
Situation #2: Murphy Oil, a small oil company in El Dorado, Arkansas is considering purchasing a Malaysian deepwater lease from Royal Dutch Shell. This is a pretty standard transaction in the oil industry, however the services - about an hour to be exact - of an experienced oil and gas lawyer is still needed to finalize the documents.The lawyer is the same in both situations; Jane Doe. The time requirement is the same in both situations; 60 minutes. Is the fee Jane charges the same? No. Why? Because Jane's fees aren't based on the time she gives the company. Her fees are based on the value she gives the company. Furthermore, the value isn't what Jane perceives it to be. It's what the company perceives they gain by hiring Jane. Think basing your services on providing value - not providing time.
Let's try another comparison. You're John Smith and you've relocated to Portland from Boston after 15 years as Vice President in State Street Bank's retail advisory services division. You've started your own consulting business with a specialty in helping retail businesses.
Situation: In about 20 hours of consultation work, John is able to help his retail clients streamline their operations and maximize the sales per square foot so they see increased profits, on average, of 50%; some even more. Question: What is John's service worth? $100/hour? $500/hour? The answer is yes... and no.If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more
A couple of days ago I had a conversation with a volunteer, we'll call him Bob, in which he said, "I know online registration is the way to do it, I've used it at another organization, but they say we don't have the budget for it here, so we're doing it manually." Bob's chuckle at the end of this explanation was very telling. Free labour is a myth. Volunteers are in demand. Finding and recruiting these people takes time and effort and though there are no salary costs, there are expenses in covering:The equipment they require Possible office space Someone to train, manage and supervise their efforts hem - you're blaming the person. Your clients make buying decisions made based on perceived value, THEIR perception of value, not yours. If your customer doesn't perceive the value, they won't make a purchase. Period.
So the question isn't, "Why won't they pay?" The question is, "Why is there a disconnect between your perceived value and theirs?"
Let's say you're Jane Doe, an internationally recognized oil and gas attorney.
Situation #1: ExxonMobil wants to gain the approval of the Peruvian government to drill off their southern coast. If they receive the approval to dig it would mean hundreds of billions of dollars to ExxonMobil and the company has asked you to assist them. They've asked you to attend a 1 hour meeting they've scheduled between the CEO of ExxonMobil and the Peruvian government in an attempt to gain drilling approval.
Situation #2: Murphy Oil, a small oil company in El Dorado, Arkansas is considering purchasing a Malaysian deepwater lease from Royal Dutch Shell. This is a pretty standard transaction in the oil industry, however the services - about an hour to be exact - of an experienced oil and gas lawyer is still needed to finalize the documents.The lawyer is the same in both situations; Jane Doe. The time requirement is the same in both situations; 60 minutes. Is the fee Jane charges the same? No. Why? Because Jane's fees aren't based on the time she gives the company. Her fees are based on the value she gives the company. Furthermore, the value isn't what Jane perceives it to be. It's what the company perceives they gain by hiring Jane. Think basing your services on providing value - not providing time.
Let's try another comparison. You're John Smith and you've relocated to Portland from Boston after 15 years as Vice President in State Street Bank's retail advisory services division. You've started your own consulting business with a specialty in helping retail businesses.
Situation: In about 20 hours of consultation work, John is able to help his retail clients streamline their operations and maximize the sales per square foot so they see increased profits, on average, of 50%; some even more. Question: What is John's service worth? $100/hour? $500/hour? The answer is yes... and no.If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more
One of the mega trends of the 90s is home based small businesses. Millions are finding new levels of independence and freedom from being their own boss. Unfortunately, many new business owners also are finding that working for themselves isn't always as rewarding or fulfilling as it could be. Here's one proven technique for bringing more fun, focus and fulfillment to your work. By the way, it also works if you're employed by someone else.Have your values and vision shape your business. All too often, entrepreneurs are pulled into a new business venture because of the promise or opportunity of large profits. Now, don't get me wrong.
Situation #2: Murphy Oil, a small oil company in El Dorado, Arkansas is considering purchasing a Malaysian deepwater lease from Royal Dutch Shell. This is a pretty standard transaction in the oil industry, however the services - about an hour to be exact - of an experienced oil and gas lawyer is still needed to finalize the documents.The lawyer is the same in both situations; Jane Doe. The time requirement is the same in both situations; 60 minutes. Is the fee Jane charges the same? No. Why? Because Jane's fees aren't based on the time she gives the company. Her fees are based on the value she gives the company. Furthermore, the value isn't what Jane perceives it to be. It's what the company perceives they gain by hiring Jane. Think basing your services on providing value - not providing time.
Let's try another comparison. You're John Smith and you've relocated to Portland from Boston after 15 years as Vice President in State Street Bank's retail advisory services division. You've started your own consulting business with a specialty in helping retail businesses.
Situation: In about 20 hours of consultation work, John is able to help his retail clients streamline their operations and maximize the sales per square foot so they see increased profits, on average, of 50%; some even more. Question: What is John's service worth? $100/hour? $500/hour? The answer is yes... and no.If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more
Have you ever been frustrated with your job? More specifically have you ever wanted to stop working? If only it were that easy, right? Your daily expenses and family pressure force you to continue working.Imagine finding a way to make enough money to stop working or at least cut back from having to work so many hours. How would your life be different? Would you be more focused on fun and family knowing your expenses would be paid?INSTANT SUCCESSSuccess for you can happen in an instant provided you are ready for it. For example, I became a best-selling author in 20 ? hours. Yes, in less than 1 day I became a best-selli
Let's try another comparison. You're John Smith and you've relocated to Portland from Boston after 15 years as Vice President in State Street Bank's retail advisory services division. You've started your own consulting business with a specialty in helping retail businesses.
Situation: In about 20 hours of consultation work, John is able to help his retail clients streamline their operations and maximize the sales per square foot so they see increased profits, on average, of 50%; some even more. Question: What is John's service worth? $100/hour? $500/hour? The answer is yes... and no.If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more
There are many different factors that help to define organizational culture. If someone wanted to make a full laundry list and get really specific, it wouldn't be surprising if over one hundred different things were listed: but most can be broke down into specific categories or factors that cover many of the smaller details of corporate culture. Here are a few of the factors that have a major hand in defining organizational culture in general.Conflict resolution. How much does the company encourage, or discourage, its employees to openly discuss any complaints. Do superiors listen to different opinions or just ignore them?
If you are a retail store owner and your annual profit averages about $3,000 net of your salary and all expenses, a 50% increase would be $1,500. While 50% is a good improvement in profitability, an investment of $100/hour or $2,000, not to mention $500/hour, wouldn't be "worth it" to that client. Now if you're LL Bean and your net annual profit is $500 million, a 50% increase means an additional $250 million. I'm pretty certain that John's 20 hours would be valued a lot more than $500 an hour and I'm sure John would be paid a lot more than $500/hour by LL Bean.
These scenarios are easy to grasp because value in these cases are easily expressed in dollars and dollars are the primary gage most businesses use in determining investment value. If your product or service addresses the more "intangible" business challenges - those not easily translated into dollars, i.e. procrastination, lack of accountability, low moral, etc. - it's important to do what you can to help your client put a dollar figure on the dollar "value" of what they will gain working with you.
No, dollars aren't the only indicator of value. In a highly competitive, small business marketplace where budgets are limited, it is a good place to start, however.
Once you have developed a level of trust with your clients, value is the primary basis on which purchasing decisions are made. If you can communicate to the client that the value they will receive by investing in your service or product will exceed the cost of that investment by a meaningful amount (meaningful to them) you're almost certain to make a sale.
Remember to be BOLD, express your value and target your marketing efforts well. ...and yes, your success does start with a vision ...a Bold Vision.
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