(Listen to this post, here.)
I bought a new car the other day. A 2013 Ford Focus.
I love it.
Fun to drive (5-speed), seamless connection to my phone (I don’t even have to take it out of my pocket), great gas mileage (35 highway).
It cost me $16,000.
Not a lot, I’m sure you’d agree, for a new car.
$16,000, in fact, is more or less the price of an option package on a high-end vehicle, something like the Audi R8 Spyder which starts at $128,400 (it’s so expensive, they don’t even feel obligated to spell “spider” correctly).
So let me ask you a question: Who do you think loves his new car more – me, or the guy who plunks down $128k on a Spyder?
I mean, I’m quite satisfied with my car. I even told you a minute ago that I loved it.
But Spyder-Man? He LOOOOOOVES it. Polishes it on the weekend. Buys clothing accessories to match the interior. Gives his children oddly-spelled names containing the letter “Y,” when an “I” would suffice.
It’s all a bit counterintuitive, isn’t it?
After all, Spyder-Man is paying eight times as much as I am for a machine that pretty much does the same thing. And yet not only is he thrilled, he’s telling everyone he knows.
Do you think he isn’t aware that you can get a car for $16,000?
Do you think he feels ripped off?
Do you think he’s annoyed that “cars cost so much?”
I’m no Jimmy the Greek (look it up, youngster), but I’m willing to lay down odds that the answer is No, No and No.
Rather, here’s why I think he’s so happy. Reasons which, by the way, have everything to do with you and the way you (under) price your services:
- He’s a “car guy.” He knows and cares about things like speed, handling, horsepower and torque (whatever that is). Me? I am literally a “tire kicker.” The differences – the things that make his car well worth $128,000 – are valuable to him, but lost on me.Clients are the same way. The people who are willing to pay more for you – significantly more – are the ones who totally understand and want the things (your knowledge, personality, approach) that only you can provide. As far as they’re concerned, there are no reasonable alternatives.If you price yourself like a Ford Focus, however, you don’t get those great clients. Instead, you attract people like me. Those who, while they have the potential to be quite satisfied, aren’t emotionally attached and who would frankly be just as happy with any number of similar vehicles (or consultants, or coaches, or writers, or whatever it is you do).Higher prices attract the fans and filter out the price shoppers.
- He uses price as a shortcut.As Robert Cialdini explains in his book, The Psychology of Influence, price is a “trigger feature,” something we all habitually use as a way of assigning value. The much higher price of the Spyder suggests that it’s also much more valuable. In some sense, the more he pays, the better he believes his car to be.Here as well, this applies to you and me. If one graphic designer charges $75 an hour, and another charges $200, don’t you assume – knowing nothing else about either one of them – that the $200 an hour person is better?Higher prices increase client satisfaction.
- He gets better service.When you buy a Ford Focus, and if you’re really lucky, they give you a hearty handshake and a coupon for a free oil change.When you buy a Spyder, they deliver it to your house, give you a bunch of “free” Spyder clothing and gear, and loan you a $50,000 “regular” Audi whenever your car needs work.It makes sense. When you clear $300 on a car, you can’t give away much. When you clear thousands, there’s a lot more headroom.Same with us and the services we sell. If your margin is razor-thin, you have to watch your time and other costs carefully. Too many changes or hours or anything else that uses up your resources, and you’ve got a problem.If you price high, on the other hand, you can afford to be generous. You’re not living on the edge of your profit margin, which means you can spend more time, more attention and even more out-of-pocket dollars on your wonderful, higher paying clients.Higher prices allow you to serve your clients better.
Here’s the bottom line. Many solo professionals assume that clients and prospects view us the way they do a gallon of gas – it’s all the same, so cheaper is better. As a result, they’re afraid to charge more, out of fear of losing business.
In my experience, it doesn’t work that way. There are all kinds of prospects and clients out there, some of whom would be thrilled to pay (way) more for you. But you’re not going to find them among the Ford Focus buyers.
Instead, spend time figuring out what you’re really good at and what truly, truly makes you unique. Then, raise your fees (try doubling them) and seek out the people who understand, value and appreciate your differences.
Started my career writing copy for a life insurance company back in the day. Their best salesman drove a beautiful, flashy Caddy convertible. One day I brashly mentioned that I thought it was a bit ostentatious. His reply surprised me. “Sure is. I’d rather drive a Ford. But the thing is, when I take my Caddy in for service I sit around and talk to other Caddy owners in the reception room. Caddy owners buy $100,000.00 policies. Ford owners buy $5,000.00 policies. So I drive the Caddy.”
Never forgotten that. I drive a 1960 MGA. Meet a lot of old, retired folks living on pensions.
Interesting insight. Perhaps that explains something that happened to me, as a buyer. Had plans for an addition to the house and contacted several contractors for bids. One contractor (actually the son of the man who had built our house some 40 years earlier) pulled up in a really nice Mercedes convertible. Another pulled up in his pickup truck. Guess who had the highest bid (of 5) and guess who got the job.
I had always thought contractor #1 was doing a bad marketing job… maybe he only wanted business from Caddy owners ;^) who would feel more comfortable talking to an executive-sort rather than a nail-banger sort.
Love that story Don!
Come on, Michael, we know the real reasons:
1) He’s an ego buyer (and it is most likely a male). Being able to spend $128k on a car let’s him tell the world he’s successful.
2) He is past the point of considering value. This may or may not relate to how rich he is. Mitt Romney, it appears, doesn’t consider value when making a purchase. Warren Buffett, it is said, still does.
So, how does this relate to our pricing? Unlike Mr. Spyder, my clients have no ego at stake “buying” my services and do consider value but probably are influenced in their perception of quality by price – if I’m underpriced relative to other people they may assume they would be getting equal value (“quality”/$) and go with someone else if they can afford it. On the other hand, if you are significantly overpriced, relative to others, you have set the satisfaction bar pretty high.
Hello Bruce! Good thoughts as always.
This one, I don’t quite agree with though: “significantly overpriced, relative to others.” It’s only relative as you move down the commodity continuum. The more different you are, the fewer reasonable substitutes there are. Pricing is largely arbitrary and I can only compare you relative to other people to the degree you all seem the same. I think that’s why Bruce Springsteen tickets cost so much (Eddie Money is not a satisfying substitute).
Thanks for reading and writing!
“It’s only relative as you move down the commodity continuum.”
True, and that’s one reason I’m happy to be in a niche. But like VC’s always tell presenters at pitch contests… don’t ever say you have no competition unless you absolutely, positively filling a need that has never been filled before. You may have a unique approach, a cheaper, faster, better approach, but in most cases people have been reaching whatever endpoint you are going to help them with.
The first airplane had no competition….if we are talking about airplanes; if we talk about travelling from point A to point B, well, obviously there was competition.
All of which you summarized with “spend time figuring out what you’re really good at and what truly, truly makes you unique. Then, raise your fees…” I agree, people will pay more for the added value of “you”.
I agree. More of a directional thing than an absolute. On the continuum from gallon of gas to Bruce Springsteen, we’re all better off to move towards The Boss!
Didn’t really want to get into this, but many years ago I partnered with another writer to create Standing Ovation Inc. We wrote a hard cover book called, ‘Standing Ovation or Polite Applause. The Executive Choice.” We developed and marketed what we called, “The Standing Ovation Process.” That was quite a promise and we promoted ourselves only to the titles of President and Chairman of the Board.
We charged over $5,000.00 per speech at a time when the average speechwriter charged $850.00. (However, the client did get a copy of our book, a $24.95 value for free.) We had more business than we could handle and became consultants to the very top corporations which led to corporate communications work, as well.
Two things you both have observed came into play.
1. Ego. Our client bragged that they were paying a fortune for their speech writer, but it was worth it because it solidified their leadership status when talking to shareholders, associations and employees.
2. With that much profit in every project, we could provide exceptional service. An initial meeting to research the speech and discuss our strategy. A second meeting where I would give the speech to the client and obtain approval. A coaching meeting to help the client with their delivery. Attendance at the function where the executive gave the speech so I could give positive feedback.
After one assignment, the client became a friend and confidant, and I kept those clients for many years and got a great many referrals.
Those other guys at $850.00 did okay…but they worked a lot harder than I did and didn’t have the time to maintain the quality.
Bottomline…pricing is positioning…if you keep the promise.
Don
That’s very cool, Don, thanks for taking the time.
And I agree on the keeping the promise idea. You can’t just start selling Ford’s for $128k. You need to be selling the thing(s) you are really, really good at.
Sorry Bruce Horwitz for not fully understanding Michel’s points
Michael – I JUST LOVE you…(I mean, your ideas). Ok, you too!
The feeling is totally mutual, Roger!
Hi, Michael – Your newsletters are fantastic, and each week I feel both educated and entertained. (Talk about giving away something valuable!) In particular, I loved this newsletter because it answered the questions I’ve had after encountering your “go ahead, charge more!” approach to pricing. (My questions being something along the lines of, “Are you kidding me?” and “Why would a client hire me if they can get a less expensive copywriter?”
However… I think I’m going to have to rain on the parade a bit. Although I’m extremely good at what I do, and although I offer skills and services many other writers have trouble matching (thanks to a somewhat eclectic background plus loads of experience), I still lose out regularly to lower-priced copywriters. This seems to be true no matter how convincing I am about the benefits of hiring me. I’ve been passed over by potential clients who clearly LOVE me and who appear profoundly miserable to be hiring someone else. Too often, it comes down to pricing and budget – regardless of other factors.
Because I believe you know what you’re talking about, I’ve tried and will probably keep trying to achieve a higher hourly rate. Could it just be my particular industry that won’t tolerate higher pricing?
yours,
Kristin
P.S. I should mention that there’s at least one copywriter in my region who is kind of screwing things up for the rest of us… She is undeniably fantastic — and she doesn’t charge much, hasn’t raised her rates in 15 years, etc. My guess is that her husband’s salary is the one that matters to the family (apologies if this sounds sexist). In my case, it’s MY income that matters, and I sure wish this phenomenal competitor would jack up her rates so that I could too!
Kristen;
I know this sounds cruel, but with every sale there’s no such thing as a price objection–only a value objection. What this means is that somehow your prospect hasn’t come to the conclusion that they can make more money using your service than someone else’s.
I know this sounds simplistic, but when you think about it, it’s really true. If the prospect feels they can get the same quality writing for less from somewhere else; then they believe they’re getting better value. If they believe they’ll get a better response and more sales by paying more for your services; then you’ll represent the greater value. Somehow, you have to establish yourself as the better value. If you can’t, you may want to reassess your positioning and your pricing.
Your point about certain industries putting less value on creative writing is a valid one. Some industry segments are heavily sales-oriented. They believe in feet on the street…cold calling…high volume lead generation because that’s the way it’s always been done. It’s difficult to sell them on using creative marketing to work smarter instead of harder. I banged my head against that wall for a while and came to the conclusion that the people who are already the best marketers are my best potential clients. Why? Because they already know the value of great marketing and are willing to pay a premium to get it…from me. For me, those clients were financial services, automotive, large retailers, high tech and wireless communication. These people understood that the money spent on production and media was wasted if the message didn’t motivate people to take action. They saw that paying me a few thousand more would mean hundreds of thousands or maybe millions more in their pocket over the long haul with precise branding and customer loyalty.
It’s not easy to market yourself with this positioning and maintain it. As already discussed, you have to keep the promise every time out. You have to deliver measurable results that justify the higher price. But sometimes it’s just truly believing you can do it that makes the difference. Convince yourself that your talent is worth it…and you’ll convince others.
All the best, Kristen.
Hi Don – Thanks for the insights, and I do understand what you’re saying (and I’m not offended). On the other hand, I’ve had potential clients explain that even though they believe I’m the better choice (and that I offer more value), they have no option but to hire a cheaper writer due to budget constraints.
Part of the issue may be that I do most of my writing work for schools and universities. Academic budgets often have less give than corporate budgets – and the question of “more sales” can be much harder to measure.
Regardless of all that, thanks for sending along your thoughts. I want to believe what you and Michael are saying, so for now, I’ll keep trying to prove my value!
-Kristin
Hello Kristin and sorry for the delayed response (I was out of commission for a couple of days).
I think all of what Don has said in this thread has been terrific and on target (many thanks to you, Don).
The only thing I’d add, on the subject of the need for potential clients to see your value (as Don points out), is that part of the way you may be constraining yourself is in how you position what you offer.
Calling yourself a “copywriter,” begs for commoditization. You may be better and they may in fact love you, but it’s like the gas station that plants flowers and plays music while people are pumping up: Arguably nice, but people still feel like “it’s just gas.”
I’d find a specialty within which you can wrap your writing skills. Whitepapers, speeches, direct response copy, whatever.
In my case, for example, I focused almost exclusively on email newsletters for 10 years, never allowing myself to be branded as a copywriter (although like you, writing is really my main capability). When you specialize, the choice isn’t copywriter vs. cheaper copywriter, it’s copywriter vs. email newsletter expert. Some people for certain products will always want cheapest (Ford Focus buyers) but others want “The Newsletter Guy” and are willing to pay for it. It’s not smoke and mirrors either for these people – it’s a real benefit since the specialist very quickly learns more and many people want that.
What can you be the world’s leading expert in?
Thanks, Michael – Excellent advice as always!
I don’t usually refer to myself as (just) a copywriter, because I am capable of and get hired to do much more than writing; here, I was doing it for the sake of clarity. On LinkedIn, I describe myself as a writer and communications strategist.
However, I understand that this broadens rather than narrows the field — and in effect may be the opposite of identifying a specialty. And I agree that tremendous benefits may result from identifying myself as an expert focused on a specific type of project. At the moment, I’m already in a position to put myself out there as a specialized expert in at least one arena. I’ve hesitated because it would mean losing the pleasure of variety in my work — and because I worry about getting enough work in that one arena during or even beyond the transition (i.e., before people realize I am the world’s leading expert and trample a path to my door).
I guess the question I’m always asking myself (because I often consider the option of becoming a specialized expert) is whether I’m willing to give up the variety AND whether I’m financially set up to survive the lean months before the trampling begins.
Any other thoughts, I’m definitely all ears!
-Kristin
Hello again Kristin!
This is a bigger discussion than email allows, but keep two things in mind:
1. What you *say,* “I’m a blah blah specialist,” and what you actually *do* (much broader types of writing) are usually not the same thing. So a specialty doesn’t mean you’re obligated to turn away broader work. Plenty of people who like your blah blah work will ask you for other, writing-related things (a third of my clients, for example, are not solos, despite my spoken niche). But it’s sticky and opens the door.
2. The narrowness won’t require “surviving.” The narrowness will give you traction in the market quickly, so you’re not always working at the margin. Nancy Latady, a student in my one year program, was a “marketing consultant” for years. When she finally narrowed to what she does now (http://www.latadyphysicianstrategies.com/) she’s told us that “my phone is ringing off the hook.”
All the best; keep us posted!
Michael
Thank you – extremely helpful!
For what it’s worth, Kristin, (see I got the name right this time) I concur with Michael but would be a bit more adamant about it. You’ve already built a reputation and clientele in your target market and they’re not suddenly going to stop using you just because you’ve decided to pursue another niche. In fact, they may actually pay more money because they think you’ll start to turn down their business if you become success in your niche.
Fact is, you may have saturated your core market and that’s why your business isn’t growing as you’d like. Everybody knows you and the quality of your work and your price. Branching out to another niche and marketing yourself aggressively will just open up new opportunities, not close down your existing base. From my viewpoint you have nothing to lose and everything to gain.
My word of caution would be to research and choose your niche carefully. Make it something you know well so you can offer expertise and experience others can’t. Make it something you enjoy doing so you’ll want to get up and work every day. And finally, start with a detailed, written business plan that identifies your market, outlines how you’re going to reach and motivate that market and the branding you’ll want to have within that market. As we’ve been discussing here, pricing is a key component of branding. A little story that might set you on the right path.
I worked for a small agency and the owner came back from lunch one day all excited. He’d finally secured a project from a huge new client. We’d be doing the job for next to nothing, but this was our foot in the door, our chance to show them what we could do. We did a great job for the client and got another job from them…another low budget job. And so it was for the several months I worked for that agency. Lots of work at a low margin.
Later, I worked as a special projects consultant for that same client. I did the strategy, wrote the materials and had them designed. As a favour to my former employer, I suggested that we put the production work through my former employer. The client said, “No. We only use them for low budget stuff. We need someone better for this.” And then he named a very high-priced production house in town and that’s who got the job. Once you position yourself as the low priced alternative; it’s difficult to lose that positioning.
So, good luck, Kristin. I hope you go for it, but whatever you decide to do will be the right decision for you. As one of my mentors once told me long ago, “Most of the things I worried about in my lifetime never happened.”
Don
Thanks, Don – I appreciate all of your thoughts! And I’m going to go for it!
Hello again, Michael and Don –
If you are willing and able to bend your minds to one last question on this topic… Would you recommend that the transition from generalist to specialist be announced in some way? Am I right in thinking that just making changes to my website and LinkedIn information won’t be enough?
You’ve both been incredibly helpful (and inspiring) so far. Thank you once more!!
yours,
Kristin
Hello Kristin!
I don’t think the announcement would hurt, but I don’t think it would make much difference. For those of us without large marketing budgets, the big bang announcements don’t seem to be noticed. It’s much more a process of simply narrowing – your web site, your linkedin presence, the things you talk and write about, how you introduce yourself, etc., until you get traction within your speciality.
People (and companies) have very narrow, specific problems. Be a narrow, specific solution and they’ll find you.
Michael
You are a gem, Michael. Thank you. I will always be grateful that my old friend Eric Groves pointed me in your direction.
yours,
Kristin
I would be against a general announcement unless there is something very specific that you can bring to the party that will give someone within your niche market a compelling reason to use you. The reason is, “Just saying it doesn’t make it so.” i.e. You announcing that you’re now going to concentrate on a specific market isn’t really of interest to anyone other than yourself.
What I would do is just create my business plan and then start to execute it. You’ll know you’re on your way when someone else (hopefully a client) announces that you are now a specialist in a specific market.
So…the business plan.
What is your chosen niche market? (Detailed description)
Who are the key buying influences? (Detailed…age, sex, title, education, income, etc.)
How do you reach them and build a relationship? (Media and frequency)
What skills or virtues do you bring that no one else can match? (The message with your unique selling proposition.)
Then, just do it. Allow yourself to be discovered as the one person who knows the niche market better than anyone…the one who immediately understands the situation and solves the problem.
Good luck.
Don
Don, thank you again for your candid and invaluable insights. Much appreciated!!
yours,
Kristin