This question comes from Irina, an attorney who has been implementing Value Pricing over the past several months with success:
I have been implementing your value pricing strategies for several months now with great results. It works quite well for traditional estate planning and estate administration matters.
Recently, I added trust mediation as a high value add niche and wonder if you can offer guidance on value pricing strategies in this field crowded with hourly, half day and full day rates.
Variations I have considered are a percentage of trust value or estimated litigation savings converted to “fixed price plus TIP [To Insure Performance] clause, plus service guarantee” pricing agreements.
As always, I appreciate your forward thinking and your candor!
What I love about this question is Irina has already answered it herself, proving two main points about pricing. First, the more you do it, the better you get. It is an art, not a science. But it’s also a skill, and as with any skill, the more you do it and think about it, the better you get.
Second, it proves that pricers are the ultimate experimenters. I think Irina’s idea of of a percentage of trust value, or percentage of litigation savings converted to an FPA [Fixed Price Agreement], along with the TIP clause and the 100% money back guarantee are excellent scenarios to go test. I have no idea which one will work better, but I do know that trying them all out will help you discover the proper price. Just having a conversation with a potential client about the options will give you a good feel for which one will be perceived as higher value.
We see so many firms get hung up on “one best way” to price, and that’s folly. Just as there is no one best numerical price for all customers, there is no one best method at determining that price. It all depends on the customer’s perception of value.
With the permutations that Irina’s come up with, she has added many arrows to her pricing quiver. This will allow her to pull out the correct one—with the proper customer, tailored to their perception of value—in order to capture the value she creates.
Great thinking Irina. Experimnent on some customers and let us know the results. That’s the ultimate test, and the best way to Price on Purpose.