The Business Brickyard

As a business owner, one of the biggest "rushes" comes from landing that great new client/account/customer. However, I have always found that nothing makes business LESS fun to run than the stress and frustration that is caused when we sacrifice price or our purpose to get that new client/account/customer.

When you present your company to a prospect, offer them a great solution and are excited about delivering your passion and purpose nothing kills the opportunity more than the old "We want to work with you but we need to you to lower the price or match your competitors price" discussion. Talk about letting the air out of the balloon! It instantly eliminates the value they place on what you do, treats you like a commodity (the worst insult) and makes the account less valuable in profit and, just as importantly, in how much you will care about them going forward. A bad combination for you, your business and the growth of both (Not good for the new client either but that is a different and larger battle).

Want to avoid it?

1. Set an unbreakable pricing floor and, for growth and balance, a new ceiling: Set a base price floor that YOU WILL NOT GO BELOW. As you get better and better at delivering on your purpose, through persistent marketing and innovation, the value of what you do MUST increase and the average profit you receive from your clients must increase with it. If it does not, then you are simply doing more for less and headed non-stop to commoditization city. By setting a new price floor every quarter or every 6 months you make a definitive statement about the value of your work and protect yourself from taking on business that is simply thankless.

How do you figure out your pricing floor? Write down the average profit (However you measure it - It may be the average profit per unit of what you sell or the total annual profit you receive from the customer) of the last 10 clients you added to your business. Figure out the average profit and set that as your floor. Do not take on a new client at less than that average. Period.

Now that you set a solid floor... Look up! Build confidence by targeting a new profit ceiling by adding 25% to the profit of the most profitable client on the list. What extra value or innovation do you have to create, prove and deliver to get a client at that landmark price? How would you feel about running your business when you landed that client?

2. If people are not willing to buy from you above your pricing floor then you have to look at your story. Reconnect to your truth and then focus on the persistent/consistent marketing and innovation of it.

Keep refining it and proving it but do not sacrifice the price. Every time you give in you send the message that you do not think your product/service is worth what you quoted... If YOU don't, why should your prospect? I totally understand the feeling of not wanting to lose a new piece of business. Really. But adding clients to the business that make it less fun to run and erode your profitability will cause you to lose much more.

Mark out time in your calendar every 90 days to go through this exercise.

New floor. New ceiling. Keep building.

Watch your cash account for the results.