A colleague of mine introduced me to a phrase a while back that hit home with me. He talked about suffering from a condition he referred to as “Money Weakness.” That’s an interesting phrase. What does it mean?
Essentially money weakness is a condition where an individual or organization is afraid to charge a fair, value-based price for their product or service based on an internal fear rather than a market-driven reality. It’s charging less than what the market is willing and able to pay, not for an externally driven reason but rather based on an internal fear of what the customer may think if you charge more.
In this economy many businesses struggle and there can be downward pressure on pricing in those situations. But oftentimes, consultants, small business owners, and those who offer a specialty service don’t value their own product or service as much as the customers do. Here’s what happens: You determine an initial price to charge for whatever it is you sell. Let’s say it’s $1,000. You work your business model and probably struggle with cash flow issues and think, “If I just had more business all my problems would be solved.” You wonder if maybe you should raise your price to $1,100.
Then you go to a conference where you are introduced to a sharp business woman who does something similar to what you do, except you learn at her company they charge $10,000 for essentially the same product. You know your business and know your costs are about $300 so how can this person get away with selling her version of the product for ten times what you are selling it? The answer is that your new friend has priced her product not based on what it costs her, but based on the value it brings to the customer. She wasn’t afraid to charge what the product was worth to the customer. The result, her company is healthier, can attract better employees, pay better benefits, and upgrade their services more easily than you can because they are not as cash-strapped. Are they price-gouging and ripping people off? Of course not. They simply haven’t succumbed to money weakness. They are confident in the value they bring to their clients and price their products accordingly.
So step back and take a look at your pricing structure. Do you have symptoms of “money weakness?” There’s no magic pill you can take to get over this ailment, but the good news is that it is highly curable. So go bring incredible value to your clients and communicate that value today with confidence.
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