By Tim Williams

By Tim Williams

As agencies become more and more convinced that they should be selling their services based on value instead of costs, they need to learn a new set of skills to help sell the concept of value and get a better price for what they do.

Here are seven key behaviors of agencies that do this successfully:

1. Don’t sell a service.  (Sell an outcome.)

Resist describing the activities involved in an assignment, and instead describe the outcomes.  Some agencies have gone so far as to use language about outcomes in their estimates, in place of listing agency functions and hours.

2. Always negotiate price before the work begins.  (This is when you have the most leverage.)

Agencies consistently make the mistake of opening a job and starting an assignment before an estimate is prepared or a price is quoted to the client.  The time to price a job is before you start on it, because this is when it has the most perceived value with the client.

3. Be willing to walk away.  (Otherwise, you have no leverage.)

This is the toughest advice for most agencies to accept.  It’s like buying a car.  Unless you’re willing to walk away from the dealership, you have no hope of getting a better price.

4. Ask clients what they think the assignment is worth.  (Remember that value is subjective.)

Very often, clients believe an assignment is worth more than the agency would have guessed.  If you price an assignment of value instead of hours, it’s worth asking the question to the client.  You’ll often be surprised.

5. Try to provide pricing options.  (Clients will usually pick the middle one).

The smartest marketers usually use a tiered pricing approach, giving consumers price options based on features and benefits.  For major assignments – and certainly for master compensation agreements – this is a sound strategy.  Set your pricing based on the assumption that most clients will select the middle tier.

6. Never lower your price.  (Instead, add value.)

If you’ve done a good job of pricing in the first place, you should never agree to simply “discount” your services.  This degrades your standing with the client.  Think of it as “pricing integrity.”  If the client wants to pay less, offer less.  Or, you could offer some added value for the same price.

7. Be creative in pricing.  (Be just as creative in setting the terms).

Sometimes it isn’t the total price that causes concern, but rather the fact that it will be disruptive to the client’s cash flow.  So be creative in setting the terms, and you’ll create a win-win situation for both parties.

Value is like beauty; it’s in the eye of the beholder.  This means determining value is much more art than science.  Selling value is also an art, but one that can be learned.  By following the above guidelines, you’ll be well on your way.