I went to a gallery this weekend where a friend of mine was exhibiting. By day he is a driver but his real passion is photography and this was his first exhibition.
He was displaying framed prints of his work as well as unframed prints and cards. We were chatting after a very successful weekend for him and he commented that he couldn’t believe people wanted to buy his pictures and he felt a bit of a fraud charging for his work since he was making 100% mark up on his framed photos.
So I asked him what he thought his was selling? The cost of the frame and the price to print the photograph (worth £12) or the time, skill, knowledge and creativity to set the picture up and take the picture in the artistic way he had? (Worth a lot more than double £12!)? I told him I thought he was underselling the photos, not over selling. I think he got the point!
This is a familiar conversation I have with clients when working out how to price their product or service. What is the right price point? What’s it worth?
Many companies merely look at their competition and try to differentiate by being cheaper (basically discounting) or promise exceptional levels of service (over servicing) – both lead to unprofitable businesses (unless you are truly set up to be a low cost provider).
The key is to stand in your customer’s shoes and think about what they are really buying and then value that. Consider:
- The skill involved to do what you doThe amount of training and time you have invested in developing your skill
- The strategic insight and creativity you bring
- But NOT solely the time it has taken you to make/do what you do
I explained to my friend that there was no way I could take a picture like he had and I was buying the thought and skill involved in the photography and didn’t even consider what the material costs were! We need to get our mindsets right in the first place otherwise we are in danger of undercharging to get customers which makes it very hard to increase prices as a later date.
You can read more on this subject by downloading my whitepaper on value selling.