JUSTIFYING YOUR PRICE

For most of us emerging from the recent unpleasantness that was the last recession the journey is not without its perils. Few of us are clear of it completely and many will experience the aftershocks for many a month to come. If we look at what has happened we see that many of our clients have been used to getting more for less, committing later and negotiating more effective deals. They in turn have been squeezed by their clients and the circle is complete.

So what hope is there for aspiring organisers, venues and contractors trying not only to generate more business but to negotiate margins that are meaningful? How do we break the cycle and justify our price when recent memory has witnessed incredible deals and silly margins? Whilst I concede that this is easier to achieve with new business, it is equally important to look after our existing client base and move them gradually to a new position or face the much trodden path of spending the next few years slowly and painfully dragging them reluctantly ever closer to ‘rate card’.

Assuming creeping death is not your favoured course of action, then there are a few strategies that can be adopted depending upon your situation and history. The options briefly are to implement an increase and risk losing some clients albeit temporarily; to add value to justify the increases as discussed last month or to justify your rates. By far the easiest and least risky is the latter.

Let’s assume that your rate is higher than the competition. You telephone your prospect and pitch only to be met with the refrain “leave it with me, call me in a week”.  Moments later your competitor pitches the same client with a similar proposition, albeit it at a lesser price. Now imagine the prospect cogitating the aforementioned presentations. It is likely that whilst they will not recall the exact minutiae they will recall the price differential in the competitor’s favour. At the allotted time you call back and are greeted with the archetypal “How can you justify your price, when I can get the same thing from a competitor for less?”  Well at this point the client will be expecting you to mention that the two packages are not the same, that yours represents value for money and just about anything else you try! So the last thing they would be expecting is some reverse psychology. State that “in your position I would be tempted to choose their offering!”  Point out that “if” the two packages were the same, (and you’re not saying that they are) and the competitor could charge more, why don’t they?  The client would be moved to agree with your sentiments. Postulate further that there must be a reason (unknown and unspecified) why theirs is so ‘cheap’. When the competitor calls back they will be retailed with the client accusation, “why are you so cheap?” – an altogether harder allegation to assuage! What do they reply to that? “Because we are inferior? Because we are trying to buy your business? Because we are rubbish?” We have carried out exactly such an assignment with one of our clients and secured an uplift of in excess of 35% using this strategy!