Pricing Blunders That Could Cost You Thousands

In a recent episode of Keep What You Earn, Shannon discussed the common pricing blunders that could cost business owners thousands of dollars. The discussion centered around the idea of making implicit features of your services explicit and ensuring that clients understand the full value of what they are receiving. This information is vital for entrepreneurs, particularly those in professional services, where the boundaries of what is included in a service can often be unclear.

One of the key takeaways from the episode was the importance of clearly articulating the scope of your services to clients. Shannon highlighted the common mistake of assuming that certain features of a service are implicitly understood by the client. For example, in the context of accounting services, she explained how offering bookkeeping and tax services might seem straightforward to the service provider, but could be vague and confusing to the client. It's essential for businesses to explicitly outline what is included in their services, such as monthly reconciliation, allocation of transactions, AR and AP management, payroll services, and custom chart of accounts design. By doing so, businesses can avoid misunderstandings and disagreements down the line.

Shannon also drew an analogy to the restaurant industry to emphasize the importance of communication in pricing services. She likened the service provider to a chef at a restaurant and the client to a customer. Just as a chef recommends dishes to customers based on their expertise, service providers should guide their clients through the available services and clearly communicate not just the benefits, but also the specific elements included in the service.

Additionally, Shannon cautioned against itemizing every aspect of a service with individual prices. Instead, she recommended that businesses charge a lump sum for the overall service, listing out all the features without divulging individual costs. This strategy prevents clients from cherry-picking elements of the service to cut costs, ensuring that they understand the holistic value of the offering.

Another key insight from the episode was the notion that service providers often provide additional services or go above and beyond for their clients without explicitly mentioning or charging for it. Shannon challenged business owners to reconsider their approach and ensure that they are transparent about the full scope of their services. By clearly articulating and including these additional offerings in their pricing structure, businesses can differentiate themselves, communicate their value effectively, and mitigate potential misunderstandings with clients.

Overall, the episode stressed the significance of effective communication in pricing and selling services. Whether you are a social media manager, accountant, marketing agency, or any professional service provider, it is crucial to ensure that your clients are fully aware of what they are paying for. By making implicit features explicit, carefully articulating the scope of your services, and avoiding the pitfall of itemizing every aspect of your offering, you can set the stage for transparent and mutually beneficial client relationships.

In conclusion, understanding the full value of your services and effectively communicating this value to your clients is essential for every business. By taking the time to clearly outline the scope of your services and making implicit features explicit, you can not only avoid potential miscommunications and disputes but also differentiate yourself in a crowded market. Remember, clients value transparency, and by ensuring that they have a comprehensive understanding of what they are receiving, you can lay the foundation for lasting and successful client relationships.

As Shannon advocates, pricing strategies that are rooted in transparent communication and a clear articulation of the full value of your services can ultimately save you from potential pricing blunders and lead to long-term success in your business.

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What you'll hear in this episode:

[1:15] What's causing the blurred lines around your service offerings?
[2:00] Could your unclear communication be turning what should be explicit offers into implicit ones?
[7:32] It's crucial to inform your clients about the entire range of available services, including what's part of the package.
[9:40] Exercise caution when breaking down your services into itemized costs.

If you like this episode, check out:

How to Build Trust with Your Customers

Why Just Bumping Up Prices Doesn't Cut It

How to Have a Successful Podcast

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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.