Setting Prices - Pricing Your Consulting Services. Exploring Self-publishing - The Exciting Option.
THE PSYCHOLOGY OF PRICING
In case you hadn't noticed, people can react very differently when faced with the same price for a product or service. In fact in most cases, we'll never actually know what is in their minds when they consider a price and then decide to respond to it in certain way. So what does that mean for those of us pricing and selling our services out there in the market?
Typically, people who sell services go for an hourly rate. They use a process called "reverse competition" to determine what their rate should be. This is where you take a look at what your geographical competitors are charging, and you decide where in the range you want to fit on the spectrum of hourly rates. Inevitably, we choose a rate somewhere in the middle, so we can say that we're not the most expensive, but neither are we the cheapest!
What kind of message are we sending out to our clients with this approach?
We're showing absolutely no differentiation from any other company - just sticking ourselves straight down the line. In other words, we compete with everyone! Not a very prudent marketing decision.
So pricing simply using an hourly rate that sits in the middle of the spectrum is, in my view, a wasted opportunity to create a point of difference with your offering. Let's think more broadly for a minute about what we are actually offering to your clients: Regardless of what our specific offering is, we all offer some combination of:
Quality, Price and Service
QUALITY
Quality has become an expectation - the minimum you need to be in the game. It is similar to a high school degree - no one cares if you have one, but watch out if you do not. Quality is no longer an effective differentiator. So if you are going on about the exceptional quality of your service in your promotional material and sales pitch, just realize that in your customers eyes, you are not differentiating yourself in any way.
After all, no sane company is going to advertise the fact that the work they do is of average or low quality. It's all high, isn't it?
PRICE
There is absolutely nothing positive about competing on price, unless you specifically position yourself as a low-cost provider. Certainly, there is a market for the discount provider, but I believe this only works if you have a very high volume of transactions. As a service provider, the only sensible route is to obtain premium prices for your services.
No matter what you charge, there is always someone, somewhere, willing to perform the work you do for less money. Customers are value conscious, not price conscious. They look to do business with people they feel give them more than they are paying for. So the goal for the service provider is to make sure the customer perceives the full value of the service, not simply the price component.
Its accepted fact that many customers will equate high price with high value - especially when there is very little else to judge your value on.
Wise consultants know that if they price their services at the low end of the market, customers do not take their advice seriously. On the other hand, if you charge rates on the upper end of the spectrum, the customer will hang on every word you say and has a higher probability of implementing your suggestions. This of course has a proviso that you are offering a great service, rather than a mediocre one.
Sometimes the biggest hurdle to get over when considering charging premium pricing is our own attitude. Do any of these sound familiar?
&I can't charge those prices - my customers will all walk away!' &My service isn't worth that much'
As long as you stay in that mindset, you'll never make the transition to high end pricing. You must truly believe the value of what you offer - after all if you don't, why should your customers? More on this below in a discussion about articulating the value of what you do.
If you are selling good advice, and your customers listen carefully and implement it - they will be more successful and thus will value you that much more. It is a cycle that spirals upward: The more you charge, the more people follow your suggestions, the more profitable they become, the more valuable you are to them. This is a vicious circle that you definitely want to be part of.
SERVICE
The third component of your offering is service. In today's world, service is the ultimate differentiator and separates successful companies from mediocre companies. People will pay a premium for excellent service, and want to do business with companies who provide it. They want to build up personal relationships, know that their needs are understood, and do business with people who demonstrate integrity and value long term associations.
Successful businesses are in the relationship building game, and everything they do is aimed at strengthening connections and affiliations with potential and existing clients. This is where each of us can be different. No one can imitate our personal style and success at building and maintaining relationships.
In the long run, excellent service providers will prevail over mediocre "competitors."
Getting Away from the Hourly Rate Mentality
Before you do business with a new customer, you hold all the leverage in the relationship. After the services have been performed, the customer possesses the leverage. The lesson is that you want to set all of your prices when you possess the leverage - that is, before the engagement begins. This requires quoting fixed prices and removing yourself from the Almighty Hour mentality.
The minute you quote an hourly rate, you put a fixed limit on your earning potential. It's hard to increase an hourly rate once it has been set. The most successful service providers charge for the job as a whole, and don't reveal how many hours it will take to complete the job.
One of my clients - a management consultant - bemoaned the fact that he always underestimated the hours required to complete a job, even when he added in extra time. When all the extra hours were added in, his hourly rate worked out to less than $50 per hour. At my suggestion, he began quoting prices by the job. After three months he conceded that on average, he was able to charge more for the whole job than when he quoted by the hour. His customers - it seems - perceived greater value when he outlined what the job consisted of, than when he simply quoted an hourly rate for his time.
Price Resistance
If you are in business, at some stage you will encounter resistance to the price you are charging. Your best option here is to help the customer understand the full value of your service, and the value or benefit they will get by implementing it. If you cannot conquer price resistance through educating the customer, then I would seriously suggest you not take the engagement.
Never decrease your price to get business from a customer suffering from price resistance. That cheats your best customers - those who value what you provide - and subsidizes your worst customers - those drawn to you by price considerations alone. Those will be the first customers to defect once they find - and they will - a service provider willing to do the work for less. You do not want to work for people who do not understand, or refuse to pay for, the value you provide.
Stay true and stick to your guns.
In today's world it is no longer relevant to talk in terms of hourly rates when positioning the price of your services. It's all about value you provide, and the perception of value in your customers'
Megan Tough - published writer, coach, facilitator and speaker - works with leaders and business people to create outstandingly satisfying and truly successful professional lives. Better leadership, improved personal effectiveness, and business plans that hum! To learn more and to sign up for more FREE tips and articles like these, visit http://www.megantough.com
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As merger mania engulfs the publishing industry, markets for book manuscripts continue to shrink. There are simply fewer trade publishers today. Because the majority are now owned by huge conglomerates interested only in bottom line profits, they are less likely to take a chance on a mid�€�list author.
To further compound the challenge, most books that are trade published experience a dismal fate. Joni Evans, past executive vice president and publisher of Random House, said in an interview in Lear magazine, "Only 10% of the books published by any house earn out their advances." What a frightening statistic. That says 90% fail! Must this necessarily paint a gloomy picture? Not really. Actually, it may be a blessing in disguise.
Why Choose This Alternative?
Today many authors are opting to take control of their destiny and publish their own work. While 10 years ago self-publishing was a case of last resort, today it is often the first-and wisest-choice for non-fiction authors.
Many savvy writers use self-publishing as a springboard to more lucrative trade publishing contracts. How so? Here's the formula: produce your own book, promote and sell the heck out of it, then allow a major publisher to take over your proven product. Because you've removed the risk and shown the book is profitable, trade publishers are suddenly a lot more interested in climbing on the bandwagon.
This can also work in reverse. Let's say you previously sold a book to a New York publisher.
They published it, then let it die a quick death. Now "your baby" has gone out of print. That's what happened to us. So we got the rights back, did some revision to update the book, then published it ourselves-and marketed it aggressively. That book, Big Ideas for Small Service Businesses, has gone back for a third printing. We are making much more money on our self-published version than we ever did on the one put out by Publishers Row.Some enormously popular books were birthed by their own authors. The classic career counseling handbook, What Color Is Your Parachute? originated its climb to best-sellerdom as a self-published title. Author and clergyman Richard Nelson Bolles eventually released the rights to Ten Speed Press, where the book continues to move at a rate of about 400,000 copies a year. The total number of copies sold is over four million! In the early 1900s William Strunk, Jr. breathed life into a little book most writers still swear by today. He printed Elements of Style as a text for his English classes at Cornell.
Celestine Prophecy and Mutant Message From Down Under were self-publishing phenomena. Celestine Prophecy got an advance from Warner for $800,000. Marlo Morgan received a whopping $1.7 million advance from Harper for her Mutant Message. These dramatic success stories have left their imprint on the entire self-publishing movement.
Privately published titles typically command respect-and profits far above the typical 7 to 10% royalties. Additionally, you maintain control. You call the shots: title selection, cover appearance, editing judgments, marketing considerations, etc.
Another appealing aspect is faster turnaround. With trade publishers, first you or your agent must shop the manuscript. Once it's accepted, industry averages are 18 months to publication. A self-published book, on the other hand, typically takes four to six months to produce. Period.
Part of the upswing in this movement is directly attributed to the support available to aspiring authors. While desktop publishing definitely made the whole production process less costly and more efficient, it should not be viewed as a panacea. If you're only doing one or two books, it probably isn't cost-effective to purchase typesetting software. And it isn't practical to embark on the learning curve required to master good design and typesetting.
There is also lots of help around now. We were pioneers in the book consulting field. Today hundreds of individuals and companies offer assistance with everything from editing and production to marketing and promotion. Some of them are excellent. Others are marginally qualified at best. Always check out their reputation and credentials.
While we're champions of this publishing alternative, we also say self-publishing isn't for every book or every person. It's extremely tough for most fiction and poetry. Even a good non-fiction book may be difficult to independently publish unless it is slanted toward a specific niche. Therein lies part of the secret.The Secret of Successful Self-Publishing
You want a narrowly focused topic so you can reach your market. A book on dog training, for example, is better than one on animals. Why? Because you can find and penetrate your target audience. Dog trainers, breeders, breed associations, animal shelters, pet shops, dog shows-all are rich hunting grounds.
Perhaps you can even sell thousands of books to a dog food manufacturer as a giveaway to entice new customers.
To prosper in self-publishing you need certain personal characteristics as well. Writing is only the beginning. Marketing is critical. You must be willing to acquire this knowledge, or hire someone who possesses it. I know, mother always taught you not to "toot your own horn." If you expect to sell books, you'd better forget that advice. Marketing, however, need not be frightening. Think of it as helping people and building relationships, which is exactly what it is. (Frankly, if you want your book to stay in print and pay big dividends, you need to be personally involved in publicizing it anyway, whether you're self or trade-published.) The ability to follow up is as important to an author as a computer is to an accountant. The squeaky wheel does get the oil.
Self-discipline is also a valuable personal characteristic. You'll be wearing many hats. A self-publisher is writer, editor, book designer, typesetter, printer, business manager, bookkeeper, order fulfiller, and publicist. Although you'll subcontract some of these functions, you will act as the construction superintendent. Ultimately, it's your project.
Be sure your motivation is clear. Self-publishing takes time, energy, and money. Most ventures are undertaken because the author wants to make a profit. That's fine. Done properly, this can be very lucrative. (Done improperly, you can lose your shirt.) We know self-publishers who earn a whopping 80% on their books. But they work hard for it.
Perhaps your goal is to influence people about a subject you feel strongly about-a "cause" book.
Additionally, many of our clients publish a book as a business-building strategy. These are professionals, corporate executives, or entrepreneurs who seek to position themselves as "the expert." A book gives them new visibility and credibility.Do It Right
Whatever your reason, do it right! A carefully crafted self-published book can compare favorably with a traditionally-published book. Quality control is vital. Get professional editing help. Develop a dynamic cover. Use someone who understands book design.
Most graphic artists who create impressive logos or wonderful brochures don't have a clue about what works for book covers. And be sure you have an ISBN, LCCN, and a Bookland EAN scanning symbol on the back cover. Unfamiliar terms? Educate yourself by reading; find out what they mean. When you elect to self-publish, you're going into business. If you expect to compete in the marketplace, do your homework.Also learn about printing. It's your biggest expense. Having a few hundred copies done at your local print shop or via Print on Demand may make sense for a family history or a chapbook of poems. To be cost-effective you need to print a minimum of 3,000 copies of most books, however, and you should work with a book manufacturer or a print broker who knows book printing and will look out for your best interests.
We offer ideas in our newly revised Complete Guide to Self-Publishing to slash costs and still have a quality product.
Work in even signatures, preferably 32- or 64-page increments. Choose from the printer's standard papers, rather than specifying something unusual. Want an inexpensive and dynamic brochure? Print an overrun of the covers while you're on the press. They're cheap and impressive then.
Consider publishing in hardcover. It will only cost you about $1.25 per book more, yet it commands a greater retail price (a $12.95 paperback versus the same book in hardcover at $19.95, for instance). Total costs to publish your own book vary as much as the price of automobiles. There are Cadillac projects and there are Geo projects. They depend on length, size, complexity of text, presence of illustrations or photographs, number of colors in the cover, editing needed, marketing involved, etc. You'll typically invest anywhere from $10,000 to $25,000 to do it right.
Self-publishing can be fun, exciting, and profitable. If you're the type of person who likes to be behind the wheel, rather than just along for the ride, it may be the perfect alternative for getting your book into print.
Keep in mind, it is not a cure�€�all. It is a powerful tool for shaping your writing destiny. The bottom line is directly proportional to the effort expended. As with anything worthwhile, it requires self-discipline, investment, time, and creativity. Yes, there are risks involved-but done properly, the financial and emotional rewards can be substantial.
© Copyright 2005 Marilyn Ross
Marilyn and
Tom Ross are the coauthors of 13 books including the best-selling Complete Guide to Self-Publishing and the award-winning Jump Start Your Book Sales. Through phone consultations and ongoing coaching/mentoring, Marilyn empowers authors and self-publishers to realize their dreams. She can be reached at 719-395-8659 or Marilyn@MarilynRoss.com.
Visit http://www.SelfPublishingResources.com for free meaty information on writing, self-publishing, and book marketing strategies.
Article Source: http://EzineArticles.com/
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