{"id":52004,"date":"2017-05-22t05:00:41","date_gmt":"2017-05-22t09:00:41","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=52004"},"modified":"2017-06-21t22:50:09","modified_gmt":"2017-06-22t02:50:09","slug":"calculate-value-price","status":"publish","type":"post","link":"\/\/www.g005e.com\/2017\/05\/22\/calculate-value-price\/","title":{"rendered":"how to calculate a value price"},"content":{"rendered":"
<\/a>3 areas of focus. by rob nixon<\/i><\/p>\n the problem with pricing by the hour is that the assumption is that the price per hour is correct (often calculated by a salary multiple) and the time to do the task was correct. the assumption is that time multiplied by the rate equals the correct price.<\/p>\n more on strategy:<\/b> why old pricing models are unethical<\/a> | 8 ways to become super-efficient<\/a> | sales is like workflow management<\/a> | sales is about trust<\/a> | how to dominate the internet<\/a> | marketing objectives determine marketing amount<\/a> | what products should you create?<\/a> | keep a watchful eye on clients<\/a> | rewards go far beyond money<\/a> | people still needed, but in different ways<\/a> in my view, nothing could be further from the truth. when selling intellectual property, to price in arrears based on time and rate is a bizarre pricing model. you are valuing what you know and the outcome the client gets based on a salary multiple (to get to the charge rate) and the time taken to do the task. very strange! i understand it\u2019s an easy way to calculate a price. the issue is this model does not value how smart you are and the impact you make.<\/p>\n there has to be a better way. and there is. it\u2019s all about value pricing.<\/p>\n value pricing is where you price the job up front based on the value you create for your client. you cannot value price after the fact. that means you have to scope the project out first (by talking with the client and doing some research), find the value you are adding and then present an implementation plan to the client based on how you are going to help them.<\/p>\n now for historical work you have a challenge with pricing. and that\u2019s price parity. you may think it is worth more but if the client has been paying $x for the past few years then they may pay $x + a bit \u2013 but not the price you think it is worth. for a new project that the client has not bought before then that\u2019s a different story.<\/p>\n if you know the numbers in advance (cloud accounting helps with that enormously) then you can scope out projects that make a difference with your clients. if you can articulate your value in advance and present it in such a way that makes sense financially and emotionally then you\u2019ll win the business.<\/p>\n most people get the concept of value pricing. price based on your value.<\/p>\n the biggest question i get around this topic is “how do i work out the price?” here is the definitive way to price knowledge-based services. if you follow this simple guide you\u2019ll never need to ask the question again.<\/p>\n there are only three areas you need to focus on to get to the right price.<\/p>\n the diagram below will help you determine the right price.<\/p>\n
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