Taking the surprises – and pain – out of pricing
Although most lawyers feel anxiety and a sense of dread around pitching and pricing work, this process can be used to build even stronger relationships with clients if you get it right, writes Colin Jasper.
When you think of discussing pricing with your clients, what emotions does it generate?
For many lawyers, it creates a level of anxiety. While you hopefully enjoy the work you do, pricing often seems to be a barrier to success – it gets in the way of us winning work and creates tension between us and our clients. Many experienced lawyers can highlight many jobs that they would have won, if only the price had been less. Or worse still – where pricing conversations with clients didn’t end well.
It’s true that when pricing is done badly it creates tensions between clients and firms. It diminishes trust and damages relationships. But when pricing is managed well, the opposite occurs. Pricing can be used as a means of strengthening client relationships and building trust.
Pricing is one of the most intimate parts of our relationships with clients. It’s the moment clients tell us that we are worth it – or not. All of our efforts to create value for clients, differentiate ourselves from our competitors, provide a solution that meets our clients’ needs in a cost-effective manner, all come together in that moment when clients ask themselves – “Is it worth it?” We can be quite passive in that moment and hope all our previous efforts justify the requested price. Or, alternatively, we can actively influence our clients’ assessment of our price.
In an ideal world…
Ideally, pricing should be done with the client rather than to the client. Ideally, we should develop our offering with them so that they can see the cost implications of the various deliverables sought and the desired work method.
The client should be a co-creator or the proposed approach and the resultant price. As Blair Enns, author of The Win Without Pitching Manifesto, states, the price should be heard before it is seen. The alternative is that the first time a client sees our price it’s a “surprise” at the end of our proposal.
So how do we use pricing to strengthen client relationships? After all, aren’t our objectives diametrically opposed – the client want’s a lower price and we want a higher price? The short answer is by focusing on the areas where our goals are aligned:
- Clients want to know that the price is appropriate, given what’s at stake. Let’s demonstrate we understand this and have consciously thought about their business case, rather than simply the brief and the cost of undertaking the work.
- Clients want a range of choices, rather than a single price being imposed on them. Let’s provide them with a range of options so that they can decide which approach represents best value? In doing so, the decision we are encouraging them to make is how to use us. If you provide them a single option, the decision you are forcing the client to make is should they use you or not.
- Clients want to contain costs. Let’s demonstrate that we have empathy for this and have consciously thought about ways of keeping costs down. There is no greater way to demonstrate client-orientation than to show the client that with the solution we are proposing, they will pay us less.
- Clients want to avoid surprises. Let’s provide them with certainty where we can, and work with them to manage any remaining uncertainties. This includes tightly defining scope, providing a few (no more than three) key assumptions, and managing matters to minimise cost over-runs.
We should actively seek to discuss pricing with clients. The goal of pricing is to find a price that is fair to the client and fair to the firm. Given this objective, why would we not start there and jointly discuss what works for both of us? When pricing conversations go well, they strengthen our relationships with clients and build trust. When we actively embrace opportunities to discuss pricing with our clients, we may not always get it right, but we will get better at it over time and this will not only result in a better client experience, it will also drive profitable growth.
At a recent training program, several partners expressed their frustration in discussing variations with clients. They highlighted how clients were reluctant to pay more and didn’t want to hear the reasons for the variations.
A better way
By comparison, one of their colleagues described her approach. She would let the client know that things have arisen not originally anticipated or budgeted for, but that the firm had the capability to support the client with these additional areas – if that was the wish of the client. She would then provide a price for the additional piece of work, which was usually accepted with gratitude. I couldn’t have described positive pricing conversations any better.
If we are confident in the value we are delivering to our clients, and we are satisfied the price we are charging is fair, then why would we shy away from pricing conversations. By actively discussing the pricing with clients, we can make visible that the price is fair.
Colin Jasper has more than 20 years’ experience in pricing professional services. He is the co-founder of Positive Pricing, a firm dedicated to assisting professional service firms to create greater value for their clients and capture a fair share of that value for themselves.