Creating a Pricing Strategy That Builds Long-Term Client Relationships

Welcome to Live With The Pricing Lady.

I'm Janene, your hostess.

This show is all about helping you build a sustainably profitable

business while making an unbelievable impact on your world.

Learn from my 20 years of experience and from my guests as we discuss their pricing

challenges, failures, and successes.

Pricing is a way of being or behaving in your business.

My mission is to help you confidently charge for the value you deliver.

Pricing is either hurting or helping your business.

Let's make sure it's helping you reach your dreams.

In this episode of Live With The pricing Lady, we take a look at

building a pricing strategy that creates long-term client relationships.

This should be the goal of any good pricing strategy, so sit back,

relax, and learn how you can go

about doing it.

It's Janene here, The pricing Lady.

I'm excited to have you joining me this week.

We are talking about pricing strategies that build long-term client relationships.

One of the things that many people forget when it comes to pricing is that

it's much more than just the number.

A pricing strategy is there to help you achieve your business objectives.

It's there to support you in achieving those objectives and

it can work for or against you.

For many service-based businesses, one of the main objectives you

have is building and keeping long-term client relationships.

This should in fact be the main objective in almost any service-based business.

Therefore, you need to have a pricing strategy that's set

up to help you achieve that.

Now, your pricing strategy alone will not give you long-term client

relationships, but it can be working against you in terms of achieving that.

If it is not intentionally set up in a way that builds long-term

relationships, then of course you're going to struggle to do so.

Before we get into this topic, I would like to remind you of one thing.

The next cohort of my program called the Fair Price Formula

is starting on March 21st, and I would love to have you join us.

This program is all about helping you set your prices in your business.

I walk you through step by step how to find the prices that fit

your business best and how to feel confident about what you charge.

If you wanna know more about this, then head on over to The pricing Lady dot

com slash set my prices and get all the details and get yourself registered there.

Of course, if you wanna have a chat with me to see if it's appropriate for you, you

can book a call with me at any time at The pricing Lady dot com slash book a call.

To our topic for this week, the pricing strategy that builds

long-term client relationships.

So why pricing isn't just about numbers, it's actually about trust,

about sustainability, and about relationships, especially when we're

talking about service-based businesses.

Now, in other types of businesses, these things may not be as important in your

pricing strategy, although I would beg to differ in most cases they will be, but

you have to take a step outside of just the numbers part of pricing and think

about how pricing influences things like trust, sustainability, and relationships.

As you probably already know, my listeners primarily are people like you, female-led

service-based business owners who are looking for pricing strategies that

are easy for them, that they can feel confident about, but that also foster a

long-term relationship with their clients.

One of the most important aspects of creating a strategy that builds

these longer term client relationships is starting to shift your mindset.

Now, there's a few areas that you are going to wanna be doing this,

and the first one is, shifting the fears that you have around pricing.

That could be the fear of charging too much the imposter syndrome you feel, the

anxiety you feel about pricing, those sorts of common fears that you and some

of maybe your colleagues feel when it comes to pricing in their business.

You want to start taking steps to help you shift those.

This is one of the reasons why I talk a lot about doing

customer insight interviews.

Why?

Because they help you to understand the customer better, so you can bring better

offers and you know what people value about them, and you know what they're

willing to pay for them, and then you can charge the right thing for them.

Sometimes that mindset sh mind shift mindset shift, I have to

be careful about how I say that.

It comes from knowledge.

So having more knowledge about your clients or more knowledge

about how to set prices.

And sometimes that shift is going to simply come from removing some of the

roadblocks that you have around things like money and success and worthiness.

So first part of this mindset shift is working on those fears

that you have around pricing.

And of course you have to be able to identify them first.

The second thing that's gonna help you with your mindset

shift is valuing your expertise.

Valuing what you bring to the table for your clients.

And going beyond just the time that you spend, but understanding as well

that the experience that you have, the way in which you work with people

the speed with which you may get them results in different businesses will

be different things, but you have to value those things first in order for

your clients to be able to value them.

If you don't think that what you do is so important, chances

are neither will you clients.

Sometimes this comes from taking a step back and looking at your

experience and where that all came from and the time and the energy

and effort it took to get there.

And then how you've perfected it and created your own, or how much

money and energy and resources you invest in keeping and building and

maintaining that along the way.

Valuing your expertise and valuing the time that you give people in

the right way based on that value is going to be very important when

it comes to shifting your mindset.

Because right now, if you feel that what you do is not very important, then you're

going to have a hard time feeling that you can charge a good rate for that.

The more that you value what you do, the more you'll be open to raising your rates

or trying new things, trying higher rates or bigger offers, and that's going to help

you have a more robust pricing strategy.

The third and last thing I wanna talk about when it comes to this

mindset shift around pricing.

That is so hard to say, is focusing on reframing pricing as an invitation for

clients to invest in their transformation.

A lot of times people don't wanna bring up price 'cause it feels icky, but

that's because they're thinking of it in the terms of, or in the context of

a cost for the client, where instead you wanna reframe it as an investment.

They're making an investment in, let's say if it's a coach in their transformation.

If you're a marketing consultant in, you know, getting more clients, whatever

it is that you help your clients do, what they're paying you, you don't

wanna present it as a cost for them.

You wanna present it and think of it in your own mind as an

investment and where they're trying to get to, not just a transaction.

Those are three areas that are going to help you be able to start to shift

your mindset around pricing so that you can align it with what's needed in

order to create a strategy that helps you build those long-term relationships.

Because let's face it, a big part of how your clients see your pricing is

a reflection of how you see it, and that's why it's so important to not.

Or important for you to understand that those mindset shifts are

going to be worthwhile for you to spend time working on.

Now let's shift for a minute.

Let's look at the key elements of a relation base based pricing strategy.

So the first element, key element is transparency and trust.

Your pricing strategy should be clear, fair and build long-term loyalty.

Recently I moved and I put some of my things in storage, and when I first looked

at the pricing strategy of this particular company, you got a discount if you were

renting for a minimum of three months, six months, or a year, I think it was.

And then when I went to check out, I saw the fine print and I saw that after a,

so if you booked it for one year, yeah, you got a special price, but you only got

that special price for the first year.

And after the first year, not only did your price go up,

the amount of the discount.

But another four or 5% more than that starting in the 13th month.

And I thought, well, wow, that's not how you build a pricing strategy that

builds long-term client relationships.

Basically if you stay with them for longer than a year, then you end up

paying 20 to 25% more automatically, which to me didn't feel very fair as

the client, as the customer, right?

But it also wasn't very clear because you didn't find that out until the very

last moment before you clicked purchase.

Transparency and trust have to be a part of the pricing strategy that

build long-term client relationships.

Does that mean you have to tell them everything and share everything?

No.

There is a certain amount of transparency that's going to make sense for the

customer and for your business, but it doesn't mean that you have to show

every detail, and there are good reasons that you would not want to do that.

So for example, you don't have to line itemize.

Everything.

Sometimes doing that opens the door.

The customer thinks it's a door opening for them to say, well,

actually, we don't need that.

When you as the expert, you know that you always need to do that.

It may be that it's just.

A check and you confirm that X, Y, Z is in place and you

can move on for some clients.

But for most clients that when you do that check, there's going

to be things to correct in there.

So you don't want to give people the option to opt out of it, so therefore

you wouldn't want to itemize that item.

That's just one example.

So transparency and trust are key to a pricing strategy that builds

long-term client relationships.

Second element value-based pricing.

So charging for the impact and the transformation, not just your

time, is another key element of relationship-based pricing strategies.

Why is time-based pricing not ideal when you're trying to build

long-term client relationships?

Well, it focuses both you and the client on time.

And time is not the value that you're bringing to the

table, it's your expertise.

It's your know-how, it's your skill, it's the way you work with your clients.

It could be your flexibility if you're super, super flexible.

Well, you can price, price based on time, but the more flexible

you are isn't necessarily going to make your rates higher.

Right.

And.

So you're not pricing actually based on the value, you're pricing on this

arbitrary unit of measure, if you will, pricing unit of measure called time.

Whereas if you say had one rate for really a lot of flexibility and another

rate for clients who don't need that flexibility, then you could actually,

you know, build, you know, build two client bases, one who's willing to

actually pay more for that flexibility.

So value-based pricing is gonna help you build those longer term client

relationships with the right people.

I. Third element, tiered and flexible offerings.

Creating different levels of services for different client needs.

Again, it's similar in how it functions to, you know, help you have

a relationship based pricing strategy, similar to the value-based thing,

because really what you're doing with tiered and flexible offerings is you're.

Customizing towards the value that suits them, right?

If you have three tiers in your offerings, and one is for the people

who want the least flexibility, the lowest priced one, and the the highest

priced one is for people who want the ultimate level of flexibility.

Again, you're creating.

Different levels of service for different clients' needs, and that's going to

help you serve each client group better.

So maybe the ones who need more flexibility, of course, they'll

be willing to pay for that.

For those who don't, you still have a price point that fits their needs.

And it means also in terms of your internal ways of working, that you

don't have to prioritize them in the same way as someone who has

your highest flexibility offer.

So again, tiered and flexible offerings can help you accommodate

very specific types of customers, and that will also help you to build those

relationship based pricing strategies.

The fourth element of relationship based pricing strategies are focused on loyalty

and retention offerings or strategies.

So offering special pricing for repeat referral or VIP type clients.

Now, one of the things I wanna add here as a word of caution

it's a little bit, let's say.

Not on topic with what we're we're discussing here today, but something

I've seen a lot recently is when people offer special pricing for repeat

clients, for example, they tend to be.

Way overly generous, that's really improper English.

They are extremely generous to their own detriment.

Oftentimes I will see 20 and 30% discounts just because someone is a repeat client.

I would caution you to say that that's probably not always

necessary to discount so heavily.

However, if you have repeat clients in your type of business, then

you may be able to offer loyalty and retention discounts that make

sense for you and for the client.

Or referral incentives to help them help you find clients later on or

new clients to, to feed your funnel.

And again, this is about building that relationship.

For the long term and these sorts of incentives that you offer should

help you to build that sometimes.

People will build these in to be nice as opposed to being part

of a strategy to build client relationships for the longer term.

So you have to take a look at what you are doing and ensure that

they are actually leading towards long-term client relationships.

The last key element of relationship-based pricing strategies

are payment plans and accessibility.

Making your services accessible to many different types of people,

but without undervaluing yourself.

This is really about.

Boundaries here.

So a lot of times you, you know, people will think that they have to offer

like a payment plan for everything.

I think it's actually a good strategy to say, okay, anything

under a certain amount is not going to be a payment plan, a standard.

Then if you decide that it's right to offer that to a specific kind of client

because you find out there's a situation that needs that, you can choose to do

that, but you don't always have to.

Payment plans can be very helpful in certain situations but you have

to make sure that in the process of offering them, you're not undervaluing

yourself and your services.

So those are the five key elements of relationship-based pricing strategies.

So transparency and trust, value-based pricing, tiered in flexible offerings,

loyalty and retention, dis or strategies and payment plans and accessibility.

So now let's take a look at some of the common pricing mistakes

that hurt client relationships.

So the first is underpricing and attracting the wrong clients.

This is a big one.

Most people underprice themselves at the beginning, and I confess I did in some

areas myself as well, and every once in a while I make the same mistake again.

It's easy to do and it's easy to put yourself in that situation where you feel

like, okay, I can't do this higher price.

The challenge is that when you do that, then you attract the wrong clients.

You end up having to build the market again with the right clients.

It's a really costly mistake, not just in terms of finances, but also in time.

It can take you a year or more to rebuild a market if you've gone in the wrong

direction, and especially if you've.

Underpriced yourself.

Then you've attracted and built a market of people who are willing to pay that

price, and they're probably not gonna be willing to pay the higher price.

So you're gonna have to find new people.

Right?

Second, over complicated pricing and causing confusion.

I remember it was LA late last year.

Someone sent me a a. An example of their pricing page and asked me

to give them feedback on it, and I felt like I was scrolling for

easily 90 to 120 seconds trying to find the bottom of the pricing page.

It was so long, there was so much information and so much detail

on this pricing page, and it was really complicated for the client.

For my client to manage.

But as a customer, when you look at such a page, you think, oh, I'll come

back to this later and look at it again.

I don't have the time right now, so they immediately will go away.

You want your pricing to be very simple, whether you present it

verbally or on a website or in a formal written offer of some sort.

You don't have to communicate everything to everyone.

In fact, often it's better just to say, well, okay, these are a couple

of things I think would you know.

Suit your challenge or be the best way to go about solving the

problem you've told me about.

Why don't I send you an offer for those two things, rather than giving

them like the smorgasborg menu offer, which just puts people into decision

overload and it causes confusion that can really hurt client relationships.

Next, not setting clear boundaries around scope and expectation.

This is a biggie in services if you're unclear.

This is so they worry, oh, well what if it takes more time?

Well, you know, projects sometimes do take more time and other projects take less

time When you moved into package based pricing, which actually in many cases help

build client better client relationships.

But when you move there, you kinda have to let go of time as a, as a

determination of price, and instead use time as a determination of your

efficiency and of your effectiveness in scoping the projects right.

So not setting clear boundaries with your client, with yourself first

and with your client second, can really hurt clients' relationships.

So sometimes even something as simple as this offer does

not include market research.

Yeah.

If someone wants market research included in the offer that you're

doing and they want you to do it, they need to pay extra for that.

Right.

So it depends on the type of business you have.

I'm thinking of a, of a, a client who does social media and marketing.

And the client wanted them to write the social media post, which was fine.

So she said send me all the information you have about your

target customer and who they are and what they value, so on and so forth.

And she had written into the contract that market research was excluded,

which in this turned out what in this context turned out to be right.

The client signed the contract, read and sign the contract and everything,

but then they said, oh, we thought you were gonna do the research.

She said, no, it's clearly written here that it wasn't.

She was clear about that boundary up front.

She'd never had anybody.

Expect that before.

But this particular time, that was something the client.

Thought she was going to do and then learn unfortunately afterwards that they

needed to supply that information for her in order to, for her to do the work

that they had actually hired her to do.

Those clear boundaries and scope, if you don't write them down in advance or if

you don't make them clear upfront, then when they come up later on, they can

become a real sticking point with a client and hurt or damage the relationship.

They may then later think about going somewhere else.

It's important to be clear with these boundaries around scope and expectations,

even ways of working sometimes upfront.

Another example here has to do like if you do if you do services, for

example, for a, a corporate client of some sort and you know, they pay you

based on a daily rate, but expect you to be available sort of whenever they

need it for an hour here or there.

Or they're constantly, let's say you have a meeting you know, each Tuesday

of the week each Tuesday of the month, sorry, there's only one Tuesday each

week, each Tuesday of the month.

But they constantly cancel like 30 minutes before the meeting, that's

not respecting your time and the expectations around ways to working

are probably being infringed upon.

But if you never had that conversation with them upfront, then it's hard to go

back to them later on without it affecting the relationship with that client.

It's possible, yeah, to have the conversation still, but is

going to feel very difficult.

The last of the common pricing mistakes that hurt client relationships

are constant discounts versus strategic value-based promotions.

So what is the difference between a discount and a

strategic value-based promotion?

Well, a discount is, you know, often something you just do because you

feel backed into a corner or you feel uncertain about what you're doing.

There's no real business purpose behind it.

It's kind of a move, desperation, if you will.

Where a strategic value-based promotion is when you're granting... I always think of

it as a price and value as a scale, right?

If you think of them on a scale and you always want the price

and the value to be balanced.

When you're granting you know, constant discounts with no business purpose, then

the, the price, you're adjusting the price side of the scale, but the value

side of the scale is not adjusted at all.

So price, you know, just gets lower and lower and the value stays.

The same basically with strategic value-based promotions or even value-based

discounts, you are adjusting both the value and the price side of the scale.

So there's a, there's a good business purpose behind it, like an early

bird discount for a program, right?

If you book.

In advance then I will grant you this discount.

Right?

So that's a value based promotion.

There are lots of examples out there of what those are.

A lot of times people offer discounts, one because they feel

a moment of weakness, they feel a lack of confidence and uncertain.

Other times people will grant them because that's what everybody else

is doing and those are not good valid reasons to be granting discounts.

Or even promotions for that one.

You want there to be good business thought behind them, and you want to make sure

that price value scale is kept in balance, that if you're adjusting the price, that

the value is adjusted somehow as well.

Let's start wrapping this up.

What can you do?

So the key takeaways from this are that, first of all, you need to be

working on shifting your mindset.

Working on those fears, reframing pricing as an invitation for clients to

invest in themselves or their business.

Or in the transformation that they're looking for.

That mindset shift is so important.

And it's absolutely key that you are clear on the value that you

bring, not the benefits, but the real economic value that you bring.

Now, we looked at the key elements of a relationship based pricing strategy.

We talked about transparency and trust, about value-based pricing,

about tiered and flexible offerings.

Loyalty and retention strategies as well as payment plans and accessibility.

So take a look at your current pricing strategy.

Does it include some of these elements?

Are those elements actually working for you or not?

Because you can, you can have a lot of transparency, but it can

also work against you, right?

Or you can have really flexible offerings, but.

Oftentimes, the more flexible you are, the more complexity we add.

And so you may need to adjust that flexibility so that the

complexity, complexity is reduced.

Take a look at your current pricing strategy and these five elements of

a relationship based pricing strategy and, and ask yourself, okay, is

what I'm doing, are these elements there and are they working for me?

And the last is to reflect on the common pricing mistakes We talked about four,

pricing mistakes that can hurt client relationships, underpricing and attracting

the wrong client, overcomplicating pricing and causing confusion, not

setting clear boundaries and expectations around the scope and constant discounting

versus being strategic and value based in your promotions and discounts.

Ask yourself, you know, are, am I violating or am I making

any of these pricing mistakes?

And how do I think that they are impacting my ability to build

long-term client relationships?

With that, I'd like to close this session of Live With The pricing Lady.

I thank you so much for Enjo for joining me here today.

As I mentioned at the beginning of the episode, the next cohort of the Fair

Price Formula is coming up on March 21st.

I encourage you to head on over to The pricing Lady dot com slash set my

prices and learn more about how you can join me so that we can help you get

your pricing strategy set up so you can move on and do better, more fun things

with more confidence in your business.

Thank you for listening to this episode of Live with The Pricing Lady, the podcast.

If you enjoyed the episode, rate, review, and subscribe to it, then share

it with your friends and colleagues.

I love hearing back from you listeners.

If you've got comments, questions, or topic ideas, go on over to thepricinglady.

com and contact me there.

Not sure where to start when it comes to improving pricing and profits?

At ThePricingLady.

com you can download a copy of my Self Assessment Pricing Scorecard.

Find out where it's going well and where you can begin improving.

Or just simply book a discovery call with me.

There we can discuss what's up with pricing in your business and

how I might be able to help you.

Thanks once again for joining.

Remember, pricing can hurt or help your business.

Let's make sure it's helping you reach your dreams.

See you next time and as always, enjoy pricing.