[Video] Strategy to Increase Your Profit Margin
How can two sellers from the same company calling on the same types of customers sell their services at totally different profit margins?
Here's a story of how two sellers, Kim and Jack, priced their consulting services projects at opposite ends of the spectrum. One had highly profitable sales, the other did not. Their typical project ranged from $60,000 to $80,000.
Kim's projects nearly always came in on the low end of the range. She typically quoted far less planning time, travel and implementation costs than the project actually required. She was concerned about her prospect's budgets and felt unethical about asking for so much money. Her clients were always asking her to reduce the costs.
On the other hand, Jack's projects were usually the highest priced in the company. He had no qualms asking for what he felt was a reasonable fee for what needed to get done. And, he often padded the budget a bit to cover requests that would expand the project's scope. His clients never blinked when they saw the price.
So why was there such a difference? Kim truly didn't understand the business value of her work. She just knew it cost a whole lot for their services and she wanted to be a worthy steward of her clients' budget.
Jack felt entirely differently. Over the years, he'd seen the impact that his work had on his client's top line sales. He knew that what he was asking was a pittance compared to the value that they were receiving. And, because he knew that, he could confidently ask for more.
If you're struggling with pricing like Kim, I suggest you invest time learning more about the business value you provide. It'll give you the confidence you need to increase your profit margin.
Jill Konrath is an internationally recognized sales strategist. As author of two bestselling books, SNAP Selling and Selling to Big Companies, she's a frequent speaker at sales meetings and conferences. For more fresh ideas, download her free Prospecting Toolkit.