Jill Konrath

 

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[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.

increase profit margin





Jill KonrathJill 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.


Comments

Well said Jill, 
 
Found your site via Mark Hunter's twitter post/link to this video. 
 
You certainly provide a lot of value to those willing to invest in the resources you provide. 
 
Keep being better than the rest, 
 
Chris Hopf 
Founder 
PricingWire
Posted @ Tuesday, June 25, 2013 1:11 PM by Chris Hopf
Really good sound advice
Posted @ Wednesday, July 03, 2013 9:06 AM by Mike
Jill, 
 
You're spot on. Our beliefs are held in our subconscious mind and what we truly believe about the value of our product/service is communicated to our customers and potential customers from our subconscious.
Posted @ Tuesday, July 23, 2013 11:00 AM by TC North
the best way to understand your pricing is to understand the financial impact of what you are selling has for the customer and what your unique value is they cannot get anywhere else.
Posted @ Tuesday, July 23, 2013 11:14 AM by Jonathan London
This couldn't be more true, especially in companies that provide services such as design, consulting, and custom programming. In a technically oriented company,internal discussions of business value are often equated with "quality" or advanced design techniques, not the actual results that are produced.  
 
You're right on target, it's up to the sales people in those situations to understand the business value, otherwise you can't support your price.
Posted @ Tuesday, July 23, 2013 11:18 AM by E Axelrod
I knew I needed to raise my prices for SEO but was having a hard time justifying it ... until one of my clients told me he got TWO 6-figure deals in one month! Now I know what my service is worth and have no problem having my clients make a reasonable "investment". 
 
Glennette Goodbread, Owner 
Premium Web - Design and SEO
Posted @ Tuesday, July 23, 2013 12:04 PM by Glennette Goodbread
Great explanation, Jill! With most companies and individuals focused on money, it's easy to fall into being Kim.  
 
However, another take I took on this is that both looking out for the client, but one is focused on what the client can spend (their budget, usually limited) and the other is focused on what the client can gain (sales and profit, not capped). Small shift, big difference!
Posted @ Tuesday, July 23, 2013 3:25 PM by Mary Foley
You can not compare the two. Kim is a salesperson /project coordinator and Jack is a BizDev person. 
It is a common perceptual error. 
 
The other angle dictates that Kim sees it as a sales process whereas Jack sees it as a buyer process. Another perceptual error in sales management. 
 
Then in an abstract sense: People have an inherent need to spend money to reinforce who they think they are. Therefore I am neither sales or BizDev. I am simply here to make you feel good ...about yourself.
Posted @ Thursday, July 25, 2013 6:58 AM by Alan Munroe
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