Value, price and knocks

I lost a client recently. I wondered why. She said to me that my service had been great over the last eight years, and she could not have been happier. It was just that someone else was cheaper.

I had always had good feedback from this client. I visited her at her home at least once a year and spoke to her often. It is not as though she could have felt neglected. In effect she praised the value of what she had without ultimately appreciating it enough to stay with me.

There is no lesson to be learned here other than that we will get knocked now and again. We just have to move forward with confidence.

Brands, value and me

Photo by Jon Stow

Photo by Jon Stow

I would normally avoid medical matters in this blog, but it is relevant that I am allergic to pollen floating about from early spring to mid-summer. You see, I buy anti-allergy pills which I find very helpful.

I needed some more, so went to one of the local supermarkets. They only had the famous brand variety, at £5.99 a packet. I am used to paying £2.00 for the generic version, which is exactly the same. Yet people must buy the well-known brand at that higher price otherwise the pharma company would not bother to maintain it. Brand power is worth a lot to big business, but I have to see value, and as far as my antihistamine requirement was concerned I did not see the value.

I crossed the road to another shop and paid my £2 for a generic version. What would you have done?

Insults, self-respect and selling by value

I had an email enquiry from someone who was concerned about possible tax liabilities should he sell a property he used to live in, but had let to tenants recently. There was one particular point he had got completely wrong. I wrote a reply as follows:

“Hi Fred (his name is not Fred)

Thank you for your enquiry. I think you are under several misapprehensions…

I should be pleased to advise you and give you estimates of any tax payable after renting out for 24 or 36 months and my fee would be £XXX (a fair professional fee) plus VAT.

Kind regards

Jon”

I received the following reply:

“Hi Jon

I appreciate you getting back to me. However, that charge is way above the figure I am looking to pay for what I understood to be 1-2 hours work.

Thanks anyway

Fred”

I responded:

“Thank you for your email, Fred. Although it was brief, it caused a sharp intake of breath this end.

From an employee’s point of view, they may think their hourly rate in a service industry reflects the value of the work provided, but the reality is that their employer has overheads and the cost to provide the service may be two or three times that hourly rate. Then there is the profit element since we all have to live.

I provide a service based on my expertise, the cost of my continuing professional development (CPD) which is obligatory for members of my professional bodies in practice, my office overheads, insurance, the services I buy in from others, and with a view to profit and tax which has to be paid. The CPD is pretty important in practical terms and there have been several changes to the taxation of let property announced even in the past year or so.

You would have had the benefit of a road map in order to plan the possible sale of your property (or to keep it), you would know the possible tax payable at various stages, be aware of all the tax reliefs which could be available and have reasonable certainty based on different outcomes. You would have had the benefit of all my long experience and learning. All this is of substantial value. One should always look at and understand the value rather than the cost of a service.

Oh, and to provide the answers to several “what ifs?”, outline the reliefs available and to put you right on your misapprehensions would have taken considerably more than one or two hours.

If you can get professional advice upon which you feel you can rely a lot more cheaply from someone else, that is fine, but you know the saying “if you pay peanuts…”

Regards

Jon”

We all know there is no point in doing unprofitable work and it does nothing for our self-respect if we provide a service which is simply not valued by our customer or client. It is much better to do less but more valuable work, and far more profitable too.

If we do not value ourselves, how are we to sell our value to others? We can certainly do without being insulted by those enquiring about our services.

Have you had this sort of comment in response to your quote for business?

Banking on personal service

A friendly place lost to us

A friendly place lost to us

The local branch of my bank has closed. Gone are the friendly cashiers (tellers), the greetings (“Good Morning, Mr. Stow”), the feeling of being valued as a customer.

The other day I had to pay in some money and went to the big main branch in the larger town. There was one cashier, and otherwise the tills had been replaced with machines. One is supposed to post into a slot any cheques received, together with a slip. There is no human being with whom to interact.

I pay a fee for my business banking, but I do not now feel I am getting any sort of service for my money. I am one very unhappy customer.

My own business is based entirely on real relationships with my clients. I value them, and I hope they value me. I try to be available to them at all reasonable times, and they know that I am there to help. If they value me, they will be happy to pay me a good fee for a service which they are entitled to expect.

Small business is all about personal service and great relationships. Big business has lost sight of that and, while we cannot all open our own banks, our flexibility and friendly approach is to our great advantage in competing where we can.

Do you have a tax issue I can help you with? Get in touch and I will guide you.

Values and work-time

Enjoy the fresh air

Enjoy the fresh air

This past year has been very challenging due to family illness. Despite this it has been a successful year on the business front from my point of view. I have worked less due to the non-business commitments, but have still found time to enjoy the fresh air on my walks, and with my wife.

How was this possible? Well, it has helped that the economy is improving. I have a lot of consultancy, and while I always bill this on the basis of value to the clients in what I do for them, my services have increased in value and people are prepared to pay for that value having less perceived constraints on cash-flow.

I should mention that my regular clients, although they value what they get, have not seen a big price hike They provide a regular basic income into my business.

So with the higher value work I can afford more free time and can pick and choose clients even more than I did. I also gain extra time by outsourcing the low value services with which I am less comfortable and which are, frankly, boring.

None of this is earth-shattering magic, but having a higher income but with more free time cannot be bad, can it? Do you value yourself enough?

 

“Dutch auction” clients

English: Julius Henry "Groucho" Marx...

English: Julius Henry “Groucho” Marx, cropped from group photo (Photo credit: Wikipedia)

Recently a prospect to whom I had quoted a fee in an email replied to that email after four months. She asked if I was still prepared to act for her. Naturally I said yes, and assumed she had accepted my quote. I sent her the usual “terms and conditions” email.

In reply she said that although I had the knowledge and expertise she required, actually she had obtained some other quotes. She effectively asked me to cut my fee in half.

Clearly she did not value me despite her comment and did not appreciate my experience, the cost of my ongoing training, my business overheads etc. Mainly though, she did not see value in me; only in saving money. Frankly, if she can get a process done for half my price, I fear for her as anyone in my field of work who was half decent could not possibly be relied upon if charging such a low fee. Too many corners would be cut. Instead of saving money, she may waste money.

I didn’t come here to be insulted, but I have got the tee shirt, so am not too upset. Very likely I was dealing with Rufus T Firefly’s daughter. She will land herself in the soup with HMRC; maybe Duck Soup.

The moral: know your value and charge for it. Clients worth having will appreciate the work you do and will be happy to pay for the comfort you give them.

 

 

 

Solving the problem. Or not?

The Plumber

The Plumber (Photo credit: Wikipedia)

We who provide services are paid to solve problems. aren’t we? If a client comes to me worried about an issue she has, it would not help for me to just say “Oh dear, you are in a mess”. She wants to hear how I am going to fix it, relieve her stress and generally help her feel better. Of course that is what I do, if possible. If I cannot fix it, I will just be honest, and if I am able, help mitigate the pain.

Recently we had an issue at home with our heating. It was a minor problem which could be fixed, although we already had another problem of a more serious nature which had been diagnosed by a plumber who had now gone abroad to work.

We had to choose a new plumber, who came to fix the more minor issue, which was done satisfactorily. We paid his bill.

We told him about our other problem. He seemed to think that the diagnosis we had been given was not correct. We wanted the problem fixed, so we agreed he could try. He sent two of his colleagues who fiddled around for a couple of hours before agreeing with the original opinion. They could not sort out the problem without the major work we had already been told was necessary.

We were then presented with a bill for not fixing the heating. Understandably, I think, we said that we had told the plumber what the problem was, and his men had spent two hours not sorting it out before agreeing with the original opinion. Would you have paid for that? I think not?

We all have to deliver a solution, or be honest if we cannot. We certainly cannot charge for our failures.

The value resold

A few months ago I advised a client on some potential tax issues he was concerned about. It took a while to research; well mainly to check as I had good knowledge of the issues. It is always important to check one’s memory against the latest legislation and case law as things can change.

What my client was looking for was not a tax scheme – I don’t do those – but the answers to a series of questions. It was a “what if?” sort of project.

When I was asked to quote in the first place, as always I thought about the value to the client. How valuable could it be to him in terms of money-saving in choosing the right path? How valuable was it in terms of peace-of-mind knowing what course of action he should take, and what to avoid doing?

I quoted a fee which he accepted. It was worth doing from my point of view because I could make a decent profit taking into account my overheads and time, but the determination of price was nevertheless the value to the client.

More recently I have been asked by another new client virtually the same set of questions and “what-ifs?”. Really, subject to a few minor tweaks, I can give pretty much the same advice. However, it will take much less time and other costs will be minimal.

Should I charge less? Of course not! I believe the value to the new client is much the same as to the previous client. I can bill him the same, and he will be happy paying for the money-saving and peace-of-mind. I know that because he has accepted my quotation.

Those of us who provide advice, knowledge, or if you like, our intellectual property, have studied hard for a long time, and have constantly to keep up-to-date with the latest happenings in order to give the correct current advice.

We have earned our value and deserve our reward. Why should we sell ourselves short and think in terms of labour costs? Never undervalue your own expertise when selling to clients.

Cheapskate prospects

Photoxpress_10909891 calculatorWell, a cheapskate is not really a prospect, as why would you take on a client who was not prepared to pay you a proper fee or have any respect for what you can do for them?

The other day I had a call from a guy who asked if my business was something I ran “on the side”. He meant, “Do you have a “real” job working for someone else, and are you just making extra pennies on your evenings and weekends?” In other words, was I going to be cheap?

I told him my business provided my living and my fees reflected the benefit he would get from my services. I did not bother with the list of costs we have such as insurance, software and training, and the value my expertise would bring him, because clearly that would have been a waste of time.

I wished him luck finding someone who would do the job at a very low cost, and bid him good day.

What would you have done?

If you are not special, you are not trying

Guarding the beach hut, Thorpe Bay

Be different (Photo credit: Jon Stow)

I have had my run-ins with telecoms companies in the past, and very frustrating it has been.

For the third month in a row, my business broadband provider, which is one of the smaller ones, failed to process my monthly payment and for the third month in a row I had a somewhat threatening email from their Credit Control Department. On each occasion I have logged into their website and paid on-line from the same account using the same method as they would had they succeeded in collecting my money. It is quite clear that the problem must be with them, so it is especially galling when all they can do is send me rude emails.

Following the last rude note from them and having paid the bill again, I telephoned to speak to the Credit Control people, and told them what I thought, but in very polite terms. I was advised that they could not check individual accounts. But, I said, one of the benefits of dealing with a smaller company was that I had in previous years received what seemed like a personal service. They had no response to that.

So it seems I am no longer getting the value out of dealing with a smaller, more caring company, in which case why should I pay more than I would dealing with cheaper but larger competitors? I will pay for value, but not if I don’t get it.

I asked to be transferred to Customer Services with a view to discussing my account. I expressed my unhappiness with the treatment over payment and asked why, with no better service than from a telecoms giant, I was paying more each month and with a lower download limit than I could have elsewhere. The response was “we cannot compete on price with the others”.

I have “voted with my feet”. I have taken my account to a cheaper provider. Value of service is important to me, but I am not paying for what I don’t get.

My soon-to-be-former telecoms provider is going to struggle. If they cannot compete on price and they no longer compete on value they will go out of business.

Our small businesses need to be special and different and offer that extra attention to our clients and customers, otherwise we cannot compete with the Big Girls and Boys. We need to offer value and if our customers feel special, then we have established great relationships with them leading to ongoing business.

Don’t you like to feel special? I do.