Everyone wants to get paid for the value they deliver, but some businesses are their own worst enemies in this regard.
The way companies deliver products and services is based on many factors, including industry standards, how businesses operate, and the current state of the market. At some point, phrases like “free!” and “value-added” (AKA free!) became all the rage.
A free or value-added service is one given to clients to create the perception of additional value. In many industries, this has become an important component of competitive sales. There was a time when everyone was on a level playing field in terms of the products they offered and the rates they charged. But when some businesses start giving away their services, the whole dynamic gets thrown off. And everyone loses.
It sounds like a great idea
But does it really do what we want it to do?
Many companies have bet heavily on the fact that if they offer a certain service for free, customers will not only use it, but that they will understand the true value of it. A second wager is that eventually, these same customers will come to love the service so much that they will be willing to pay for it— or buy up.
Unfortunately, what many have learned is that it’s way too easy to train people to pay nothing. And that when the personal or business investment is zero, the perceived value is often zero as well.
Therein lies the problem
Businesses spend a lot of time designing services that are appealing and useful to their customers. But how can anyone see the value in something they're getting if the person giving it away doesn't even value it?
And yet we've taught ourselves to not talk about the money and time and effort and manpower that goes into providing those services. What’s more, by giving these things away, even on a temporary basis, we’ve taught our customers to expect that everything we do for them should be for free.
By not placing a dollar value on our value-added or free services, we are getting exactly what we’re charging. Nothing.
How can we change it?
It all starts by changing your own mindset. Stop de-valuing and commoditizing your services. Instead, focus on how you help clients achieve results— and the financial benefits of doing so.
- If you’re still using the term value-added, stop. Replace the idea of free services with the idea that you offer relevant and valuable solutions. Convey this message to your clients and, more importantly, believe it yourself.
- Understand how your customers can benefit when your products and services are used properly. Know what results can be achieved, how to achieve them, and what they mean financially.
- Only offer the solutions that make sense. Just because you've got twelve different products doesn't mean everybody needs them. Don't overwhelm customers with unnecessary information. Focus on delivering relevant information and results.
- Educate your prospects AND clients about your offerings. A customer who doesn’t know how to use what you’ve sold them won’t get the results they need. Or the results you promised. And that isn’t going help either one of you.
- Be upfront about the real costs of what you’re providing. What does it cost today? What will it cost next month? Next year? Hidden costs are frustrating, as are pricing models that increase over time. These scenarios are perfect breeding grounds for skepticism, misunderstandings, and unhappy surprises.
You wouldn’t be in business if you didn’t have something valuable to offer. But you won’t stay in business if you keep giving it away.
It’s time to recognize that value yourself, communicate it to your customers, and yes—charge people accordingly.
Photo by Olena Yakobchuk