Are you using anchoring in your pricing and proposals for your consultancy, freelance, speaking, or coaching?
If you're not including anchoring and options as part of your pricing strategy then you're missing out on a huge opportunity. Using this strategy will dramatically increase your engagements and the profitability for all of your proposals almost immediately once employed.
You see anchoring all the time and you may not even realize it. Why does Louis Vuitton sell a $20,000 handbag? It's because it makes the $2,500 handbag seem like a much better value and reasonable investment to the customer.
You can employ that same strategy in your freelance and consulting business by always providing at least three options and anchoring high. You may not have any intentions of selling your high anchor, but you want to include a high anchor in all of your proposals and pricing to the client because this really helps to establish the value of your service in the eyes of the client.
Human nature is to automatically solve a problem or in this case a value equation and figure out which is the best value. When you present the client with three options, one with a really high anchor, they will naturally gravitate towards the middle to avoid the extremes of the high anchor and the low option.
You see this being employed all the time with online SAAS products like QuickBooks, Netflix, and FreshBooks . They all have three or four tiers or options where they have the one in the middle that's always tagged as the “Best Value” or “Most Popular”. This is where everybody lands because they're using anchoring to establish the value of the product.
This strategy can be employed in your business proposals by anchor high to establish the value of the three options. The middle one is where you want them to land and the low option is probably what the budget actually is, or where you think they would be normally. By doing this you stretch your value up and helps you establish that value, command a greater price for your services, as well as gives the client options to pick and choose.
I employ this strategy even in my email exchanges with my clients before a formal proposal is provided to the client. What I will do prior to an email exchange or formal proposal is to have a discovery call, or discussion with them to find out more about the client and they're needs, and so forth.
Before I get off the phone call or discovery call and before I email them my anchor and options, I will give them a verbal ballpark figure over the phone that is usually very high or where I think the high anchor will be to expose any pricing objections before the email exchange.
If they go silent or respond with any pricing objections you know it may not be a good prospect, or at a minimum, you can flesh this out early in the process prior to investing a bunch of time. If they don’t have any pricing objections or issues with this high verbal anchor, you know it's a good prospect and its worth exploring further.
For example, the next time you have a client on the phone for a discovery call, make sure to state a high anchor by stating the following:
Yes this looks something we can help you with, based on this initial discussion, we are likely going to be somewhere between $xxxxx.xx and $xxxxx.xx. Is that going to work for you?
And then go silent, let the anchor work and wait for them to respond. Fight the temptation to break the silence and you will find out more about your prospect and expose any pricing objections up front and early in this process.
If they respond favorably, then let them know you will work on the specifics and that you will be following up via email with some options for them to consider. Send over the three options with that high anchor and they will likely select the middle option or even the low one.
What this strategy does is makes those 2 lower options much more reasonable and a better value to the prospect which will substantially increase your engagements.
Don’t make the mistakes that I have in the past, as well as many other consultants and freelancers do, where you provide one low ball price. I made this mistake where I would provide my rock bottom price, playing that commodity game where you're not getting paid for your expertise or your true value.
By doing this you think you're going in with a real competitive price to get the client, and the next thing you know you're working from there down. What you want to do is work from the high anchor down and land where you really want to be. I challenge you to try this and let me know if you see an increase in your engagements. My bet is that you will.
So, that's my tip for you today. I hope that you found some value in this. I love pricing and talking about different ways to make a win-win for you and your client. I am hoping to do some more training and speaking on the subject of pricing and I’d love to connect with you at www.paulklein.net.
You may be interested in my services agreement or contract template that you can download for free called “The One Page Consulting Agreement” You can use it as a template to develop your own.
I’ve used this template to get some of my biggest clients like Cracker Barrel, Taco Bell, Slack and many other great brands that I have worked with over the years. You are welcome to download it for free at www.paulklein.net.
I would love to connect with you and I am on all the usual social channels, LinkedIn, Facebook, Twitter, Instagram and so forth. I’d love to hear more from you and connect with you.