Posts tagged ‘Pricing’

More Money, Less Pain

The June edition of Psychological Science published the results from six experiments conducted by psychologists and a marketing professor that tested the power of money in relation to social interaction. In one of the most startling results, they found that merely touching money or thinking about expenses affected participants both physically and emotionally.

In one experiment volunteers were asked to take a “finger-dexterity” test, one group counted stacks of $100 bills, while the other group counted paper. Afterwards both groups were but into a social interaction simulation where they were meant to feel snubbed and isolated. The group that counted out the money before the simulation rated their level of social distress much lower than the group that counted paper.

In another experiment, the same “finger-dexterity” test was taken and then the volunteers were asked to dip a finger in very hot (122 degree) water. Those who counted the money rated their pain as lower than those who counted paper.

The pain test was then repeated but with the volunteers now writing about either their expenses the previous month, or the weather. After the finger dip, those who wrote about spending their money rated their pain as higher than those who wrote about the weather!

“These effects speak to the power of money, even as a symbol, to change perceptions of very real feelings,” like pain, said Kathleen Vohs, a marketing professor at the University of Minnesota and co-author of the study.

What does this mean for the designer? It’s just one more thing to consider when presenting the project costs. Clients need to feel comfortable enough with the potential of your work to transform their lives and their interiors to offset the real and psychological pain of letting go some of their hard-earned money! It’s about making sure the client understands the value–both immediate and long term–of investing in their home décor; so that the experiential satisfaction they get from the process and the results more than offsets the purchasing pain.

See more about this on Live Science. Within that article are also links that discuss the value of “experiential” purchases vs. “product” purchases.

7 August 2009 at 8:46 am Leave a comment

Get on The Web

marketing-to-moms-top-10-activities-moms-online-july-2008Susan and I have been encouraging pros to get a web presence for some time in our seminars and discussions at IWCE, Showtime and NeoCon. Well, if you don’t think you need one or “you are working with a web designer and we should be up and running by September” – read this.

This study by Marketing to Moms Coalition found that American Moms with kids under 18, log an average of three hours a day on the internet and that their school age kids log only 2 hours. What’s interesting is that women (your target market) spend  nearly half (49%) of their time on the web- that’s 1-1/2 hours a day -researching and comparing prices. So if you’re not on the web they don’t know you exist! 

Run, don’t walk to your computer and do one or all of these things:

Build a blog ( WordPress is our blog platform of choice)

Join LinkedIn

Create your Facebook profile.

You can add content whenever you like without having to know a bit of HTML. You can show your work. You can tell your customers what you’re up to. You can establish you self as the expert pro you are.

 When you get on the web or if you are already; send us your address and we’ll link up.

28 June 2009 at 8:18 am Leave a comment

Anticipating the Home Sector 2009

This is a blog post from Home Accents Today with the transcript of a panel discussion at Las Vegas Market revolving around what will 2009 bring for this industry. Good reading!

25 February 2009 at 7:47 pm Leave a comment

Commitment Pricing, Part 2

I was speaking to someone about yesterday’s commitment pricing post and he made me realize I left out  some important information. So here’s a follow-up.

First, I don’t want it to appear that I was advocating raising your prices with no consideration for any of the other components that go into setting your prices.

To be successful with commitment pricing you need your clients to invest more than just money with you. They need to invest their time, attention and emotions in order to realize the full value of what they’re purchasing. Now custom design is already a time-intensive and emotionally fraught process, but it’s important to remember that you’re not in the business of selling products, but of an improved, enhanced, more beautiful life. If that’s not worth an investment in time, attention and emotion, I don’t know what is!

I mentioned “full value” in the previous paragraph. Commitment pricing needs to match or exceed the value your client’s get from the service or products you’re offering. What do I mean by this? Just think about how interested or dedicated you would be to selling or promoting something that isn’t worth what you charge for it. What’s the point, for you and for your clients?

And finally, everyone is familiar with the concept that a happy client is easier to build additional business from, in terms of both future projects and referrals, than having to cold-call or market to unknown prospects. So think of your commitment pricing as a means of establishing a support system, for your clients and for your business. Staying in touch, following up, servicing them three-months, six-months or one year down the road, is definitely good for business, but it costs something to do that. This is one aspect where commitment pricing is very aptly named!

So make a commitment–to your clients, yourself and your business–and I think you’ll see the difference almost immediately.

16 July 2008 at 3:13 pm Leave a comment

Commitment Pricing

We’ve all been there…trying to determine how to price your services often seems to be the biggest struggle i our business. Charge too much and you’re afraid you’ll lose clients. Charge too little and you can’t earn a living.

But take another look at those statements. Charging “enough” to make a living doesn’t really seem like very satisfying goal. Instead of just looking at your costs, your competition, etc. why not look at your clients. How much should you be charging to get committed, sing-your-praises clients AND to deliver the level of service, training and expertise they deserve?

Being in business costs money, and the costs keep going up every day. When you charge less than you need in order for your business to thrive; you’re not just short-changing yourself financially, you’re depriving your clients of the full experience, benefit and range of services they should be getting from you. You’re not committing fully to them, in terms of what you’re willing to offer, because you can’t afford to do what you’d really like to do for your clients. 

Commitment Pricing is especially important for designers because this business is not based on need or necessity. It’s not commodity selling, because commodities—something that is widely available and has little or no distinguishing characteristics—is what design is emphatically NOT!

Any consumer, when willing to invest in something customized, something unique and distinctive, usually recognizes that the higher price for such products and services carries with it a commitment on both sides. For the seller to deliver, service and respect the investment of the buyer; and for the buyer to appreciate, value and respect the seller.

Think about some of your recent purchasing decisions: Are there any examples of commitment pricing you can identify and apply to your own business?

14 July 2008 at 4:44 pm Leave a comment

The Money Mirror

Take a moment to think about our ingrained training regarding money. People are “filthy rich” or loaded with “dirty money.” Those who don’t get business degrees are doomed to become “starving arists”, but everybody better get to work anyway because “time is money.” Money is unnatural because “it doesn’t grow on trees” and it’s alright to struggle financially because, after all, money can’t you love or happiness. Besides, everyone knows, “money is the root of all evil.”

These issues are rarely directly addresses when designers discuss pricing, but our ambiguous emotions regarding money certainly play a part. As an industry we frequently undercharge because:

  1. We based our prices on our perceived competitive set…and they’re already undercharging
  2. We are fearful that a lack of credentials mean we can’t charge as much as some one who has [check any that apply] ___ been in business longer  ___ more training  ___ an office/studio/retail location ___ other
  3. We’re afraid of looking greedy/aggressive/“snooty”/“out-of-touch”/etc. 

Our attitude toward making money from our skills, talents and abilities is a reflection of ourselves. It’s a mirror of our self-worth; and as solo or small practitioners our inability to look into that mirror and see the results accurately often sabotages our best efforts to grow our business.

What does your money mirror say to you?

10 July 2008 at 3:39 pm Leave a comment

Designer Definitions

One of the most frequent topics of discussion to come up whenever Deb and I run a seminar or presentation regards identity and definitions.

In some states, of course, the phrase interior designer can only be used by a licensed professional, so many believe, by default, that interior decorator is a “lesser” choice. I’d like to point out, however, that many of our best known, most praised design talents in the U.S. were (and are) proud to be know as decorators… reaching back to Dorothy Draper, Billy Baldwin, Sister Parish, Mario Buatta, Charlotte Moss, etc. 

But this concern over “what to call myself” is usually a cover debate for “how can I charge”, meaning does a designer have a greater perceived value to the client than a decorator? If you’ve ever found yourself having this discussion with yourself, your staff, etc. you’ve allowed yourself to become distracted from the key issue by semantics. 

And what is the key issue? You need to ask how you perceive yourself. Are you a color specialist? Are you a fantastic resource? Are you a good listener? Are you a problem-solver? Are you a space strategist? It all goes back to how you present yourself to your clients and what value you bring to them.

So our response to the designer/decorator debate? It doesn’t really matter that much. Get yourself out of the design-world bubble and start thinking bigger. Who gets called in when there’s an issue that can’t be solved  internally? Who gets paid the big bucks to advise, research, strategize and plan? Consultants!

You don’t have to call yourself a design consultant, but you do need to think of yourself that way. Why? Well, how about this really, really brief summary of Alan Weiss’ book Million Dollar Consulting.

* Focus on the value you deliver.
* Never count hours or charge by the hour.
* Make a case for what you can deliver. Once you’ve got your client on board, present your “fee” as an given.

According to Weiss, the client will almost always bite.

As always, we welcome your thoughts on this!

 

9 July 2008 at 5:45 pm 1 comment

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