Author: admin

How much would you pay for a bottle of wine? Maybe £5 for a cheeky red, or £10 for a Prosecco treat?

Received wisdom has it that anything less than £5 isn’t really worth it because by the time you have taken into account the cost of production, bottling, shipping and tax you are actually drinking 50p worth of wine. Move up to a £7 bottle and the fixed costs remain largely the same so you might be paying a bit more tax and enjoying £1.50 worth of wine. A 3x increase in quality without needing to pay 3x the price.

The producer will also increase their margin slightly and so everyone wins.

When we price our products and services it is tempting to be ultra competitive and go for the lowest price. If we don’t value ourselves this can be an easy trap to fall into. However, if we create a strong brand and make sure we know where we add value then we can price accordingly.

My experience of coaching service businesses is that they constantly under-price themselves, fearing that small business means small price. My suggestion to them is that they raise their price slightly above the prevailing market rate. This can create an increased perception of quality and moves people away from a ‘race to the bottom’ where they compete by constantly lowering their price.

The key lesson is that if the prevailing rate for a coach, therapist, accountant, or HR professional is £50 per hour then charging £52.50 is close to the rate and yet still higher. It allows people to make a positive choice to hire the practitioner, without feeling they are paying an excessive amount for the service.

And if you’re reading this and thinking ‘why risk losing a customer for £2.50’ then here’s the rub …that £2.50 x 20 chargeable hours per week x 40 weeks = £2,000 a year extra profit for zero extra effort. You can make up your own numbers here and it doesn’t take a genius to see that even £51, instead of £50, quickly earns us an extra £100.

Now, if you don’t want the extra £100 or £2,000 then my suggestion is you still raise your price a fraction and send me the extra money. I promise to invest it wisely in Prosecco, so that you don’t have any problems spending it yourself.

Remember that a slightly higher price can help to insulate us against price-sensitive clients (because any reduction we offer starts from a higher place) and it also supports our brand values of high quality and exemplary service.

So, this week our task is to increase our prices by a humble little £1 and enjoy watching it turn into £100 for us.

Next week: The Dividend Trap

Here’s a dilemma…

A hungry looking man walks into your bakers shop and takes a bread roll. He puts it in his pocket without paying and slips out of the shop. As you saw what happened do you…

A. Leave the counter and pursue him, to ask for the money?

B. Take pity on him and just think of it as a good deed you have done?

Maybe a smart lady walks into your restaurant, orders and eats a three course meal and then leaves without paying. Do you…

A. Run after her and demand payment, or you will call the police?

B. Assume she has no money and feel glad you fed her for free?

Whatever you chose to answer, the point of both stories is that they are both about theft.

Taking goods without paying is theft. 

How about you provide someone with life coaching and they promise to send you a cheque, but never do?

Would you pursue the debt and write to them until they paid up? Or do you assume your work was at fault, or just write it off to experience?

Not paying for a service is theft and even though we can’t see the product that doesn’t mean the law doesn’t apply.

I was chatting to a colleague last week who had provided three weeks of home care to a couple. They knew her costs and terms of business and when the time came …they refused to pay and said they couldn’t afford it.

My colleague was surprised when I told her this was a case of theft and she is currently writing to them to recover the money. Before our conversation she had thought it was ‘bad luck’ on her part and was going to let it go, even though she needed the money herself.

I have had three bad debts in 14 years of business. The first was chased every week until they paid. For the second I hired a debt collector, who recovered some cash and the balance is still owing. The third involved an Australian business who mis-managed their cash flow.

When they wrote and said they couldn’t pay I replied politely that I would sue them personally for the debt. They paid 80% and then (a year later) went bankrupt. The balance is in the hands of the receiver and I may see some of it in due course.

All businesses incur a bad debt at some point. Often from a friend …according to my debt collecting agency their experience is that 9 out 10 bad debts are owed by a friend to a friend. A sobering thought perhaps.

If we are confident enough to sell our services on the open market, we need to be confident enough to chase up all the money people owe us.

Non-payment is theft. It’s not ‘hard times’ or ‘character building’. It’s theft and we owe it to the next person they are going to default on to chase the debt and make them think twice in the future.

As for the first example, I would have paid for the bread roll myself and let the hungry man go free. If I met him in the street I might even have offered him some lunch. We can all be charitable when the need arises …and we can be tough minded when we need to chase up a debt. Even if it is invisible, due to the nature of service work, it’s still theft.

Next week: Turning £1 Into £100