Thursday, January 31, 2008

How much do your competitors charge?

I received an interesting email today from a Canadian consultant who had read my PROFIT magazine article "Raise Your Prices", and wondered how to get more information on what prices his competitors are charging.

I offered a few suggestions:

1) Why not contact other people in your line of work and ask them what they charge? Ask specifically about related issues, such as do they charge mileage, do they charge travel time, how do they charge for out-of-town engagements, do they have separate rates for small and big business, etc., to indicate you are looking for real advice and not just inquiring about their base rate. In my experience, many business people are happy to help each other - especially if the market is bigger than any one person can ever hope to own.

2) You could specifically focus on out-of-town experts who are in your business. If you live in Toronto, for instance, you could contact your counterparts in Montreal, Vancouver, New York or Chicago and ask straight-out for pricing advice. Ask enough people, and some will answer.

3) Make sure that you focus your clients and prospects on the tremendous value you provide, not your price. If you can give someone the training and advice to help them land just one deal, the return from that should be so great that your price is almost irrelevant.

4) PROFIT Magazine has an online service, Peer to Peer, in which questions such as yours are asked by email to an audience of thousands of Canadian entrepreneurs. They usually draw some very thoughtful and useful answers.

You can read past Peer to Peer articles here. That page also has an email link you can use to submit your own questions.

PROFIT editor Ian Portsmouth also sends this link to a recent Toronto Star story that discusses a scientific connection between price and perceived quality. Click here to find out why wine tastes better when you think it costs more.

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