Itemized Pricing and Giving Away Trade Secrets
You may have noticed, it can be like pulling teeth with some vendors if you request itemized pricing. Two of the few, if only industries that have been able to hold on to their “trade-secrets” are the medical trade and mortgage lending. However, if you did the research, you could write your own mortgage. One of the last industries to succumb to the “give everything away for free” business model is the paper media industry. Newspapers fought the long hard fight to maintain paper subscriptions even while free news stared them in the face, online.
When it comes to social media the major theme is “give everything away.” A company needs to make money but sustainability is achieved by forming long lasting relationships with your client community. Give everything you can, away for free. By everything, I mean information. Promote transparency and no more secrets. This is a heavy request for some industries but not so much for others. The old school taught many to hold on to their knowledge and industry secrets. Imagine if you will, Company A keeps its secrets ‘close to its chest’ and Company B is more forthcoming. Company B has Open House events at their office, gives tours, readily answers emails clearly from end-users trying to do it themselves. In addition, Company B provides quotes with every item quoted, priced individually. When a client eventually needs the billable services of A or B, which Company will the client probably prefer to do business with? Company B.
Building a Community and Relationships Online
I believe the payoff is in the community and relationships you develop by being transparent. The internet is filled with answers and information. Most likely the information you choose to withhold is readily available somewhere, on the internet. I sit on the board of the International Technology Rental Association and the membership is split on the value of social media. Everyone can see value in maintaining a presence but we are split in how much time should be dedicated to gaining more presence. I must say, I fall on the side of dedicating time for increasing your internet and social media presence.
One secret still held close to some company’s chest is itemized pricing; especially in the service oriented field. Maintaining a competitive advantage used to depend on keeping the client in the dark on the details of how the end total is achieved. Pricing an entire event as an event planner is similar to pricing the audio visual only, for large A/V events; it is priced as a package. At A.V. Rental Service, Inc. we publish our standard price list here for all the world to see. The negative backlash I hear is “this could run customers off if they think something is too expensive.” True, but the value and appreciation we receive for being transparent, well outweighs a losing a possible DIY client. In addition, I would rather be a little out of someone’s budget online than publish an unbelievably low price and later force the client to pay a hidden charge, which some companies do; leaving a bad taste in the client’s mouth. There are times and special events that we are able to offer the lowest available price that still allows us to make a profit. These are special situations where there may be value for us in another manner. In 2014, we provided a large amount of audio visual and lighting equipment for a medium sized booth on the New York Comic Con main floor. At the end of the day, we did not make a profit from the equipment rental but what we did achieve is contacts for future projects, resources for future New York business, hours of video footage and we met DMC, of Run DMC fame(Joke). My point is we did profit from taking the gig and basically giving everything away.
Alternatively, know…when to charge and how much.
In an effort to gain clientele some new companies succumb to the pressure to offer the lowest price to win a contract. Eventually you learn… you may not want to win every contract or event you bid on. Being aware of the value of your services is one thing but remaining steadfast at that number can be a challenge when faced with the possibility of losing a contract. The value of a company’s services is determined by the company. Making that determination can be one of the hardest task. Again, being confident in that final determined value is imperative. In the event planning business, ‘value-added’ pricing and ‘skim pricing’ works in the best interest of the company and the client. Educating the client is at the heart of this business model. Ensuring your client understands the value of your service is of the utmost importance to your client agreeing to your price. So take them on that tour of your facility, explain in detail exactly how you plan to execute their vision. In your estimates, include detailed drawings, diagrams and specification sheets that will not only overwhelm them with information but make them feel comfortable and confident they will be making the correct choice by using your company.
Bruce L. Johnson Jr.
A.V. Rental Services, Inc.