Impact Pricing Blog

Q&A: Putting a Price on Trust

Question:   Hi Mark, do you think that all valuable aspects of a good or service should be priced? I am a pricer at a law firm, and one very important aspect of our service delivery, trust, is not explicitly taken into account when it comes to pricing. I am curious for your view on this! Kind regards, S

Hi Mark, good to hear you love this question. It has been puzzling me for sometime. I think of trust as some sort of prerequisite of getting a case from a client. The higher the level of trust, the higher the chances we are getting the case. But somehow it seems very hard to translate this aspect into a price.
Then again, using a hourly billing method, I could also argue that we are using (not always though) a form of cost-based-pricing. If we were to put a fixed price on a case, I suppose the level of trust could be translated into a higher price. But even then, if our clients would ever find out that we have put a price on the level of trust, I think that would have devastating effect on the actual level of trust, so to me, it seems hard to factor in this aspect. I am looking forward for your view and blog (as always). Meanwhile I keep pondering my own question and perhaps thinking of more examples. Kind regards, S

Answer:  Hi S, There are two HUGE lessons to take out of this situation.

Worth

First, of course you price trust into your bids, but you don’t make it a separate line item. Think of the price of Coca-cola versus the price of a store brand soda. Why does Coke charge more? Because of their brand.  But they don’t say, “Our contents are priced the same as the other one, but our brand costs this much more.” They just sell it at the higher price. Buyers decide if it’s worth the price.

Some law firms charge higher rates than others. Why? There are a multitude of reasons: experience, past performance, quality of lawyers and TRUST.  Yet nobody adds a line item for any of these.  It’s just the price.  These attributes are important to winning the deal at the price you charge, but you don’t charge separately for them.  You simply talk about them in your sales and marketing efforts.

 

Billing by the hour

Second lesson. Stop hourly billing. By billing by the hour you take away some of your ability to capture the true value you’re delivering to the client. I highly recommend you look up Ron Baker and Verasage. He has been battling hourly billing for years, and he’s brilliant. The reasons are too numerous to mention here, but suffice it to say, you will make a lot more money and your clients will be happier when you switch to billing by the job.

 

**Note: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.

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