John Ray is a Pricing and Business Development Coach for Professional Services Firms, and a Podcast Host and Producer.
In this episode, John shares optimal strategies for positioning your value proposition to attract the best fit clients for your business.
Podcast: Play in new window | Download
Why you have to check out today’s podcast:
- Discover how to craft a compelling value proposition by identifying the unique value that your clients perceive in your offerings
- Learn about the importance of continuing value conversation
- Overcome the fear of pricing the value you provide to your clients
“Develop your options around that client and let them choose. And you’ll find out your pricing suddenly improves.”
– John Ray
Topics Covered:
01:15 – How he got himself into pricing
02:10 – Who is his ideal client?
03:59 – Insights on solopreneurs making their business work even if they don’t necessarily plan on being a business owner
05:28 – The feeling of fear and inadequacy in pricing in a lot of solopreneurs
06:11 – It’s not all about expertise but the value you deliver
08:13 – Suggested value proposition to this case: Roger [the client] loves the fact that I calm him down when he gets notice in the mail, I’m trying to win some new business
09:01 – The importance of continuing value conversation
11:10 – One way to lead a value conversation and for people to dig deep with you
11:47 – Optimal win rate or rejection rate and the significance of having a value conversation
15:25 – Benefits of accepting all clients when you’re just starting out [and advantages of niching]
18:42 – Turning the intangible value you have into a tangible range of values for the client
20:47 – Price effectively or end up costing your business
24:10 – John’s thoughts on this: If I’m bidding and there’s no competition or there is competition
26:11 – John’s pricing advice
Key Takeaways:
“By definition you’ll be getting better clients by that measure [35% win rate].” – John Ray
“The great thing about a value conversation, it’s a net that allows the great clients in that fits you well, and keeps out the ones that are not great fits.” – John Ray
“You don’t lean on what you think you’re worth, you lean on what the value that you’ve been able to uncover in that conversation.” – John Ray
People / Resources Mentioned:
- Ron Baker: https://impactpricing.com/?s=Ron+BAker
- Allan Weiss: https://alanweiss.com/shop/books/hardcover/value-based-fees-3rd-edition/
Connect with John Ray:
- LinkedIn: https://www.linkedin.com/in/johnray1/
- Website: https://www.raybusinessadvisors.com/
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
John Ray
Develop your options around that client and let them choose. And you’ll find out your pricing suddenly improves.
[Intro]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the mindset relationship between them. I’m Mark Stiving. Our guest today is John Ray, and here are three things you want to know about John before we start. He runs his own podcast production company called RadioX. He’s been doing it since 2018, and I was a guest there, oh, many, many years ago. He also runs Ray Business Advisors, and he’s done that since 2013. Surprisingly, he’s a deacon at the Episcopal Diocese of Atlanta. I don’t think I’ve ever had a deacon or a minister or a priest on my podcast before. And I’m going to say he’s just an all-around nice guy when you look at all the things he does. So this is going to be great. Thank you. Welcome, John.
John Ray
Thank you so much, Mark. I’m delighted and honored for you to have me here, so thank you.
Mark Stiving
It’s going to be great. Yeah. Hey, how did you get into pricing?
John Ray
I was the patient at one point. I mean, I had my own practice and I was having pricing problems. I didn’t feel like I was getting what my services were worth. And I went to find resources and there just aren’t a lot around. And I also had clients that were having pricing problems. And so it became a little bit of a tool of self-discovery for me, finding great pricing leaders like Ron Baker, Alan Weiss, you, others that are leaders in pricing and learning from them. So I’m becoming an evangelist myself, if you will, and trying to spread the word among the clients I work with.
Mark Stiving
We all fall into pricing somehow. So that’s a great story. And so tell us who it is that is your typical customer? Who’s your audience?
John Ray
So, it’s a solo and small professional services firm. They’re either fresh out of corporate or maybe they’re a few years in. The ones that are a few years in, they need the most help because they’re the most frustrated with where they are. They’ve gotten out and they’ve priced, quote unquote, where everybody else is pricing. And the problem is when everybody else you survey is pricing incorrectly, you’re pricing incorrectly by definition. And that’s what they find out. They’re pricing by the hour, or they’re pricing in with some formula that has no relation to value, and they realize they’re working way too hard for too little money. Their proposals are getting accepted way too often, and there needs to be a little gap between how many proposals you put out there and how many get accepted to gauge your pricing. Right. And so they’ve got all these issues that really what they reveal is a pricing problem. And a lot of them don’t even know they have it in some cases.
Mark Stiving
Yeah. So one of the things I find fascinating about solopreneurs is that they started whatever business they started because they wanted to be in that business. Not because they wanted to run a business. So for example, I think some of my favorite examples are people like someone who runs a bike shop or a veterinarian, right? They do this because they love bicycles or they love animals and they don’t really want to run a business. They just have to, if they’re going to be successful at the things they want to go do. And so we find that these solopreneurs, not that they’re stupid or anything, they just don’t have the business experience or knowledge to go do this. And so people like you are really helpful to them.
John Ray
And see, the thing about it is they don’t have the resources, right? I mean, they come at it with some general knowledge. Well, they come at it with a passion to help people, and that’s wonderful, and they come at it with their core expertise, whatever that is. And they come in with the general knowledge of how to market what they do and how to network and that kind of thing. But they really have no idea about how to have a value conversation. They don’t even know what that is in a lot of cases. When they talk about what they’re worth, they talk about that from their perspective, not from what the client sees in their worth. And what I can try to teach is the client will always see more worth in you than you see in yourself. And that’s why it’s important to have that perspective. I think that’s always true, don’t you?
Mark Stiving
So I think it’s probably 90% true, and I’ll tell you when I don’t. I think that sometimes men, this is a really sexist comment. Sometimes men are overconfident, and so we think that we’re worth a lot more than we really are, but most of the time solopreneurs are extremely underpriced, underconfident. It’s a fear thing. So if someone doesn’t accept my proposal, they don’t like me.
John Ray
Yep.
Mark Stiving
It was me. It wasn’t my business, it wasn’t my proposal, it wasn’t my offer, it was me. And that’s scary.
John Ray
Yeah, absolutely. It’s very personal. I mean, you’re not, as a solopreneur services provider, you’re not selling green beans or doggy treats. I mean, you’re selling what’s between your ears and that is highly personal at the end of the day. That mindset of inadequacy, of imposter syndrome, of comparison that social media blows up for you every day can really work on you mentally. And so it’s really important to flip that mindset away from those places to be in your head.
Mark Stiving
Okay. How did you do it? How did you get over this fear of rejection, we’ll call it, or how do you teach other people to do this?
John Ray
To make it about the client. Because it’s not about, first of all, if you internalize what value is, that value is not just contained in the features and benefits of whatever it is that you do, that people want to do business with you because of intangibles that have nothing to do with what you think is important. Let me give you an example. I’ve got a CPA who’s a great friend of mine. He has a podcast. He had a client on his podcast who started talking one day about how, why he does business with my CPA friend. And the first thing he mentioned had nothing to do with this professional’s expertise. He said, I’m a really excitable guy, and when I get a notice in the mail or I have something happen in my business that upsets me, I call Roger. He calms me down. That’s the first thing he mentioned. And see, that’s an intangible that this CPA may never would’ve known if this individual hadn’t talked about and verbalized why it is he was doing business with him. So we all have clients that have different reasons, intangible reasons why they do business with us, and it’s important for us to put ourselves in their perspective and have a value conversation to learn what those are.
Mark Stiving
Okay. John, I’m going to put you on the hot seat because I do not know the answer to what I’m about to ask you.
John Ray
I may not either. Let’s see.
Mark Stiving
So your friend comes to you and says, hey, I got to tell you this experience I had, Roger loves the fact that I calm him down when he gets notice in the mail, I’m trying to go win some new business. How do I position the fact that I can calm you down when you get overly excited?
John Ray
So let’s talk about what happens when you’re not calm. What are the decisions that you make when you’re not calm, what are the ramifications of those decisions? What am I saving you from because I keep you calm, right? What do I talk you through rationally in terms of your response to that notice you get in the mail or that lawsuit or what have you.
Mark Stiving
I think that part I get. It’s the part that I have a really hard time with. How do you lead with, I’m the type of person who keeps you calm. Now, what you can do is have one of these value conversations to figure out what problems do you have. And when you find someone that says, I get overly excited, but whoever says that as a potential buyer.
John Ray
Well they don’t. I think you get to that in the value conversation, right? In terms of what it is you’re looking for in a provider. To be fair, this was a client that this CPA had for many years. So that value kind of came out later as time went on. But that brings up an important point. It’s important to have a continuing value conversation. That’s why I think value conversations are a dialogue that you have over years with a client, not just a one-time thing when you sign an engagement agreement.
Mark Stiving
Yeah. Absolutely. Now that you’ve had a chance to talk, I’ve had a chance to think of what answer I would give to the hard question that I asked.
John Ray
Okay. I love it.
Mark Stiving
I think what I would do is I would have in my back pocket the fact that I have this skill and I can solve this problem and I’m not going to lead with it. But as I’m having a conversation with my client and I find out the client tells me an experience where they got overly excited or reacted too quickly, or it’s like now I can pull that one skill out and talk a little bit about that and the experience of my other client and turn that into value and part of a value conversation. So not everything we do, we lead with or we use to go capture business, right. But these are all proof points that say we can help our clients.
John Ray
Yeah, absolutely. No question about that. And I guess where I’m coming from is that that ability to calm a client may not be as highly valued in the next client you talk to, right? Those intangibles are an entirely different set for the next client you talk to. And hence we repeat ourselves again and again. This is why it’s important to have a value conversation.
Mark Stiving
Yeah. And it’s important to have a list of the skills and values that you can bring to a client. So you can figure out which ones make sense. And by the way, you can figure out which clients you don’t want to do business with because you don’t solve their problems very well.
John Ray
Yeah. And that’s a very generous place to be. I mean, and that’s why one way you lead a value conversation and to get people to dig deep with you is to say, hey, we may not be the best fit. I want to figure out what is the best alternative for you that may not be me. And if it’s not me, I’m going to help you get there with another provider to the extent you’ll allow me to do that.
Mark Stiving
Nice. Earlier on you said that you don’t want to win too many deals. Do you have in the back of your mind an optimal win rate percentage or range?
John Ray
So this comes out of some of the research out there that you would know better than I do, but what I pick up along the way is that the cheapskates, I call them, the people that are shopping based solely on price are probably about, let’s say 25% a third of the people you run into for any given product or service. Does that resonate with you?
Mark Stiving
That seems reasonable. I haven’t seen the research, but that certainly seems reasonable.
John Ray
Okay. Let’s just say it’s 25%. So if 25% of the prospective clients you run into are cheapskates, then what that says is this, if a hundred percent of your engagement agreements are being accepted, that means by definition, your price is too low because the cheapskates are taking advantage of what you’re offering. And because for them, price is everything. And so by definition, you should have a rejection of about 25% of your proposals, your prices should be high enough that that’s how high your rejection rate should be.
Mark Stiving
Yeah. So let me slightly modify what you just said. And that is that your rejection rate needs to be at least 25%.
John Ray
Yeah.
Mark Stiving
Very possible that I’m up against competition and both of us are doing a great job and we only go after the high end people and we both quote high and we win 50/50. So now we’re at 50% of the 70% that are left mm-h. So we’re now at a 35% win rate or something like that.
John Ray
Yeah. And by definition, your pricing when you get to that point will be high enough that it more than compensates you for loss of revenue of 25%. And by the way, in doing that, you will get better fit clients, clients that love you a lot more at the end of the day than the cheapskates do. Because the cheapskates will always find a reason to have a problem with something you haven’t delivered, or they’ll want to discount because something was a day late or whatever. By definition you’ll be getting better clients by that measure.
Mark Stiving
Yeah. I don’t know if you used this phrase a lot, but as soon as you said these words, it sets off endorphins in my brain and the words were better fit clients. I loved that phrase. So if you’re not using it all the time, use it.
Mark Stiving
I use it all the time. So thank you for that. Thank you for that. Because that’s part of the deal, right? I mean, because a lot of my folks come out of corporate or when they start their practice, they take on everybody because they’re trying to get started. And there’s nothing, no shame in that. Right. You gotta start somewhere, after a certain point that gets old and you come home and you’re kicking the dog, you’re yelling at your spouse or whatever you’re doing because you’re taking that out on everybody else in your life and it’s because you’ve got bad fit clients and so you’ve got to rearrange your practice. And so that’s the great thing about a value conversation, it helps a net that allows the great clients that fit you well and keeps out the ones that are not great fits.
Mark Stiving
Yeah. And what happens is when you first start out and you’re taking on every client you can possibly win, you’re actually learning what feels good to you, where you truly add value to your clients, what types of clients are out there. And it should help you start to formulate what your niche is going to be.
John Ray
Yeah.
Mark Stiving
You should go after.
John Ray
Exactly. And it’ll help you modify your service offering too. Right? So, because you’ll learn that niche, to your point, and you’ll learn a lot more about what it is they really need and what you can supply that you didn’t think of. But when you get into business and once you get to that point, you’re able to price a whole lot better.
Mark Stiving
Yeah. Because we’re now doing true value-based pricing, how much value, and when we’ve niched it, we truly understand who we can help and how we’re going to help them. We actually understand how much value we’re going to deliver. In a lot of ways we could understand how much dollars in profit or additional income or revenue that we’re going to help that person or company generate.
John Ray
Yeah. For sure. And also how we’re going to help them personally because a lot of solo and small professional services people are working with similar kinds of businesses, right? They’re working with other solopreneurs, other small businesses. And so the values there are certainly quite intangible in a lot of ways. I mean, they’re in that business not just to maximize this quarter’s earnings, they don’t have reported earnings. They’re in it to make sure they can take the spouse to Rome, Italy next summer. Right. So that’s a big intangible and things like that are big intangibles that my folks help their clients get to and that’s what they need to dig into and ask about.
Mark Stiving
Yeah. So to show you that I was listening, I heard you say really early in the conversation that the way we shift the mindset is to stop thinking about ourselves and our own company and start thinking about our customers and their company.
John Ray
Correct.
Mark Stiving
Now, to me, one of the biggest problems especially solopreneurs have when pricing is just the word confidence. They don’t have confidence. So how do you, or do you think it’s the same answer? Is it a different answer to how we help our clients get more confidence in their quoting and their pricing?
John Ray
Yeah. So I call it a confidence crutch. If you’ve had a value conversation that’s a dialogue with a client, then the two of you together have defined value and you’ve had a conversation that’s unleashed a lot of this, not just for you, but for that client, right. Because that client sees a lot of value in what you do that goes beyond the coaching or the consulting the tax return that you do or whatever the thing is, if you will. The outcomes that come out of that spill over to the business and to them personally. And a lot of that comes up to the surface. And so all you’re doing is leaning into what that client has told you, they see that value themselves. Right. And so you lean on that. You don’t lean on what you think you’re worth, you lean on what the value that you’ve been able to uncover in that conversation.
Mark Stiving
Yes. And so do you take that value…Do you recommend to your clients that they turn whatever that value is into profit dollars to their client?
John Ray
Sure. I mean, there’s certainly that component, right? That you’re going to, your advice, your work is going to generate so much additional revenue or save so much in expenses or what have you. You may have that, you may have a service though that leans toward the intangible that you have to convert to the tangible. So let’s just say that you’re a consultant, you help lower turnover at companies and you’re being hired to do that. So does your thing help get that turnover down from let’s say 40% down to 20. Hey, if I can just get it to 30, that would be an improvement, right? So what’s that worth to you? What’s that worth to the company? And let’s talk about some of those ranges of values. Yeah, it doesn’t have to be exactly right. And see, this is where I think people mess up. They think they have to have an exact number and I think clients just have to have an estimate in their head, right, of what they’re going to receive. And you just have to show that the return on the investment in you as the services provider is going to be a fantastic investment on any range of those outcomes.
Mark Stiving
Yeah. So, I agree. They don’t have to have an exact number, we just need to get a big number. That’s what we’re after. Give us a big number.
John Ray
Yes.
Mark Stiving
I’m going to rephrase what you said to answer that question, if I may now. And that is that if we have a value conversation, well, I’m sorry, if I don’t have a value conversation, I’m walking in the door saying, hey, I’m a pricing expert I charge most people $10,000, right? It’s like I’m hedging my bet and would you take that or how much are we going to negotiate but instead of have a value conversation I say, oh, so you’re saying if we solve this problem, you’re going to make another million dollars. So, I can help you do that and I only charge $10,000. Right? It changes the confidence in the presentation dramatically.
John Ray
Absolutely. And I’ll tell you what happens if you go in like that. The problem is that it sounds too good to be true. I’m going to pay $10,000 for an additional million in revenue. So, hey, professional services provider, you’re not only not leaning into value by pricing more effectively, but you may end up costing yourself the business because it’s too good to be true. Right? Does that make sense to you?
Mark Stiving
It does make sense to me. I’m debating whether I’m going to let you coach me in my own business or not, right now.
John Ray
You don’t need to be.
Mark Stiving
But the problem is, I make million dollar impacts on my clients, right? Not a doubt. And I do charge in the range depending on what we’re doing, somewhere between 15 and $25,000, right?. And, so that looks like a phenomenal ROI. But if I charged a whole lot more than that, they would go hire SKP or somebody, right? I’m doing hourly advice to get them to where they are and they’re looking at what’s that per hour rate that I’m paying you? Right? It seems ridiculously high. So they’re doing all that math themselves. Yeah. So there’s all these things that we have to have in mind as we think about how they make decisions. But in the end, you want to say to yourself, it’s okay if they don’t hire me.
John Ray
Exactly.
Mark Stiving
There was somebody else that was a better fit. I’ve got other people that are hiring me. It’s totally okay.
John Ray
Yeah. And, and I mean, let’s keep using the same numbers if we can. So if you’re able to get one client that will pay you a hundred thousand dollars for that additional million, then that takes a whole lot of clients and takes care of a whole lot of clients. You’re certain right now getting at 10,000, 15,000, 20, whatever the number is, right? I mean, the beautiful math about pricing is…
Mark Stiving
Was just going to say, hang on, I’m going to go change my website, my pricing on my webpage. Just one second. I agree with you completely, John. I thought that if I could pull that off, I’d probably do it.
John Ray
Well, what you’re saying about the audience is spot on, right? So if you’re dealing with a big company with committees and procurement which makes, tingles run up my spine when I say that word but that’s a whole another dynamic than when it’s one business owner to another business owner, right? Let’s just put that out there. We may be talking about apples and oranges here in some cases.
Mark Stiving
Yeah. And I think the other thing, you and I haven’t talked about this explicitly, but there’s, I call it ‘will I and which ones’, so all my past listeners know exactly what I’m talking about here, but there’s a huge difference between if I’m bidding and there’s no competition or there is competition. If there’s no competition, then I’m getting a percent of the value that you’re going to get. So I’m going to make you a million dollars, I’m going to get a hundred K of that. Right? If there’s competition, I have to be relative to the competition versus the amount of value or the things that I can deliver. I don’t have to be equal to it, but I have to somehow be relative to it.
John Ray
Yeah, absolutely. I mean, when procurement is involved, when there’s an RFP involved, absolutely. For a solo small professional services provider, here’s the issue. They think there’s competition and there’s really not.
Mark Stiving
In so many situations. Absolutely.
John Ray
Yeah. Here’s an example. When I coach individuals like this, I ask them, do you ever say like, why did you get that call? Why did you call me? Well, the fact that they called you means they’ve weeded out a whole lot of people, right? They weeded out your competition. There’s something that they found out about you and you normally, they’ve been referred to by someone. So if Mark my friend referred me in, then the work has been done, right? Because they trust Mark and I’m riding on Mark’s friendship, goodwill, whatever it is with that client to get me halfway down the road. I don’t have to worry about my degrees and all this kind of hoorah that a lot of people that are early on in their business worry about.
Mark Stiving
Yeah. I think referrals and repeat business both are often non-competitive situations. And we should know that, recognize that. And then since we’re on the topic, let me just give you my favorite question to ask somebody. Because I never ask, who else are you looking at? Or who are we competing with? Does that imply there’s competition out there? But if I want to know, I’ll ask the question. If you don’t buy this, what will you do?
John Ray
I like that.
Mark Stiving
And the implication is there’s nothing else possible.
John Ray
I like that. Yeah, I like that one a lot.
Mark Stiving
I’m having a ton of fun, but we’re going to have to start wrapping it up. But let me ask the final question. What’s one piece of pricing advice that you would give our listeners that you think could have a big impact on their business?
John Ray
Yeah. Well, you’re going to love this one. I think because for most solo and small professional services firms, the one thing they could do today is just introduce options. They don’t give options to their clients. Therefore they don’t figure out the best fit clients, the ones that will accept let’s call it a better or best option. And just by introducing options, they will raise their prices. See, they don’t have to worry about how you quote unquote talk a client into it. You just develop your options around that client and let them choose. And you’ll find out your pricing suddenly improves.
Mark Stiving
Yeah, I think that’s a great idea. And not only does the pricing improve, but the packages that we deliver to our clients are better fits.
John Ray
Yep.
Mark Stiving
And we do that without trying to customize everything. Because custom, well how many of these do you need? It is just hard for people to do. So, yeah, absolutely. I love that. Thank you, John.
John Ray
Thank You.
Mark Stiving
Thank you so much for your time today. If anybody wants to contact you, how can they do that?
John Ray
Sure. So you can email me directly, johnray.co. I’m also on LinkedIn, John Ray1 because there’s a lot of John Rays out there, but I’m John Ray1 on LinkedIn.
Mark Stiving
Nice. And to our listeners, thank you so much for your time. If you enjoyed this, would you please leave us a rating and a review? You can get instructions by going to ratethispodcast.com/impact pricing. And I recently got a new book review on Amazon for my first book, which was 11, 12 years old now, Impact Pricing, but it came in, saying:
“If you are pressed for time or only buying one book on product pricing, this is the book for you. It’s short, succinct, understandable, and powerful. You’ll not only learn the importance of value pricing, it’ll show you why you should embed it in your organization before designing any product. If failure is not an option, start with this book.”
So, that was from Spectrum Reader. And thank you so much Spectrum Reader, the check is in the mail. And finally, if you have any questions or comments about the podcast or pricing, feel free to email me, mark@ impact pricing.com. Now, go make an impact!
