Differentiating Between Price and Value
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Free Download - Dressed To Bill By James Chan |
Setting prices that really reflect the value of your services takes discipline and courage. And as Fran McElroy, who runs a video production firm, has discovered, the toughest people to charge are often those you admire the most.
Fran went independent after two distinct careers. The first was as a staffer for Senator Edward Kennedy, which she recalls as a time of idealism and youthful enthusiasm. The second was as a program developer for a public television station, where, she feels, her anti-authoritarian attitude made her a prime candidate for downsizing.
When she set up her business, her goal was, in a sense, to combine her liberal political philosophy with the skills that she had acquired in television. She incorporated her business as a nonprofit. Its intent is to serve other nonprofit organizations, particularly charities and cultural institutions, by making educational films, fundraising videos, public service announcements, and documentary films.
Television and film production is expensive by nature, and Fran is very proud of the results she has achieved on tiny budgets. ~{!0~}They have no money, yet they want all the bells and whistles,~{!1~} she says of her nonprofit clients, ~{!0~}and often I~{!/~}m able to oblige.~{!1~} One way she does this is by convincing her contractors and suppliers of the worthiness of the cause so that they are willing to settle for lower fees than they usually charge. The other way she does it is pay herself next to nothing.
~{!0~}It~{!/~}s just my liberal guilt,~{!1~} Fran says. ~{!0~}Something inside tells me that I shouldn~{!/~}t take money from organizations that serve the homebound elderly and the homeless.~{!1~}
Recently, after one of her videos won a national award from an association of philanthropists, Fran realized that she was placing too low a value on what she does~{!*~}not only in the prices she quotes, but in the way she thinks about her work. In imagining that she was taking food from the mouths of the homeless, she was forgetting that her videos serve the organizations for which she works and, by assisting their public awareness and fundraising, help to keep them in business.
~{!0~}Any charity has to find the money to get its message out,~{!1~} she says. As a consequence, she has decided that she has to charge enough to ensure the future of her own business. Fran doesn~{!/~}t intend to gouge the poor, merely to compensate herself fairly.
She recently made a proposal whose costs reflected this new, realistic attitude. ~{!0~}They said yes, and I was absolutely shocked,~{!1~} says Fran. ~{!0~}I~{!/~}m learning.~{!1~}
Like Fran, most entrepreneurs grapple daily with the tangled issues of pricing and self-esteem. And her dilemma demonstrates that having admirable, even saintly, customers~{!*~}a problem most of us don~{!/~}t face~{!*~}doesn~{!/~}t make running your business any easier.
Differentiating Between Price and Value - To learn more about this author, visit James Chan's Website.
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James Chan Video - James Chan, Ph.D., created the phrase "The China Formula" to help Americans understand China in one word.
Dr. Chan is President of the Philadelphia-based, independent consultancy, Asia Marketing and Management (AMM). AMM specializes in advising U.S. manufacturers, trade associations, and information companies in building business relationships in China and in exporting American-made products and services in China and Asia. To view AMM's detailed profile online, go to: www.AsiaMarketingManagement.com.
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