The Price is Not Too High, The Value is Too Low: Part 2

Recently I have been reviewing this post I wrote in September 2009 as I am working on 2011 business plans where I work, and wanted to further elaborate on this topic, at the encouragement of my boss. :-)

In these austere times, "no price too high, but value too low" this mantra is all the more critical as everyone is crying "low and lower price" while not really asking enough about "what is the value?". This lack of asking makes it all the more critical that we who are seeking funding & resources be better than ever at articulating the value we will deliver. I had a great discussion with my boss about this matter and he challenged me about a few things that stick with me:

1. Lead with the deliverables, not the resource request. So often we are preoccupied with what we need to get a job done (the resources) and neglect to clearly define and articulate the outcome we will create (the deliverables). We fail to understand that the investor is most interested in the outcome. For success, we have to learn to think as much like the investor as like the performer who converts resources into outcomes. As we transform our thinking in this way we will improve our proposals with better linkages between deliverables and resources, and as a result, improve the "hit" rate on our requests, whether it be for budgets, jobs, relationships, etc..

2. Focus on value-added activities & drop the non-value-added "busywork". So often we get caught up in the "urgent and efficient" elements of our to-do lists to the neglect of the "important and effective" elements of the same lists. In reflecting on this admonishment, I have to remember the 80/20 rule; that 20 percent of our effort gets us 80 percent of our outcome. Where we invest effort has a lot to do with the outcome we get, for better and or worse. If we are neglecting the investment of that 20 percent in important and effective effort, our outcomes will suffer. Another element of this dilemma is that those things that are most important and effective, are also most challenging to us and thus invite procrastination (see my earlier post on this topic). This tendency toward the urgent & efficient, and avoidance of the challenging is something to watch and to be disciplined against in order to deliver the value that warrants the higher price we all like to charge.

The Price is Not Too High, the Value is Too Low

In a world of "Everyday Low Prices" when the goal is to assure that every transaction is a bargain, like with anything, we can take this to an extreme where we transact for bargains that ultimately deliver shallow and inadequate value. In our work, we are all required to convince someone to purchase something of value from us (time, knowledge, contacts, outcome) at some price (salary/wages, fees, attention, membership). These are the elements of transaction. As you know, much haggling occurs in the transactional process as we weigh and negotiate to assure the lowest price for the highest corresponding value. We err when we allow these negotiations to focus too much on price (the more tangible and quantifiable element) rather than value.

The utterance, "that price is too high" is frequent but the fact is that people pay whatever price is asked for what they value and sometimes they will pay extra and brag that they did so; just look at military, legal services and luxury goods transactions. This "price too high" utterance is sweet in the mouth but bitter in the ear. When encountered, our opportunity is to detect and devise value propositions that warrant the price. Note that often the price does not have to change as much as the perception of the value being offered for that price. Unfortunately, we do not instinctively go for the "value build" because of its greater difficulty versus price lowering. We miss the point that the difficult has the advantage of not being easily imitated and by getting good at value building, we gain a significant competitive advantage in all we do.

When faced with the response, "the price is too high", whether we are talking about money, time or the risk of being trusted to get a job done, it behooves us to think first about what value justified the price, and if we have articulated this value thoroughly and compellingly enough. Such thinking better connects us with the valuable outcomes of our work taking us beyond a task to a valuable outcomes orientation. This is critical in an age where employers are more readily hiring for outcomes than for the completion of tasks. When developing your "value build" story, think not only in terms of what value is gained if your price is paid but also what is lost if the price is not paid. When articulating value, also remember there is more to it than money made or saved. There is time saved, service levels guaranteed, knowledge and experience levels leveraged, relationships gained, repaired and sustained, processes made more efficient, downtime reduced, projects well managed, etc.. Build value on as many dimensions as possible in order to warrant as high a price as possible.

So, let's begin to practice this different approach of looking for the "value build" when asking for others' investment in our work.

Thanks in advance for comments and further insights on this topic.