The Art of Price [Archive]

Happy Anniversary…to me.  July 4th was our first ‘scoping’ trip to Oakland.  I remember it like it was yesterday.  So, we’re out celebrating and learning more about my wonderful, new hometown and the surrounding areas. (I’m dying to go to the Heath factory.  And, back up to Healdsburg for jazz & great wine.  Where else should we try?)

Meanwhile, here’s one of the very first book reviews I did.  The Art of Pricing is a slim volume but packed with common sense goodness about pricing.  I read pricing journals (so you don’t have to).  This book is a joy to read and very relevant to your business. You’ll notice I’m writing for mediators, my first loves.  The advice (and the book)  work  for you, especially if you’re holding your price down to try to boost sales.  Happy 4th!

 

The Art of Pricing Solves Mediation Fee Problems

 

Finding the right price to charge is hard for service providers, and especially hard for mediators.

 

Most of us do a ‘scratch on a napkin’ calculation and charge somewhere near the bottom of the range for fear of looking ‘greedy’. Or, we take our colleagues’ fees combine with our costs then set prices pretty close to everyone else.

 

Neither of these methods really captures the true value that mediation provides for our clients, appreciates mediators’ unique talents, or creates a revenue stream that mediators deserve.  That’s why I was thrilled to read a new book on pricing strategies, The Art of Pricing by Rafi Mohammed.

 

Finding Hidden Value

 

Mohammed, a Batten Fellow at the University of Virginia’s Darden Graduate School of Business, offers us hope in his book by making pricing theories accessible and, dare I say it, easy to apply.  He encourages us to find the hidden profit that lies within our practices by examining our thoughts and perceived value.

 

For instance, most mediators keep their fees low possibly as a concession to the attorneys they work with or the knowledge that consumers are skeptical of seemingly extra fees.  According to this book, and the Professional Pricing Society, the lowest price will not always draw the largest amount of clients.

 

Think about your own purchasing experiences.  When the purchase was important like buying a home, did you select based on the lowest price or were there other factors that made a higher price point acceptable?  You probably weren’t looking for the least expensive house, but one that met your needs.  It is reasonable that clients will pay more to work with a mediator who meets their needs even if the fees were higher.

 

What’s Mediation Worth to Clients?

 

One of the most useful sections of the book explores differential value, meaning that different people are willing to pay different prices for the same product based on their interpretation of value.  I saw real life examples of this years ago when I was an auction enthusiast collecting McCoy pottery.  Sears uses a similar strategy by grading its products: good, better and best.  You get the vacuum but with more or fewer features depending on how much you’re willing to pay.

 

 

 

 

Unbundling Mediation Services

 

This idea of unbundling works for mediation, too.  Our product is resolution and peace of mind for clients and we provide it via a mediation session.  But what if we unbundled the mediation process and offered the results in differing ways?  Then, we can set differential prices, too.

 

In my mentoring program, ADRPracticebuilder.com, we discuss how to un-package mediation and offer real information and value to consumers in a way that reduces their risk, increase their confidence in us and ultimately lead to booking more mediation.

 

In his book, Mohammed, discusses a value decoder, a formula for assessing the value to clients.  It doesn’t have to be that fancy.  You can do it the easy way: just ask.

 

Questions like:

 

What was your batma (best alternative to a mediated agreement)?

What did you like best about working together?

How much would this have cost, emotionally and financially, if this had been litigated?

 

 

These types of questions assist you in understanding what specific, repeatable, unique value your clients receive from working with you.  This knowledge, combined with marketing tools, can be a real

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