I have a special treat for you today. We’re going to do something that we have not done before, but we will do more in the future in our Total Life Freedom Community. Every month we have guests, experts come on for question answered, calls with members of the community, and I was so excited when Bob Burg, the author from the Go-Giver and the Go-Giver series of books got on a call with us and for an hour he knocked it out of the park answering questions from members of the group. So today I’m going to give you a clip from that call and in this clip, Andrew Mundy, who is starting to build a coaching business, had a few questions for Bob. So here you go. Here’s a little bit of the awesome Bob Berg and the question from Andrew Monday.
Andrew Mundy:My question is regards to the law of value. How do you determine what your services are actually worth? For example, I started a new coaching business and I know that there is huge value in how I’ve helped people so far, but it’s hard to quantify when it comes to understanding what I should charge moving forward. So where is that balancing point between giving value and taking payment, which I’ve gotten some of that information so far already. Um, but yeah, that was my question.
Bob Burg: So, so what you see is there really isn’t a balancing point between giving value and and receiving because you know, they’re both important. Just like breathing out and breathing in. Uh, I think the question is what do I charge and how do I communicate my value and how do I justify that, that price? So the first thing we have to understand is, is that price and value are two different things where we, so we talk about law number one, uh, the, the law of value that says your true worth is determined by how much more you give in value than you take in payment, not when you first hear that. It sounds counterintuitive, it sounds like, yeah, give more in value than I take in payment. That sounds like a recipe for bankruptcy, right? So we simply have to understand the difference between price and value.
Price is a dollar figure. It’s a dollar amount. It’s finite. It simply is what it is. That’s the price. Value is the relative worth or desirability of a thing, of some thing to the end user or beholder. In other words, what is it about this thing, this product, service concept, idea, this wisdom coaching, what have you, that brings so much worth to another person that they will willingly again, free market. They will willingly exchange their money for it and be ecstatic that they did while you make a very healthy profit. So let me give you an example. I often, I often give, because I think it’s just a very concrete one. You hire an accountant to do your taxes. She charges you a thousand dollars. That’s her price, her fear, her price. But she saves you $5,000. Uh, she saves you countless hours of time. She provides you with the security and the peace of mind of knowing that it was done correctly.
So first we see here that again, while price is finite, value can be both concrete in terms of that $5,000. That’s pretty easy to get our arms around, but it can also be conceptual in terms of the peace of mind, right? Which you, how can you put a price on that? So what the accountant did is give you, she gave you well over $5,000 in value in exchange for $1,000 payment or price. She gave you more in value than she took in payments. So you feel great about it, but she made a very, very healthy profit because it is worth it for her to lease out her time and her wisdom and her knowledge for $1,000. Okay. Uh, in fact, the, one of my great mentors, Harry Brown used to say in a free market based transaction, there are always two profits, the buyer profits and the seller profits because each of them come away better off afterwards than they were before.
Okay. Now, so, so that’s the basis. But remember that accountant, um, while she provided a wonderful service, she’s not the only accountant in town and pretty much every other accountant can do the same thing. So what separates her and her services from someone else’s? Because let’s face it, it just like what separates you in your coaching, uh, from any other coach because, um, unless and until the prospective customer, uh, is able to distinguish between any two or more providers, whether it’s an accountant, a coach, a dentist, a, an electrician or anyone else, they’re always on until they know the difference. They don’t know the difference. And then if not, it’s always going to come down to who has the lowest price. And you know, unless your last name is a Walmart, I guess, or, or amazon.com trying to make low price, your unique selling proposition is not a good way to do business.
It’s not productive, it’s not fun, it’s not profitable, and it’s certainly not sustainable. So there’s gotta be a way to be able to, to communicate additional value over and above the intrinsic value of the product or service itself. Well, the good news is there are dozens if not hundreds of ways to do this, but they tend to come down to five what we call elements of value. And those five are excellence, consistency, attention, empathy and appreciation. And to the degree that you’re able to, to communicate one or more, hopefully all five of those at every single touch point with this person from the time you first meet them, whether it’s an inbound, a request or an outbound connection, uh, through the relationship building process, the followup and follow through the sales process, the referral process to the degree you’re able to communicate those additional assets of value, that’s the degree that you separate yourself and distinguish yourself from the competition and you take price and the competition out of the equation.
Now, so what do you set as a a fee? I, I can’t answer that because I don’t know your marketplace. I don’t know what you do. I don’t know your level of expertise. There’s, there’s too much, I don’t know. But what I would do is as you’re researching this kind of discover and determine what basically the going rate or fee is and make it a little higher. Okay. Because you want to position yourself as the, the higher fee, you want to position yourself as the value based person. Remember when you try to sit, when you sell on price, you’re a commodity. When you sell on value you are a resource and so you want to do those things that position you as a trusted resource, not as a commodity. Does that make sense?
Yeah, absolutely. I think just my followup to that would be, so when, when say you’re looking at one of your products or services that you’re looking to sell, do you, do you kind of go to somebody in your network and kind of get their feedback or like what’s sort of your process for, for, you know, to turn up determining that selling point?
Bob Burg: Well, I think that is it. I think you have to research it. You ask different people, you look at what the market’s doing and you, you know, and remember the, the, the eventual fee is what someone else is willing to pay and what you’re willing to accept. Yeah. And what you’re willing to walk away from, I guess you could, you could say so, um, you want to be doing it at a high enough fee that first of all, you still feel as though you’re providing immensely more value than what you’re taking in payment. Okay. But you also want it to be profitable enough that you feel good about it, that you’re stepping into your value, that you’re not underpricing yourself because then you’re going to feel good about it. And you know, it’s difficult to, I always love when I, one of the things I speak when I speak at a sales conference, one of the things I talk about is, um, communicating your value in such a way that you don’t have to, uh, lower your price.
And so it’s always really interesting when a, when a, the client wants me to lower my speaking fee, which I know I don’t, but you know, one of the things I, you know, we’ll joke about is as you can well imagine is, you know, could you imagine me, you know, speaking to your team on maintaining their fee integrity, what if I were to lower my price? You know? And, um, so, uh, you know, I think that’s where you’ve got to go with it. So it’s not necessarily a silver bullet, easy answer. I think you do have to do your research and you’ve got to determine, you know, what’s gonna work for you and what’s gonna work for them.
So there you go. The awesome generous Bob Burg doing what he does so wonderfully. If you have not heard of Bob but you have not read his books, head over to the Go-Giver.com pick up the go giver that go give her leader the go giver influencer or the go giver sells more and check out the Go-Giver podcast, which you can find on his site as well. So thanks to Bob, thanks to our awesome community. I’ll be back with you tomorrow.