Kenny Chapman breaks down three ways frontline teams justify price: competing on lowest cost, explaining your services and costs, or delivering superior end-to-end service so customers pay more and come back. The third approach beats the other two.
How do you justify your price? Kenny Chapman here, blue collar coach, Freedom Friday. Focus. Want you to think about this. There's three ways that you justify your price. When I say you, it's your frontline team, it's your on or your CSRs on the phone. Anybody making that touch with the client. Three ways. Here's how most of them happen. Number one, crutch based pricing. What does that look like? That's the way most contractors go to market. It's oh, the race to the bottom. Whoever can do it the cheapest. Whoever can justify, oh my gosh, it's, it's crutch. Well, why is it that it's just I, we can be the cheapest. Even if you don't train that some of your team might be communicating that. Number two, reason based pricing. We went through this when we first got into upfront pricing in the industry and different types of things. How much is it? Why does it cost? That much reason behind that? Well, there's extra cost that goes involved and there's more that goes into the service call than just when the truck arrives and all those different types of things. Reason based pricing, certainly better than crutch based pricing. However, what if you get to the third type and that is differentiator based pricing. That's when the price just doesn't even hit. That's when it's like, man, that seems a little more than expected. However, absolutely I would use this company again. I would request a specific frontline team member again. 100%. I didn't know the budget. I wasn't thinking it was going to be anywhere near this much. But they did this right? They did that right. Everything from A to Z was so good. We don't need the service all the time. I'm going to pay more for it because they're that good. Differentiation completely changes the game. How do you justify your price? Maybe it's time to look until we talk. Make it a better than fantastic week. We'll see you real soon.
