The Picasso Principle of Pricing
Harry Beckwith, in his book Selling the Invisible, relates a story about a presumptuous woman who approached Picasso on the street as he was painting at a sidewalk café. She asked Picasso if he might sketch her, and charge accordingly. The master agreed and in just minutes her essence became a Picasso original. “How much?” she asked. “Five thousand francs,” he answered. “Five thousand francs?” she proclaimed. “But it only took you three minutes.” “No,” Picasso said. “It took me all my life.”
Greatness is, more often than not, a self-fulfilling prophecy. No wonder his paintings now sell in the millions. He personified his value. He made it tangible through his own self-respect. He didn’t confine his worth (or price) just to the time it took to do the job. He knew that whatever investment a patron made for his art, it would ultimately return far more than the original asking price.
How can your ‘art’ demonstrate a consistent return far more than the original asking price?
Like Picasso, you are perceived by what you reflect to others. And you reflect what you think you are. Clients are like satellite dishes. They pick up the signals you send about yourself (or your company) and convert them into images. These images range from poor stereotypes to something truly unique and valuable.
You must exude confidence—not smug arrogance but the commanding confidence that results from sheer passion and preparation. Clients gain their own confidence through yours, and will pay a premium for this added sense of security—the assurance that not only will their best interests be protected, but that whatever price they paid for your services will be more than offset by the emotional, physical and financial savings they will receive just by having you on the job.
How do you create the image of something truly unique?
There is an incredible opportunity here because the current landscape of professional services is littered with firms who basically say and do the same things ... “Our culture attracts the best people”. “Our fully integrated, multi-disciplined approach insures better coordination”. “The testimonies of our clients attest to our value-added services ...” What these firms say about themselves in these value propositions are mostly qualitative in nature. The tangible, quantitative evidence that could truly separate the value of one firm over another is lacking. In this environment clients are totally comfortable shortlisting four to six firms satisfied that any one will perform in basically the same manner. The typical client asks: “Why pay a premium for what is essentially the same service?” Research indicates that when clients perceive that their options “look alike" they tend to make choices based on price.
The Solution? You must quantify your value. But how?
In order to quantify your value and command commensurate fees, you’re going to have to rock the boat a bit at the start of every project and ask the big and at times intimidating questions upfront: “What are you trying to accomplish and why”? “How will you measure success?” “What assumptions are you making?” “Have you considered the inherent risks associated with your assumptions?” “Have you considered the cost impacts?" "If we worked together to significantly mitigate these cost risks and succeed, how will it change your perceived value of our work?" “Based on savings we quantify together, how much would you be willing to share with us as a premium for superior service?" By intentionally setting the project up this way at the beginning, you accept responsibility for quantifying the value of your services throughout the project and reporting that value to your client. You have also set up a reward system that adds additional revenue at the close based on value added services. This is where your ‘art’ can return to your patron far more than the original asking price.
Now imagine repeating this process on every subsequent project and the amount of quantitative information you will generate to improve your future value propositions. You have now placed yourself in a better position to be paid for the value you bring as opposed to the mere hours you spend. Furthermore, at this point you won't always have to wait to the end to receive your reward--you can now begin to command it at the start! That's the Picasso Principle at work.
Back to Picasso. Probably in the same fashion you started out, there was a time when he was so poor he burned his own paintings just to stay warm. By the time he died he had offered the world a staggering 22,000 pieces of art. Obviously, he didn’t burn his work for long. Isn’t it time for you to stop burning (selling short) your own professional services and begin to both qualify and quantify your value?
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Randy Tuminello is the CEO & Principal Consultant of Tuminello Consulting, a firm dedicated to the AEC industry and public agencies. For questions you can email at randy@tuminelloconsulting.net or to join the conversation on his blog at www.tuminelloconsulting.net.