Case of Price, Part 4

How do we price something that we’ve never done before? It appears to me that many business owners worry more about how to price a new product/service than they do about learning how to do it in the first place. Web sites, social media, QR codes, email broadcasts, and shopping carts as well as Twitter, Facebook Business Pages, and LinkedIn pages all come to mind. How do you price such services for customers? First, understand you can never accurately price something you haven’t done before. Second, you need to know how to do it before you worry about pricing. And third, it’s hard to learn on the customer’s nickel, but that’s been the tradition in the printing industry. Going far afield, however, requires a better approach. And I have a suggestion for how to do that.So what do we hear in the trade press about pricing social media? Value to the customer and substitution pricing are the primary responses. Charge what the market will bear. Okay, I agree, but how do you know what that is? Well, bear with me and I’ll give you one way of getting there.

 

Learning the Hard Way

Are you old enough to remember your first coated offset job on an AB Dick 360? If you’re not, then you don’t know that coated offset had a nasty habit of sticking to the blanket cylinder, being projected into the ink train, and wrapping tightly around ink rollers, which created that irritating slapping sound.

Well, if that didn’t happen to you, I’m sure you have had an equally interesting training experience. You see, we small business owners (not just printers) train on live jobs. We simply do not allow training time for anyone to actually gain skill in whatever it is we’re doing. Rather, we buy a piece of equipment and then expect it to produce saleable work instantly.

I was once in a plant installing a multi-million dollar six-color press. The owner was pressuring the installers to cut short their test runs, saying he would sign whatever they needed just so he could get the press online and get the work out that needed to go that afternoon.

On the flip side, I know printers who have stayed with what they’ve always done because they were fearful of losing money by doing anything else. And since they didn’t know how to do anything else, they didn’t—and aren’t around because the processes passed them by. Nether life nor printing should work that way, but it does.

Okay, how do you break the logjam? Start with the premise that you really don’t know how to do it. Even if you are just buying a different press, schedule your operators to run enough jobs so they can become proficient. In the real old days we would save a pile of photos so the newbies could learn how to shoot halftones. Add a box of film and lock them in the darkroom until they knew how to “bump” one appropriately. It usually took about a day or so. Point is, in learning to do anything, it is the intensity of the effort that is required—especially if no one in the shop knows how to do the new task, let alone price it.

 

First Things First

Let me admit one thing here. If we are expanding into familiar territory such as buying a press, it’s far more doable to stretch and learn on the customer’s nickel. What do we do when it comes to a real game changer such as the Internet, social media, etc. All the gurus are yelling at us to become marketers and social media experts. Let’s assume they are right for now. How do you do that?

Ground work: I assume you’ve gone through setting up your website (I hope you bought a canned program and made it work instead of building it from scratch). You’ve also begun using Twitter, Facebook, LinkedIn, survey software, and more. That’s the first step. Then you’ve also taken the second step of actually reading a few of the million or more books on the subject of social media. And you have even gone so far as to establish your own online presence (profiles including, yes, pictures of you), and set up Facebook and LinkedIn business pages, and you feel comfortable with this and are ready to take the plunge into selling marketing services.

If you haven’t done that, you can stop now because much of what anyone tells you won’t make sense. You’re probably one of those who makes grandiose statements such as, “I am too busy to waste my time reading what someone had for lunch on Twitter.” If you want to continue in business however, you just might want to take those steps (see my previous series in QP entitled “Print without Printing”)

If you have, then how do you take the jump from proficient amateur to actually getting paid? And what price do you charge? It’s really simple.

One, start with a good customer with whom you have a good relationship and who needs to have a better marketing program. Approach them sort of like, “I have this new stuff which has worked for me. I don’t know if it will work for you, but I’m looking for someone who needs what it does, which is where you come in because it appears to me you do. I’m trying to learn more about it, and I thought if you would be interested we could do a joint venture over the next three months.” (It’s extremely important that there be time limit, and shorter is better, but long enough to get results.) “I will be willing to do the work, but I do need you to share some costs. I would say we’d need a budget of $X.” The price needs to be low enough that they can’t refuse, but high enough to at least pay for your direct costs—$500 set up and $200 a month for three months: $1,100 total. It can be lower if you’re uncomfortable or higher. Remember, the point is you need experience and a referral.

A side note: Never do it for free. The customer must have skin in the game to take it seriously so they’ll actually get results and be a good referral. You can’t love their business more than they do.

Next, specify what you do. Assess what the client needs. If you don’t have some good ideas, then you’re not ready to turn pro. Stay an enthusiastic amateur until you have more of your own expertise and ideas to help others.

Let’s just say this customer needs a more robust website with an autoresponder, a monthly email newsletter broadcast, a website main product feature updated every two weeks, one or two RSS feeds supplying the site to keep fresh content popping up, some sort of weekday tweet once a day, which also hits their Facebook Business Page (and a plan to gain followers), and a printed monthly newsletter, along with mail list management.

Okay, you can price the printing and probably the mail list management. But what about pricing the rest of the stuff? You can’t price it, for you have never done it. That’s specifically why this is a short term deal. Our original offer was $500 and $200 a month for three months. At the end of three months you may continue or change the price, but increasing it greatly will be hard to do with this customer.

That’s why you start another customer in the same program, but you increase your price. As you gain there, you do a third one and increase your price again. The main point is you lock in each price for a short while with a few customers, and raise them each time as you gain experience and pricing backbone. And note, at some point you will want to continue doing business with number one, but you won’t be able to afford to do so at that pricing, so you either drop them or raise their price to your current price level.

After a short period, you will be able to more intelligently price your service, for you will find what customers are willing to pay for whatever you offer. From the customer’s view, they will substitute paying you for paying the radio station or newspaper. It’s all about getting a piece of the advertising budget.

 

Potential Pitfalls

Oh yes, a couple of cautions. First, select customers that actually have advertising budgets. Don’t try to teach business owners who don’t advertise to do so. It’s far more productive to compete for a piece of existing funds.

And second, please don’t allow your graphics person to be the only person to learn how to do all of this on your dime. You have to be personally involved and know why an email broadcast looks different in different browsers. That’s a dumb owner trick because you will either end up being held hostage or your graphics person will leave and start their own thing after they are trained.

Finally, if you want to learn more specifically about what folks are charging for products and services, go to www.crouser.com/panel and sign up for my National Panel on Prices, Costs and Wages. We’re already undergoing price studies in the field of social media as well as many other print shop related subjects. Hope this helps.

 

Tom Crouser is author of the “Crouser Guide to Small Press Printing” as well as the newly released “Digital Printing Price Guide” (www.crouser.com). He is principal of Crouser & Associates, Inc., 4710 Chimney Drive, Charleston, WV 25302, 304/965-7100. You may reach Tom at tom@crouser.com. Tom is now tweeting, friending, and linking in. Follow his Small Business, Schmizness column on Facebook at tinyurl.com/smallbusinesss, friend him on Facebook, link to him on LinkedIn, and follow his tweets at www.twitter.com/tomcrouser.

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