Business Essentials: Know Your Value!
I’d like to share with you a quick story about your business and why you need to know your value. It is my hope that by reading this, you may be more willing to understand and demand what you are worth.
A colleague and I were sitting down with a potential client not long ago. This person had heard that we had recently written a book and wanted our help in writing one. Of course, we are happy to help people to write a book, but we also consider it a service to the client to ensure that what we do is actually going to benefit the client. In accordance with good practice, we had a long conversation to try and isolate the desired outcomes for the planned book project.
After some discussion, we began to realize that the client has developed a highly specialized skill set in a very close knit industry. There are generally only a few dozen practitioners of this particular service. The client’s boss had carefully crafted a set of processes that could be employed for tremendous value in uncommon but critical moments. The boss was widely known and respected and, consequently, had great demands upon his time. Our prospective client had approached the boss about capturing these skills in a book. The boss had indicated that the idea had merit, but indicated that due to the demands on his time, he couldn’t write the book himself, and he challenged our prospective client to write the book.
And that is how we came to have this conversation. Our client wanted to create a book describing how the firm did what they did. It was at this point that my colleague and I both started recognizing some real concerns about the business case for the book project. We found it unwise to provide detailed descriptions of the “secret sauce” of their corporate expertise. I was trying to draw the client’s attention to the value proposition of book idea. In any business, it is important to know your value. But after raising our concerns, our client didn’t seem to understand the basis of our concerns.
Undeterred, I tried to illustrate our concern in the following way:
I asked, “How long has your boss been performing this service?”
I then asked for the boss’s hourly rate.
“$175 an hour.”
“So, assuming a conservative workload of 40 hours a week for 50 weeks a year, we can estimate your boss works at least 2000 hours a year. He’s been doing this for 10 years and at an hourly rate of $175 an hour, this means that your boss’s experience and expertise could be fairly valued at least $3.5 million dollars—and here you want to give away that much value for the cost of a paperback.
After that comment, our client’s face looked confused—struggling to grasp the significance of the comment.
I continued, “Listen, I think it is a great thing that you want to pass on useful and specialized skills to others in your industry. It’s obvious that this will benefit them. All we’re saying that it should work for you, too. Don’t you think that the value you offer is worth more than the cost of a book?” We then went on to talk about creating educational content for participants at a more favorable price point.
The point of the lesson is that it is vitally important to appropriately value your offering. Not only is this a function of one’s realization of the economic value of what you have to offer, but also to have the self-esteem necessary to demand appropriate compensation for that value.