Disclaimer: You are about to read about the problem some engineers, accountants, attorneys, and other technical and analytical professionals face when pricing their services. It’s not true of all analytical “seller-doers” of course. There are some folks who fall into this category who don’t struggle with any of the problems I describe below. But I have seen this trend over and over. Hear me technical friends: I’m not bashing you. Far from it. I’m on your side. I’m an engineer myself. I’m “mathy” too. Excel is my jam. I’m all for formulas. But please read this knowing that you might be making less money than you could. Than you should.
We regularly see a common pitfall among our more analytical and technical clients in professional services industries such as accounting, legal, and engineering firms. Often, these types of companies expect their service providers to sell. In other words, the attorney generates his or her own client business. Accountants serve the same clients year after year, and often pricing and selling those services are the purview of the accountants themselves rather than a separate sales function. Whenever this “seller-doer” dynamic is in play, particularly among engineers, accountants, and other technical and analytical types, some common beliefs and behaviors can be problematic for profitable pricing:
- This group is “mathy.” They love formulas that tell them how to price. The idea that pricing is fuzzy, both art and science, a poker game between buyers and sellers, creates discomfort for this formulaic group. Many prefer something like a spreadsheet that calculates pricing based on inputs (time, materials), even if it’s cost-plus. It’s repeatable, predictable, and fair. What could be the problem with that? The answer: it sub-optimizes profitability, it fails to capture customer willingness to pay, and poorly reflects the true value to the customer.
- This group loves data. This may sound the same as #1, but it’s different in an important way: analytical seller-doers take feedback they receive from customers as data. “The customer said our price is too high” = our price is too high. But what customers tell you often isn’t data. It’s noise. You can’t believe your customers because, although they may be lovely, honest human beings about most things, they are practically never honest about price. Customers curate the information they share about price. Or downright lie. In the industries we’re talking about, it’s often the case that seller-doers have longstanding relationships with customers for years, even decades. There is deep regard and trust. But don’t confuse what customers tell you about pricing with data. It’s not. If technical seller-doers take pricing information shared by customers at face value, it will cost substantial profitability because customers share partial (or even false) information.
- Often, the very skills that make this group exceptional doers in their fields (very technical, very analytical, very detail-oriented, lose themselves in the nitty gritty of the project work) are what can cause them to struggle as sellers in their fields. Most of these folks didn’t become engineers or attorneys or accountants because they love to have “confrontational” pricing conversations and sell themselves and their services. Some downright hate the sales and pricing part of the job. Many just want to get that part over so they can get back to what they like: doing the work. “Fighting” the customer and negotiating a fair price for the value they deliver is tough work and not the kind of tough work at which they excel. It’s easier to underprice or discount and get a “yes” from the customer and get back to the fun part. (CAD drawings… yay!)
- Many analytical and technical professionals are extremely detail-oriented to the point of perfectionism. This group takes “under-promise and over-deliver” to an extreme. They don’t just go “the extra 10%.” They go the extra 100%. This substantial over-delivery is problematic for profitability because the extra is often out of scope, outside of what the customer has agreed to pay, and often outside what the customer has even requested. If the customer did request it, the technical seller-doer is often uncomfortable asking for an additional agreement or change order because it’s easier (less confrontation) to do it for free (see #3.)
If you are an accountant, an engineer, an attorney or another service provider in a technical or analytical field, don’t despair. You are not doomed to underprice and discount out of control. It’s possible to utilize training, coaching, practice, tools, guardrails, and other supportive mechanisms to keep you from falling into these traps. But it’s impossible to take action until you are aware. And as GI Joe said, knowing is half the battle. Start paying attention to how these four beliefs and behaviors might creep into your pricing and selling practices. Shining a light on them is often enough to start to change them over time. And contact us if you want help addressing these challenges.