Monday, March 19, 2007

The Art of Pricing Creates Mediation Masterpiece

Finding the right price to charge is hard for service providers, and especially hard for mediators.

Most of us do a 'scratch on a napkin' calculation and charge somewhere near the bottom of the range for fear of looking 'greedy'. Or, we take our colleagues' fees combine with our costs then set prices pretty close to everyone else.

To me, neither of these methods really captures the true value that mediation provides for our clients, appreciates a mediators unique talents, or creates a revenue stream that mediators deserve. That's why I was thrilled to read a new book on pricing strategies, The Art of Pricing by Rafi Mohammed.

Finding Hidden Value

Rafi, a Batten Fellow at the University of Virginia's Darden Graduate School of Business, offers us hope in his book by making pricing theories accessible and, dare I say it, easy to apply. He encourages us to find the hidden profit that lies within our practices by examining our thoughts and perceived value.

For instance, most mediators keep their fees low possibly as a concession to the attorneys they work with or the knowledge that consumers are skeptical of seemingly extra fees. According to this book, and the Professional Pricing Society, the lowest price will not always draw the largest amount of clients.

Think about your own purchasing experiences. When the purchase was important like buying a home, did you select based on the lowest price or were there other factors that made a higher price point acceptable? You probably weren't looking for the least expensive house, but one that met your needs. It is reasonable that clients will pay more to work with a mediator who meets their needs even if the fees were higher.

What's It Worth?

One of the most useful sections of the book explores differential value, meaning that different people are willing to pay different prices for the same product based on their interpretation of value. I saw real life examples of this years ago when I was an auction enthusiast collecting McCoy pottery. Sears uses a similar strategy by grading its products: good, better and best. You get the vacuum but with more or fewer features depending on how much you're willing to pay.

Unbundling Mediation Services

This idea works for mediation, too. Our product is resolution and peace of mind for clients and we provide it via a mediation session. But what if we unbundled the mediation process and offered the results in differing ways? Then, we can set differential prices, too.

During my teleseminar, 3 Keys to Making Money as a Mediator, we discuss how to un-package mediation and offer real information and value to consumers in a way that reduces their risk, increases their confidence in us and ultimately leads to booking more mediations.

In his book, Rafi, discusses a value decoder, a formula for assessing the value to clients. It doesn't have to be that fancy. You can do it the easy way: just ask.

Questions like:

  1. What was your batma (best alternative to a mediated agreement)?

  2. What did you like best about working together?

  3. How much would this have cost, emotionally and financially, if this had been litigated?

go a long way to understanding what specific, repeatable, unique value your clients receive from working with you. This knowledge, combined with marketing tools, can be a real boon for growing your practice and your income.

The Art of Pricing Teleseminar

On Thursday, March 22nd at 1 p.m. EST, Rafi Mohammed is scheduled to join me for a spirited discussion of the book and its application for us. If you want to increase your current income as a mediator, or start your practice off right, don't miss this call. Sign up now; seating is limited.

Try. Fail. Learn. Grow!




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