A few weeks ago, we were shopping for a business service that we thought could help our processes. We found a good company and decided to arrange a meeting to learn more about what they can do for us. A few rounds of uninteresting meetings later (it didn’t provide us with new insights into the relationship) we were provided a free quote. When we received the quote, we were flabbergasted, to say the least.

We were completely stumped trying to figure out how a five-figure setup fee was determined for a service that we had no understanding of what value it would bring. I realized that where that company went wrong was not what they were charging for the service. I will give them the benefit of the doubt and assume that it is really worth the price quoted to some companies. Where they went wrong was by not communicating how it would be worth that much for us.

B2B 101 – know  three types of expenses

Because as a business, we only want to spend money on things that will provide value. When doing business with other businesses, it is important to note that there are three types of expenses.

Investment

This is where you put money into a product, service, equipment, land, etc and expect to see a return on it over time because of appreciation, or through the sale of your company’s goods or services.

Required expense

The second kind is an expense that is required but does not necessarily give back value, such as taxes.

Unnecessary expense

The last kind of expense is one that you should always avoid. It is not required and it does not provide value (or the value it provides is less than its cost).

How to quote your customer

Often times, prospective customers will ask that dreaded question. “How much does it cost?”. When you give them the number, the customer will immediately make a judgement on whether it is worth that amount based on what information he or she has already gathered. Don’t let this happen, because more often than not, the customer, not knowing the actual value you are bringing, will assume that you are charging too much and will either walk away or begin bargaining.

Pricing appropriately and communicating value immediately is the most effective way to acquire new customers. So at this point, you must be asking: “How do I do all this?” One bad way to communicate value is to list features. Most likely, you have competitors and their features are very similar to yours. The trick is to set yourself apart. The best way to do this is to make a connection with potential customers. Telling a story about why you do business, what your business believes in, etc., is a perfect example of making a connection. Understand what is valuable to them and work in your features and benefits to their needs, and end it with perhaps another customer (in a similar paradigm) who’ve found your product of service extremely valuable. Because each individual business is so different, I can’t go further into detail about value. But I can end with three tips that will work for any company:

Be Personal, Be Humble, and Be Relatable.