While I was out a few days ago on my daily walk (my first “daily” walk for a week) I listened to a great interview on the Escape from Cubicle Nation podcast. The website, , is hosted by Pamela Slim, a “coach and writer who helps frustrated employees in corporate jobs break out and start their own business.” She writes regular blog posts and puts out a semi-regular podcast. In this episode of the podcast, released on 3/7/08, she interviews Bob Burg about a book he co-authored titled The Go-Giver.
In the interview Bob talks about the five key principles covered in the book. To learn about them all, either have a listen to the 40 minute podcast (links provided below) or read the book. To give you a short feel for what you’re in for with the podcast I’d like to discuss the first of two of these principles as they struck a real chord with me.
The theme of The Go-Giver is how it is possible to be successful and to be generous at the same time. Bob starts by talking about what he describes as “false dilemmas”, or overuse of the word “or”. For example, “do you want to be rich OR happy” or “are you a giver OR a taker”, when in fact you can be both. Pamela also adds to this by talking about how she was often called naive when working in the corporate world because she was uncomfortable with doing some things that felt wrong but which were considered acceptable by others by simply using the rationale “because that’s business”.
The first principle discussed by Bob is the “Law of Value”. It simply says that you should always seek to add more value than the fee or price you charge your clients. He quotes another author, Wallace D. Wattles from a 1910 book titled The Science of Getting Rich, when he said:
“Give every man more in use value than you take from him in cash value; then you are adding to the life of the world by every business transaction.”
I love this quote. It goes exactly to the heart of everything I believe about pricing. I’m sure many people would hear that and say “well that’s obvious”, but I’m also sure some of those people would think they follow this in principle – but in practice do not. Or more likely, they follow it for the majority of the time, because in reality that is the way markets work whether they like it or not, but if they can get away with charging more for a period then they’ll go for it. Because “that’s business”. As an example, in the case of a consultant setting their fees, what is the first question they ask themselves? Possibly “what do others charge”, or “what will the market bear” or maybe even “how much do I need to buy that [insert name of expensive toy] by [insert date by which said toy is required]” . But anyone who follows the principle put forward by Bob and Wallace would start with something closer to “how much value can I add for my client, and what rate should I charge so that a substantial amount of that value remains with the client and they will be left delighted by the experience”. You might think that this just makes business sense because the client will keep coming back, as well as recommending you to others. Correct. Then again, you could just do it because it’s the right thing to do. Either way, doing the right thing and benefitting from it at the same time seems like a pretty good outcome to me.
I’ve already adopted this thinking in my pricing, and some discussion appears on the website. I only ever ask that a client pays for the value they receive. Obviously if I cannot add enough value for a client to justify the rates that I would like to charge then the best thing for everyone is to end the relationship. This should not be seen as any failure. It may be that the business is so small that even by doubling the revenue of that business profits are still not enough to justify using me, or any consultant. Or the problems the business is facing aren’t problems that my skills are suited to. That’s fine too. I’m sure there will be many times where I say no to work because of similar reasons to these, and hopefully I can at least help point those clients in the right direction to find someone that can help.
Back to Pamela and Bob. The second principle put forward by Bob is described as the “Law of Compensation”. His short description is that your income is determined by two factors : how much value you can add for the people you serve (which obviously relates directly to his first principle), and how many people you can serve.
Co-incidentally, in the podcast I listened to immediately after this one while in the home stretch of my walk, I heard another quote that said something very similar. That was:
“Find a problem and figure out how to solve it, then find more people with the same problem and you have a business”
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This issue is what I spent most time on while setting up my business (that and building this website.) My number one question was “what types of issues do small/medium business owners face and do I have the skills to assist them”? I have discussed this many times with friends. Are there small business owners in need of an extra pair of hands or a different point of view? Absolutely. Do I have the skills to help? Definitely. The next question is the hardest: will the issues faced by small and medium business clients, if solved, be worth enough to those clients so that I can charge a fee that meets two goals: firstly, that they get significantly more value than the fees they pay me (based on their assessment, not mine); and secondly, that I can earn an income that makes this a viable career. I guess we’ll know soon enough.
The podcast is available via a link at ; via (right click the link and selecting “save link as”); or by (best option if you want to explore some of Pamela’s other podcasts).
