New knowledge can be worth a fortune. If relatively few people have the knowledge required to perform a service, make sure you're using a value-based pricing model to capitalize upon the knowledge you have, writes Todd Youngblood in Selling Services When Nobody has Money to Spend.
If a service will save the customer $1,000, it would be logical to pay $900 for it. Even if it only costs you $10 to provide the service, the customer is better off.
Value has absolutely nothing to do with what it costs you to deliver a service, Youngblood says. Services are based on the knowledge required to execute a process. The value of knowledge varies immensely over time.
If, after a few years, a large number of people have picked up the knowledge to provide that same service, a cost-based pricing model will become necessary. But the trick to maintaining your profitability is to properly manage the transition from value-based to cost-based, or commodity, pricing. Move too quickly and you leave money on the table. Move too slowly and your competitors will outbid you and take the business.
