The lower your prices, the more pain in the . . . neck your clients will be.

That’s the conclusion that my friend, Rand, and I came to after talking about the changes in his business.

Rand is in the courier business, but the lessons are applicable to what you do. 10 years ago, I was Rand’s operations manager. A year before I started, Rand’s company was mostly bicycle messengers. The average day had 100 jobs dispatched, most of them at $3.99 a job. (You do the math . . . $399/day gross!). Not only did this have a significant drain on his dispatcher, he also had extensive customer service problems.

The $3.99 customer was highly demanding, easily dissatisfied, slow-paying, and disloyal.

He didn’t notice just how difficult the $3.99 client was until he compared them to new clients who needed packages delivered longer distances within an hour (read: paid and valued a more expensive service).

By the time I started, Rand was dispatching half the jobs at three times the profit. His complaint ratio dropped by more than half and the payment cycle . . .

The best of his $3.99 customers would pay in 90 days!!!
After the customer upgrade, his average customer paid in 45 days!!!

Do you have problem clients?
Do they hold your offering in high enough esteem?

It may be time to review your pricing.