Have you heard the story about the desperate mill owner?
I first heard it about 8 years ago when I was running my IT business. It totally changed the way I looked at the value of what I did.
You may have seen it before (it’s something of an ‘urban legend’), but it’s worth a re-read.
Oh, and there’s homework for you at the end!
Here’s the story
At the end of the 19th Century, a mill owner in the North of England was beside himself with worry.
The boiler that provided power to the whole mill had been broken for 4 weeks now.
The bills were mounting up.
He was behind on his orders, and his best customers were threatening take their business elsewhere.
What made matters worse was that neither his own maintenance people, nor the country’s most prestigious engineering firms knew how to fix it.
He was pacing anxiously up and down his office, wondering what an earth to do next. Then an engineer wearing oil-stained overalls knocked on the door and walked in.
‘I hear you have a problem with your boiler, Sir. I can fix it.’ he said.
The mill owner looked at the new arrival, unconvinced.
‘I’ve had people from the best companies in the country in to look at this boiler.
All I have to show for it is a bloody great bill.
Now you turn up and tell me you can fix it with just that small bag of tools in your hand there?’he scowled.
‘Correct Sir, I only bring the tools I need for the job.
Now if you’ll show me to the boiler room, I can start fixing the problem, if you want me to’, replied the engineer.
‘Very well, I suppose I’ve got nothing to lose’, the mill
owner sighed.
He led the engineer down a maze of corridors to where the great boiler sat in silence amongst a nest of twisting pipes, valves and inlets.
The engineer approached the pipework, and pulled out a small mallet from his bag
He began to tap, slowly and methodically along each pipe, listening intently to the noise from each one.
After about 10 minutes of this, he paused, tapped in the same place 3 times, and swapped his small mallet for a much larger one from his bag.
He then hit the piping in the exact place he’d been listening with an almighty
“CLANGGGGGGG!”
The effect was instantaneous.
The boiler sparked into life. All around the building lights came on, and the machinery started working again.
‘That’s incredible!’ said the delighted mill owner.
‘I can’t thank you enough. Send me your bill, double your normal rate!’
‘Oh, doubling it won’t be necessary, Sir’, replied the engineer, smiling and left.
A few days later, the mill owner’s secretary brought the invoice to him. He was astounded to see the figure: £100 – a huge amount in those days.
Granted, some of the prestigious companies had charged him nearly as much for failing to fix the problem.
But they had been in there for days, and this engineer had been there for no more than 10 minutes.
He instructed his secretary to draft a reply requesting a breakdown of the figure.
The reply came swiftly.
It said:
—————————————-
For 10 minutes of tapping – £1
For knowing where to tap – £99
—————————————-
Total: £100
—————————————-
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That still makes me smile every time I read it!
Each of us has our own variety of ‘knowing where to tap’.
And that’s what your clients are really paying you for.
After all, if the engineer hadn’t turned up to fix the problem, what would have happened to the mill owner’s business?
Why then, when it comes to putting a value on what we do, and asking for money for it, are we still nervous?
Why do we always seem to undervalue ourselves?
It often takes a bit of digging to get to the real reason for this, but ultimately the same things crop up again and again when we come to set our pricing:
- If you used to work for someone else, your job title automatically gave you a sense of status in the world. Suddenly, you don’t have that any more.
- In your experience of being employed, you are typically paid an hourly rate MUCH lower than the value that you actually deliver. After all, your (ex) employer had to factor in hiring costs, running costs, sales and marketing, and a profit margin if they were lucky. Just like you do now You are so used to walking around with all that knowledge inside your head, you don’t see it as anything special. YOU wouldn’t pay for the sort of services that you offer, because you already know how to do them.
- You look around at your competition, and they all seem so much more established then you – they have flashy websites, glossy brochures, and a smart address in the city.How can you compete?
I’ll tell you now: you shouldn’t pay attention to ANY of these things when you come to value what you do.
Remember: what your clients really value is
the tangible effect your services have on their lives.
Not your job title, not your posh office address, and not your flashy website.
Sure, those things may help with initial impressions of how your clients perceive you.
But have you ever been burned by a company who ‘talked the talk’, and then didn’t deliver the goods? Your clients probably have too.
How much is your expertise really worth to your clients?
Earlier I said that what really matters is the value you deliver to your clients.
And is that based on the problem that you solve for them.
- Write down the main problem that your service solves for your clients.
- Now put yourself in the shoes of your client. Write down the knock-on effects of that problem. Think about the mill owner and the effects on his business of the broken boiler.
- What do you think the approximate costs (in time, money, resources, or personal distress) of living with the problem for a year. How about 3 years? 5 years? Write it down!
Now review what you’ve just written.
Can you see just how valuable the combination of ‘knowing where to tap’ and being there at the right time makes you to your clients?
(Flickr Creative Commons image by Paul Stevenson)
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Iain– I like the homework. Sometimes it’s hard to see the exact value we bring to someone’s life. It’s not always as clear cut as the mill owner story. But if you take any “stuck” place and multiply it out a few years, the number gets big. I have clients who’ve known for years their website needed an overhaul, or they should start advertising with Google Adwords. But they haven’t done it yet because they don’t know where to start. (And they’re scared someone’s going to tell them to rebuild their entire factory instead of just fix the part that isn’t working…)
Thanks Joe, you’re absolutely right.
Often we just learn to live with a problem which costs us dearly in the long term, just because we don’t know the right questions to ask to get it fixed. And the people we hire are too polite to step outside their remit and show us where we’re going wrong.
I’ve seen very well meaning consultants run their clients’ businesses into the ground by doing that.
I think a lot of service providers get into a silo where they think “I’m just a copywriter” or “I’m just a consultant” or whatever, and don’t see how their service fits into the bigger picture of their clients’ lives.
That can lead to timidness when they come to sell their stuff, which means they might miss out on solving the real problem.
I agree though – life is rarely as simple as in the stories. But that’s what makes it fun
This is such a great story Iain.
It made me think at how we should look more into the real value we provide for our clients and make this more visible for them.
‘Knowing where to tap’ is a great skill, which should be more valued by the people who posses it.
I will take your exercise and see how it goes from there.
Eugen
Let me know how you get on!
When I went through that exercise with a client of mine recently, she ended up doubling her prices
I work with artists and other creatives. Many of them are terrified to charge what they’re worth because of the view society takes toward artists – at least the ones who aren’t wildly well-known.
Communicating value is critical. To your clients as well as reminding yourself that you’re worth every penny.
Love that old story, Iain, thanks for reminding us of its lessons.
This really speaks to me. I have checked out websites of all my competitors and its scary but no mre excuses. They all started somewhere, so will I.
I am worth every penny cos what i lack in experience I make up for in knowledge, commitment and desire to succeed.
What a great story–it’s so easy to assume we should be paid based on the hours put in (or the distastefulness of the job) Thanks for the reminder that while we might judge the value of our work by how “busy” we are others judge us by the value we create!
@stacey – Thanks. I can imagine it’s a real problem for artists, because what they do is so often removed from real, measurable monetary value. But it still brings great joy to people’s lives. Glad you enjoyed the story too, I love tales like this. I’ll have to find an excuse to use a Just So story in a blog post at some point.
@vona – thanks. Good luck with getting going!!
@maureen – that’s what I love about running your own business. It’s what you do that matters, not how long you spend doing it. Although that can work against me sometimes too!
I always love hearing this story! It reminds me that times change and prices need to as well! I just upped my prices on one of my site services and it had the remarkable effect of clearing out the type of people that simply drain your time and energy.
That’s often a pleasant side-effect. I find charging up front is really helpful in that respect, too.
Iain this is something I have struggled with for quite awhile. Perceived value in the eyes of others. With all that I know, I found it hard to actually charge people for my knowledge and know-how. It’s a major mind-shift, but I’m learning that what I have to offer is valuable to those who are willing to learn more about it.
The funny part is we’re always willing to pay someone else for a service, product, etc. that we perceive to have value, yet can’t bring ourselves to do the same.
Great story. It does put things in perspective.
I’ve never heard this story before. Thank you for sharing. It has a very powerful message. As a web writer, it really resonates with me. Writers in my field who only sell their words are paid a pittance, but writers who are selling their expertise are paid very well. Off to do my homework
@Clesha – the key is always to focus on the other person, and what they want. In your case, they’re not buying aromatherapy, they are buying nicer skin, or stress relief, or a magical hour alone in the bath whilst the kids are at Grandma’s.
@Kathleen – you’re welcome! Unfortunately selling what you do rather than an outcome invites people to shop around for other prices. That’s because it doesn’t communicate the true value that you offer, so they “may as well go cheap”.