Car manufacturers look at the cost of parts, manufacturing, distribution, commissions for sellers, cost of running a dealership and probably thirty other factors all to determine the price of their car. Car brands add value as well as reputation and history. A Mercedes Benz is much more expensive than a Ford, and the buyer can chose to pay for the vehicle he wants.
But what if the item in question is different? What if it isn’t a tangible object? What if it is a service? Okay, so the yard guy comes and mows and trims for an hour each month, I can see the results of the work he has done so that must be a tangible service. How about a service that can impact the quality of an individual’s life for years to come? Well, that seems to me like an important and necessary service and I would expect to pay more for that then I pay for landscaping.
The news is out, people! MUSIC THERAPY WORKS! Each day there are more news stories about music therapy in NICU (neonatal intensive care units), hospitals, schools, long-term care facilities, mental health, and hospice. I have had the blessing of facilitating music therapy sessions where the client met important and life-changing goals and I have devoted my life to providing this important service. And yet when it comes to negotiating contracts, I tend to negotiate in the wrong direction despite my knowledge of the benefits of music therapy.
Over the last few weeks, I have been discussing wages and prices with my colleagues. Why am I so willing to lower my rates? The primary reason is that I love music therapy. Anything else is work so I want to do more music therapy. And when I see the impact on the individuals I serve, I truly feel as if I have received a bonus. However, you can’t pay the mortgage with the hugs you receive. Instead, we worked backwards. What is a monthly budget that would be comfortable and include things like health insurance and retirement? Take that, divided by a reasonable amount of contact hours and our prices are determined. So now, as much as I would like to see everyone receiving music therapy, I won’t undersell just to make the group happen.
How do you determine the value of the services you provide? Or how do you value the services you procure?