When most business owners price their goods and services they usually have a fixed hourly fee or some sort of markup for a product. But added value goes beyond just delivering what the customer requests.

"Added value is when the business owner realizes that the product or service they're providing has more value than that fixed fee or markup," said Charles Hilliker, district manager of Fiducial's seven offices in Indiana. "It's a case of knowing your market and knowing your product."

For example, Hilliker said it's a fundamental fact that there really is no difference between a Honda Fit and a BMW, because both are made to take you from Point A to Point B.

"BMW makes it look fancier and has created a certain panache so they can charge much more than the value and the cost of the components would justify," he said.

Landscaping contractors that do work in neighborhoods where the houses sell for $200,000 are going to quote their services for a certain rate as opposed to neighborhoods where homes sell for $750,000. Here the landscaping services are worth much more because the owners are going to see more value in what they're getting.

"You've crossed the functionality line providing more value than just the new deck or water feature," he said.

Understanding your market

Consider the case of a marketing consultant that puts together a brochure for his client that generally costs about $1,200. Since the consultant knows the brochure is going to generate much more business than that $1,200, he charges $1,950 instead. Hilliker pointed out that the consultant has learned over time where the price resistance walls are, and he keeps increasing his fee until he meets that limit.

"The basic fundamental issue is of what value is the brochure and the value to the client?" he said. "He can build in a value for himself because the client has a perceived value of the work."

Most small business owners are scared to death to raise their prices -- even if it's fully justified --because they don't understand the selling process. The first thing customers are going to say, if they don't understand the price, is that it's too high. This is what's known as a "porcupine" in the sales world. 

Hilliker maintains that you toss it right back to them. "You repeat the objection in the form of a question and you normally discover there was something they didn't understand," he said.

Those businesses that grasp this distinction have much better profit margins because they know there is real value in what they are selling, and they make sure the client understands that as well.

"They need to understand their market and their position," Hilliker added.

Extra level of service

When Gene Polley recently walked into a potential client's florist shop, he expected to see fresh flowers in a refrigeration unit. But it turned out to be more like an antique store instead. The senior business advisor in Fiducial's San Diego office noticed that the florist had pulled out all the stops in making her business stand out from the competition, with awards of her work and newspaper stories on her accomplishments.

For Polley, this was a stellar example of providing some real added value to customers.

"She is demonstrably getting more for her products than a number of other people, and there's an added value," said Polley. "She has flair and showed me a centerpiece for some sort of an affair that was really unusual. She's gotten awards for her originality in floral decorations and that is her added value. It's very noticeable."

Citing another instance of added value, Polley had his wife's car serviced by an independent auto shop. When the work took longer than expected, he received a free loaner car.

"They just handed me the keys," he said. "This was really unexpected for a small shop. After the repairs were completed, they made sure I was happy with their work. They were again going the extra yard. It's like that extra level of service, like going to the Ritz-Carlton. It's not obsequiousness -- it's just the right level of customer service."

One of Polley's clients owns a boutique that sells many unique, hand-crafted items and has established a reputation for giving customers that added value.

"When you walk out of her shop you have a distinctive bag with her name and logo on it," he said. "There's colored tissue paper coming out of the bag. It makes you feel good and people notice you as you're walking by on the street. It's amazing how many people know about her store."

Polley observed that savvy owners know instinctively how to take care of their customers and make them feel appreciated.

"They want to come back and refer other people to them," he said.

Going that extra mile

Dale Ellery, district manager for Fiducial's Detroit, MI, region has been providing his clients with added-value services for many years. This means getting results -- such as getting a business owner out of a difficult situation.

"We got the client out of an audit with the IRS when he thought he was going to jail," said Ellery.

For Ellery, providing added-value expertise all comes down to going that extra mile for his clients.

"We rendered a service and somebody else less talented would have taken a lot longer to do it," he said. "That's the advantage of experience and being able to think outside the box."

As a financial planner, real estate broker and CPA, Ellery wears many hats. His array of qualifications enables him to give his clients much more than accounting expertise. They contact him for advice on a number of business concerns and he's repeatedly asked "What would you do, Dale?"

In Greenland, N.H, Fiducial franchisee Van Ballantyne noted that he's always differentiating the tangible services that his business provides along with the intangibles such as added value.

"The added-value services we provide really are in the intangibles," said Ballantyne. "An example might be a clean set of books that will pass an audit. Isn't that what we're all looking for?"

Ballantyne believes that his business is offering what everybody should be offering, but he knows that's not the case.

"We're giving clients more than they expect and more than they're used to," he said. "They're getting somebody to watch out for them so there are no surprises."

STEPHEN PAREZO is the Media Manager for Fiducial.