Ditching Hourly

Hello, and welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm going to talk about building a product ladder for your business. Before I jump into that, I've got a quick bit of housekeeping. In episode 14, Productized Services, I mentioned a concept called the four phases of engagement. And I got a lot of feedback from that. People were really blown away by that concept. And in that episode, I failed to mention that that was not my original idea, and I wanted to give credit where credit is due. I first heard about the four phases of engagement from Blair Enns of Win Without Pitching in a post called We Will Diagnose Before We Prescribe. And you can check that out at his website, winwithoutpitching.com, and I've got a link to it in the show notes. All right, on with the show. Today, we're going to talk about building a product ladder. If you haven't heard me use that term before, here's a quick definition. A product ladder is a series of offerings priced in a graduated order of magnitude sort of fashion. The idea of the product ladder is to make it easy to turn prospects into customers regardless of the level of trust you have created with them. So in other words, people who have just heard of you will not trust you that much, and they'll most likely enter at the bottom rung of the ladder, so around $10, $50, $100, something really low. Assuming that they benefit from that purchase, in other words, they're happy with it, they get good ROI, they will have increased the level of trust they have in you and will be more likely to move up the ladder to larger and larger purchases. So for a software developer, a typical product ladder might look something like a cheat sheet at the bottom for $5 or $10, and then a book, maybe $29 to $49, somewhere around there. Then in the three-figure range, you could have a video course or an email course or some sort of self-service study. In the four-figure range, you could do something like a roadmap or some other productized service that I talked about in episode 14. You can check that out. And then at the top of the ladder, you'll have a custom project, which would be probably five or possibly even six figures. Of course, this is just one possible product ladder for a software developer. The specifics of yours will depend greatly on what your target market values, what things they value, and your area of expertise. Most developers I work with, they only have one rung in the ladder. It's just custom project. So probably at least high four figures, probably in the solid five figures for a non-trivial custom project. And projects are great for revenue because they take a fair amount of time, maybe three months, maybe six months, maybe 12 months, and it's steady income. It's a fair amount of money, fair chunk of change, whether you're fixed pricing or even billing by the hour. But the problem is they aren't super profitable. They have some intrinsic factors that make them a little bit less attractive than other things. They are relatively hard to sell. You have to have a long sales cycle. You have to have a conversation with the clients, perhaps multiple conversations. You need to have a live conversation with them, capture all of that information, put together a proposal, come up with a price, chase them to review the proposal and approve the proposal, and then start work. And doing a project is very labor-intensive. It takes a lot of attention over a long period of time. There's a lot of collaboration. It can be very risky for everyone involved. And for a lot of people, this can become pretty stressful over time. So here's what's really cool about having a product ladder. If you only have that one product in your ladder and it's at the very high end, it's almost impossible to have any meaningful visibility into your pipeline. So you just don't know who might hire you for that project. They kind of show up randomly. They're sort of all over the map in terms of what kind of business they are, like maybe it's an offset printer or a plastics manufacturer or like an animal shelter. Adding a productized service to your ladder, just one rung below the high-end product, makes it a lot easier for your ideal clients to engage with you because a productized service, as described in the last episode, gives them much more clarity about what's involved, what the outcome is, that makes it less risky for everyone. It's a lower price that they would need to approve. It's not going to be as much as a full-blown project. And assuming that that all goes well, for folks who buy your productized service, they'll be more likely to move up a rung in the ladder and buy the custom project. So over time, as you add more and more rungs to the lower...

your ladder, so under the productized service, maybe you add a video course, you get the same effect where somebody comes to you and they're like, eh, you know, I'll spend 400 bucks with this guy and see, you know, how this class works for me. And if they're happy with the way it goes, they're much more likely to trust you more and move their way up the ladder to higher and higher price purchases. So if you are experiencing this sort of feast famine cycle, the product ladder is your escape. So if you can imagine having, let's say, four products, let's say you've got a book, a course, a roadmapping engagement, and custom projects, and you've got a bunch of people who have purchased the book, maybe 100 people have purchased the book, and maybe you've got 10 people who have purchased the course and three people who have purchased a roadmap, and you've got a dry spell coming up with your custom project work, you know, you have customers who have purchased things from you and presumably are happy with them. So you can reach out to them and say, hey, I've got an opening in my calendar, a project that I thought was going to come through didn't come through for whatever reason. If anybody needs something for December or January, then just let me know. I can help you out with that. We can talk about whether or not there's a good fit there. So it gives you more visibility into the pipeline of your business, and it allows you to create more customers, really, in a very low-risk, easy-to-maintain sort of way. All right, that's enough for today. I'm Jonathan Stark, and this is Ditching Hourly. See you next time. If you bill by the hour and would like to learn how to significantly increase your income, please go to valuepricingbootcamp.com to sign up for my free email course. Again, that URL is valuepricingbootcamp.com. Hey, Jonathan again. Do you have questions about how to improve your business? Things like value pricing your work instead of billing for your time, or positioning yourself as the go-to person in your space, or maybe productizing your services so you never have to have another awkward sales call or spend hours writing another custom proposal. Book a one-on-one coaching call with me and get answers to these questions and others in the time it takes you to get ready for work in the morning. Best of all, you're covered by my 100% satisfaction guarantee. If at the end of the call you don't feel like it was worth it, just say the word and I'll refund your purchase in full. To book your one-on-one coaching call, go to jonathanstark.com slash call, C-A-L-L. That URL again is jonathanstark.com slash call. Hope to see you there.