Ditching Hourly

Hello and welcome to Ditching Hourly, I'm Jonathan Stark. Today I'm going to talk about what sorts of project can be value priced and which can't. Any kind of project can be value priced, but not every kind of project can be value priced profitably. That's the trick. So if you imagine a customer who wants a logo redesign and it's worth about ten bucks to them, you could charge them a dollar for it, and they'd be like, yeah, I'll totally do that. But charging a dollar for a logo redesign is probably not going to be a profitable situation for you. So the real question here isn't about what can be value priced, everything can be value priced. The question is how to find things that are profitable or how to find value in your work that can then be priced in a way that's profitable for you and delivers a good ROI to the client. I most often get this question from designer type people. Or you could imagine it from professional photographer, what's the value of a professional headshot? It's not 100% obvious. It's tough to bring it down to a bottom line like, oh, we took this professional headshot or we redesigned this website and instantaneously there was this bottom line increase. It makes it easier if you can find a bottom line increase, but it's not required because in the prospect's mind there is some value for the work. If the logo redesign is worth $10 to them, that's how much it's worth. If it's worth $10 million to them, that's how much it's worth. The idea is to find projects that are far more valuable to the client than they would cost for you to do. So there's this huge margin between your cost and the value to them. Because then you can set a price anywhere in the gray area in between pretty much. You can comfortably set it somewhere in the middle and you could be wildly off in your calculations and still come up with a price that's attractive to both parties. So how do you apply this to something like a design project? And the way that you would do it, because I think it's trickiest to do with design, the way that you would do it is to have a conversation with the customer, a why conversation, and work out why they want the project done. This is the same thing I always say about regular development projects or any other kind of project. The idea is to figure out why they want this work done, and that will give you an indication as to how valuable it is to them. So if you say to them, you know, they say, oh, we really want our logo redesigned. And you say, okay, why? Why do you want to do that? Why not just leave it the way it is? Like, well, we're really sick of it. I'm really bored of it. My wife hates it. My brother thinks it looks silly. That sort of thing. Then you probably not, if that's the real motivation, there's probably not a lot of value there. There's certainly very little business value. So you need to drill past that and say, okay, your brother thinks it looks dumb. Does that affect your business in any way? And the person might say, well, no, probably not. My clients never say it looks dumb, but I imagine that they do think it looks dumb because my brother thinks it looks dumb. And in a situation like this, I would say, well, why don't you find out? Why don't you ask your clients? You've got a bunch of clients. Why don't you ask them if they think your logo is unprofessional or gives them a bad sense of your brand? And they could research this. You could basically talk them out of doing the project and say, you don't need a logo redesign. What you need to do is do some research and find out if you need to do a logo redesign. There's a hypothesis on the table that your logo might need to be redesigned. Let's find out before we do it. Because if we don't, then it's going to turn into a situation where the client is just arbitrarily giving you instructions about, you know, I don't like this. I do like this. Can I get version two mixed with version three? And all those sorts of shenanigans that happen when there's no goal for a project. If there is a goal or if they do some research and they do determine that clients do think their logo looks silly or dumb or unprofessional, then they're going to start to have a real business value attached to this. Like, wow, you know, if my customers think this doesn't look good, then there are probably all sorts of prospects who got a bad sense of our business from this. And if that's only 10 percent of the potential leads that we're sort of throwing away because they're just not even contacting us, then that's going to have an immediate value. They're going to have a sense of like, wow, maybe we could increase our number of leads by 10 percent by just redoing our logo. That's a much more valuable proposition than my brother thinks it looks dumb.

My brother to think it looks cool. It's much easier to put a business value on that. So this is just one example. There are all sorts of benefits that design can bring to a business, because of course design's not how something looks, it's how it works. So a designer could come in and say, beyond just a logo redesign or a rebrand, they could say, well, let me redesign your checkout flow. Your checkout flow is very awkward on mobile. You're probably losing a lot of business there. Let's set up some analytics, see what the cart abandonment rate is or the bounce rate is on mobile, and we can redesign it so that it works better on mobile, and then deliver you some kind of business outcome. Because whether you're a designer or photographer or developer or illustrator or copywriter or whatever, businesses don't hire you because they feel like it. You're asking them for dollars. You want a very specific amount of money from them, and in order to justify that, you need to deliver something back to them, a positive ROI on that investment. Like I said, it doesn't have to be a bottom line thing. It could just be a sense to the client of a potential beneficial business outcome, or it could be an increase on some sort of leading indicator that does lead to sales down the line. So it could be an increase in leads or something like that, where they know they're already doing a 10% conversion with the number of leads that they currently get. If they could increase the number of leads by 50%, that would probably increase their bottom line significantly, and they can do some back of the envelope calculations to justify your fee. Okay, so to recap, anything can be value priced, any project, anything, everything really is purchased on value. People decide whether or not a thing is worth the price that it is posted at. The question is, can you do it profitably? So find ways to increase the perceived value of your services with your clients by trying to talk them out of doing the work. Say, you know, why isn't the status quo better? Or why would this be better than the status quo? And make them convince you why in themselves why they should do the project. That's it for today. I'm Jonathan Stark, and this is Ditching Hourly. Thanks for listening. Hey, the next time somebody asks you for your hourly rate, remember to visit 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.