Ditching Hourly

Hello and welcome to Ditching Hourly, I'm Jonathan Stark. Today I've got an audio excerpt from an answer I provided on my YouTube channel. You can check it out at thejonathanstarkshow.com and it'll redirect you to YouTube if you're into watching videos. Otherwise, you can just listen to the audio here on the podcast. Enjoy. Hey, Jonathan here. I've got a question from Design Build Solutions who asks, Hey Jonathan, I design remodeling projects. My goal is to create relationships with contractors because I like the relationship and repeat business. Sometimes homeowners call me directly. In either case, the end user of my service isn't a business, it's a homeowner. I've been working on my why questions and value-based proposals and sometimes I think I'm getting there. But then other times I wonder, does value-based pricing work for homeowners? I'm sure it's a little different since I'm not making a business value proposition to them. Thanks. Okay, so what we're talking about here is a B2C or business to consumer type of sales proposition where a sort of a normal person for their personal life is buying something. So normally you'd think of B2C sales would be something like shampoo or Starbucks coffee and a B2B to contrast that business to business would be the contractors hiring this design build solutions person to do something for them. So on behalf of the client, so the homeowner. So there's sort of a couple of things are raised here. So first, I'm just going to quickly talk about the idea of going through a contractor. It kind of reminds me with web designers and developers going through an agency where the agency is out there getting clients and they maybe land a client that has a project that has some things that they're not great at, not a core competency. So they'll have a kind of a black book of contacts they'd reach out to when they need like Drupal development or some WordPress plugin work or theme development or something like that. But that's not someone that they keep on staff. That's not a skill that they have in house. So they hire it out. And that's a tricky proposition for value pricing because you never get to talk to the end client to develop a sort of value proposition to understand what it is they're trying to achieve. A lot of times agencies aren't great at that either because they're planning to just bill out hourly as many hours as they can get away with. And they're just they want to hire you hourly at some rate that's the same or less than their hourly rate so they can kind of tick that box for the piece that you do and still, you know, make a margin on the hours that they're selling to the client. So if your contractor relationship, if when you're hired through a contractor, you don't get to talk directly to the homeowner and the contractor is really your customer and you're sort of behind the scenes or just giving them a deliverable or even if they are closing the whole deal, even if you do talk to the homeowner, if it happens after the sale takes place, it's probably not a good idea to value price it or you can't really value price it unless you can't really value price it. There's some exceptions, but they don't matter. So giving a fixed price to the contractor is kind of dangerous for anything that could last a long time. I'm assuming since you're doing a design, it's not it's not taking place throughout the entire project. So it's probably not probably doesn't open you up to a massive amount of risk, but still you can't really value price it if you're not talking to the homeowner before the sale is made and giving a fixed price to the contractor can be kind of dangerous because if there's potential for scope creep, if the homeowner gets out of control and the contractor isn't good at managing them, then you can be on the hook. You know, you're only getting $10,000 for this project and the contractor keeps coming back to you with changes because they're terrible at managing the client. That's sort of I don't like that. That's a dangerous situation. So you would really need to trust the contractor, have a good relationship with them and know that they're good at managing the client. They aren't going to scope creep you by proxy if you're going to give a fixed price to if that's the model with the contractors. Okay, now let's put that aside and imagine you've got a direct B2C relationship with a homeowner. They come to you for some reason. They, you know, maybe you're talking to them at a barbecue or they see your website or they were referred by a friend. They come to you for something. It's, you know, at the very end of the project after you give them your design for the remodel and some builder comes in and builds it and then it's done. Then they're going to have some outcome way at the end. But there's an outcome that they'll get from you from knowing that someone they trust and an expert in the field or authority on this thing, remodeling designs, an expert has

sort of de-risked it for them. So they are nervous about something. They want someone like you to come in and calm their nerves down or give them a plan, give them some clarity, help them feel confident, give them some kind of maybe work with them on a budget. There's something. They want something. And it's going to be very qualitative. It's going to be based on their trust in you, how much trust they have that you're an expert at this, and you understand them. It's going to be about as squishy as it gets, which is true with most B2C things. Like, really, what's the value? It depends. It depends from person to person. So if you want to value price these folks, meaning like every time a prospect comes to you, you talk to them, you find out their situation, you get a sense of what your contribution to the engagement would be worth to them, and then you give them a price based on that value. If you're going to do that every single time with every homeowner, it can be a lot of work. It can be emotionally draining. If you're not great at it, it can drive customers away because they feel like they're being interrogated for some reason that they don't understand. So it can be a little bit – it's stressful. It can be a little bit draining. But what you want to do when they come in, if you do want to do that, if you do want to value price these design projects, you need to be talking to them about why would they bother hire someone like you? Why would you hire someone expensive like me to do this? Couldn't you just download some program like Remodeler Pro at remodelerpro.com and you can do this yourself? Or couldn't you take a course at the community college and learn how to do this? Couldn't you get someone cheaper? I don't know the space well enough to have an idea what a cheap version is. What's the analog to Fiverr in the design space? I don't know. Couldn't you buy – there's probably websites that have prefab plans that they could put together. Like, oh, you have a Dutch Colonial? Why don't you just go to this website, look for a Dutch Colonial, and pull down plans? Why don't you just go to Pinterest and look for Dutch Colonial bathroom rentals? Why don't you just do that and put it together and give it to a contractor? And they'll tell you – maybe they'll say, yeah, maybe I will just do that. But hopefully some of these prospects will say, no, no, no, we would never do that. We've done that before and it blew up in our face. Or we had friends that did that and it didn't work out. Or they'll say, no, we definitely – this is going to be a $100,000 reno, the whole thing. So we want to make sure that it doesn't go way out of control. We want to get an expert in here to kind of scope it out for the contractors. Maybe there's another product you could offer where you provide oversight while the contractors are doing the job, where periodically you check in to make sure that they're actually doing what you suggested they do. And any situations where there's a surprise, you kind of work with the client and the contractor to come up with a reasonable solution that everybody is happy with. So you can do it. B2C, it is possible. You're probably going to want to skew toward the more wealthy individuals because they're going to have – because money – a $10 bill is worth less to them than someone who doesn't have a lot of money. So they're automatically – all of the security and clarity and confidence is going to be worth more to them because they've got more at stake and they care less about any individual $10 bill. So if you can kind of skew toward – we do design remodeling projects for $10 million homes, you're immediately going to have a bigger budget to work with for folks like that. Another thing that you could consider is offering a sort of productized version of this where it's relatively fixed scope no matter who comes to you, and you could offer this sort of productized version for $5,000. You get X, Y, and Z, and particular buyers who look like this or houses that are like this should expect to get these kinds of benefits from the engagement. So you would focus it on maybe the lower end of the market if you wanted to serve the lower end of the market and say, eh, you're doing a bathroom reno for a flip or you're doing a bathroom reno in your single family home or whatever. Whatever it is, whatever is the most common thing that people want to do. I would imagine it would be kitchen and bathroom. So if you wanted to offer productized services like that, you could say, hey, are you in a single family owner occupied home in this particular area, meaning in this particular area is probably a price range for the homes in that particular area. So do you live in a single family home, owner occupied on the east side of Providence, and you're thinking about doing a bathroom or kitchen renovation?

So if you did that, you'd say, oh, it's $5,000, and what you can expect is X, Y, and Z, and when you're done, the benefits are A, B, and C. You'll be able to do this. I'll give you a list of trusted contractors that could do the job. I've got a direct line to them, so they can move you to the front of the line. You can trust them. They do good work. They are relatively on time, so on and so forth. So two options there. You could target the sort of mid to low end of the market with a productized service that's very fixed scope and has like a benefit that's reliably going to come of it. And for the higher end projects, a million dollar homes and bigger, then you could say, okay, we should talk and kind of like get a feel for why you would bother hiring an expert like me to come in and do this. Don't you already have somebody? Couldn't your general contractor just do it and get a sense from them about why it's important for them, what they're going to value about it, what they're afraid of, that kind of thing. So with those two offerings, anybody that comes along, you could say, well, how much did you pay for your house? Or how much are you planning to spend on the overall renovation? What's your budget for the overall renovation? And you can immediately, because you're not going to get that money, so they'll probably be happy to give it to you. We figure it'll probably be a quarter of a million dollars or we figure it'll be about $25,000. Immediately, you're going to be able to say, well, okay, if it's going to be $25,000 rental, you should probably go with this productized service I offer. Here's a page. You can ask me any questions about it after you review it, but it's $5,000 and it will give you all of these benefits and pay for itself for these reasons. And then on the high end, if they say, oh, probably a $250,000 budget, then you can say, okay, we should talk. Maybe you walk the property. Maybe you do a few things. But basically, there's a bigger potential upside with someone who's got a bigger budget overall. So it might make sense to, after some qualification, to put more energy into putting together a custom proposal, having a value conversation, having the Y conversation, and so on and so forth. Okay, hopefully that helps. I'm Jonathan Stark, and if you have a question for me, you can hashtag AskJonathan on Twitter, LinkedIn, or YouTube, and we will find it and add it to the list. See ya. Would you like to learn how to get paid what you're worth? How about selling your expertise and not your labor? We work through all of this together in the Pricing Seminar. Pre-registration starts soon, and you can sign up to be the first to know when early bird pricing is announced at ThePricingSeminar.com. That URL again is ThePricingSeminar.com. Hope to see you there. 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.