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 Ludwig who asks, I'm just starting to do value pricing and I have a little question. How can I apply value pricing on projects where multiple parties are involved? For example, a website where one agency is doing the design and I'm tasked with the development. I can easily find out the value of the whole project for the client, but how do I know what percentage I can take from this when there are more people doing the work? Yeah, so this three-way relationship I think is a really bad fit for value pricing. It's really hard to do. It can work in certain edge cases if you are brought in to quote the work directly with the client or you help pitch the work. You can kind of sometimes make it work, but most agencies, just like most freelancers and most consultants, bill on an hourly basis or some sort of time and materials basis. And trying to jam those two models together, those two pricing models together is really hard. It might as well be impossible. It's not totally impossible, but it's just easier to do other things. So what I would recommend, if possible in your situation, if you want to keep working through agencies, because I know that can be a really good source of a steady stream of work for people, a couple of things I would recommend. One, make yourself as easy to work with as possible so they keep hiring you. And that probably means working by the hour. Yikes. But what that will do is give you a cushion of cash flow. It'll be a regular cash flow that you can depend on. The trap is that you don't want to work 40, 60 hours a week for them. You want to limit it to 20 or 30 at the most so that you have 10 or 20 hours left over to go find your own clients directly. Start to get your marketing game going. Attract your own clients. Close your own sales and value price those projects. It's really hard to value price through an agency, but you can use them as a cash flow cushion while you're landing direct clients. Another thing you can do if you don't want to bill hourly, and I would certainly understand if you didn't want to, is you could give the agency a fixed price as long as you feel like you have control over the scope. And this is pretty rare in one of these situations. But if you feel like you've got control over the scope, you can kind of increase your profits by being amazing and fast and high quality at what you do. So if you're the developer and the agency comes to you and they say, hey, we've got this client, we need to build this website for them, we're going to design the whole thing, here are the designs, and you say, all right, I'll do that for $25,000. And they say, $25,000? How many hours do you think that's going to take you? You say, I don't know how many hours it's going to take, which is why I want to give you a fixed price so you can budget. If I don't give you a fixed price, then I don't know how much it's going to cost, and you're just going to have to either absorb the overage or you're going to have to pass it on to the client. So you could perhaps convince them mentally to accept a fixed price from you, not for hours, but for an outcome, for the delivery of this set of wireframes or designs or whatever. And this is a little bit scary to do in an agency model because you don't usually have control over the scope. It can creep and there's nothing you can do about it. And if you give a fixed price, you could be on the hook for it or you just end up fighting with the agency. So if you're in a rare situation where you have a great relationship with them and you guys work well together, your communication is great, and when they give you designs, they don't scope creep them, they are good at controlling their clients, then maybe give them a fixed price and commit to it and then deliver the results. If you're not 100% sure or you're not at least 100% confident that they are good at managing scope creep, good at managing clients, then I would probably just go hourly with them for 20 hours a week, 30 tops, to keep the lights on while you go land your own clients. So it's kind of a bridge to value pricing. But yeah, just to summarize, value pricing with a third party involved, especially when they own the client relationship, might as well be impossible. It's easier to just go find your own clients. Okay, hope that helped. I'm Jonathan Stark, and if you have a question for me, you can hashtag AskJonathan on YouTube, Twitter, or LinkedIn, and we'll get to it as soon as we can. 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 among 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.