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 Zhao Chen. I'm sure I said that wrong, sorry. And the question is this. It's great to learn about value pricing for future inquiries, but how would you tackle the conversation with past repeat clients? Next time they have a project for me, how would you approach it? Or are we simply stuck in the old ways when it comes to past clients? I have a few clients that I'd like to build long-term relationships with, so I wouldn't want to try ditching them and finding new clients. Okay, so what the question asker is getting at here is I've said, I say all the time, it's really hard to convert hourly old clients for whom you build hourly over to value price clients. It's just hard. They don't see you in the right way. The kind of conversations that you need to have with them are different than what you probably have been having. So usually what I say is, well, just let those clients peter out and find new clients, attract new clients who you can start fresh with. It's almost easier. It's usually easier, I think, to just start a fresh new relationship than trying to get out of the friend zone with an old client and turn into a romantic relationship. It's very hard to change the way they think about you, which is what they have to do to switch into a value model. Okay, but here are some tactics that you can try if you really want to keep working with these sort of existing clients who are used to paying you by the hour. I don't love all of these ideas, but these are some things you can do. First thing is you could have them buy blocks of hours in advance, where at least what you're doing there is getting the money up front and not having to bill in arrears for your time. So you get a slight time value of money benefit from that. And you get away from onesie, twosie types of things where they call you for an hour this week and you don't hear from them for a while and they call you for an hour the next week. It forces them to kind of wait until they've got maybe 50 hours of work built up and they can buy this chunk of hours, you blast through it, and again, I don't love this, but it's something that you can do to kind of convert these clients, especially if you've got a lot of ongoing maintenancy kind of work. Another thing you can do is, I suppose it depends on the kind of client, but you could put them on sort of a support and maintenance sort of thing where it's X amount of dollars per month and they can have up to X issues and it doesn't roll over. It's like, it's an insurance policy. If we don't hear from you, if you don't have any bugs this month, then we'll do some maintenance stuff and try and use up the time. But basically you get this recurring income from them. You're sort of on speed dial. So if they do have an emergency, they can get you and you can have a particular response time. Maybe it's same day, maybe it's 48 hours, whatever the response time is supposed to be where you get in, you diagnose the issue, you give them some potential resolution or you explain to them that it's not an easy fix and we're probably gonna take X amount of time that we could quote separately. Again, I don't love this, but it's something that you can do to get them off of this straight hourly billing thing, switch them over to like a maintenance plan. Another thing you can do if they have a big project for you. So instead of like an ongoing dribbly kind of support and maintenance work, if they say, hey, we've got a whole new module we're gonna build or we wanna redo this solution from scratch and there's an actual project with a beginning, a middle and an end, then you could say, okay, well, do everything how you normally do it and then when you write the proposal, you have one option that's exactly like the old way that they're used to where we think it's gonna be $1,000, our hourly rate is $100 an hour, so that totals out to X and then you can additionally say, or I'll give you a fixed price. So instead of it being 10,000 maybe, we'll give you a fixed price for 18,500 or something like that and we'll guarantee that it'll get done for that price. So yes, that's a lot more money, but you remember what happened last time when we thought it was gonna be 10,000, ended up being 30,000. Well, we didn't feel great about that. We know you didn't feel great about that. We know there are gonna be some surprises, so let's just build it into a fixed price. We'll take the risk and if it does end up taking $30,000 worth of hours, then that's our problem, not yours. So what you're doing is giving them the old way juxtaposed with a new way, a fixed price way. It's not a value price, it's just you tacking on 85%.

up to take the risk of the project. And since these are old clients that you've got relationships with, you're gonna have a feel for how far off, how easy they are to work with. You're gonna know that you have good communications with them. So it's not as risky as it would be with a brand new client, a stranger. So when you go to do that estimate, let's just for round numbers say that the estimate is 10,000 maybe, and then the fixed price is 18.5. If you're like, whoa, 18.5 is way too low, then your 10,000 is probably wrong. It's probably too optimistic. It's probably too low. You're probably putting that $10,000 in there to get the project because you're afraid they'll say no to a higher estimate. So what you should do is pick a fixed price that you'd be comfortable with and then calculate a number that's like, I don't know how to say it backwards, like calculate a number, an estimate for which the fixed price is 85% more, if that makes sense. My math, sorry, that was a mess. The idea is that you want the estimate and the fixed price to differ by 85% or very close to it. And if the fixed price feels too low, it feels too risky, then your estimate's too low. So raise your estimate so that the fixed price is 85% higher. Other than that, I would say that, I'm trying to think of any other ways to sort of separate time from money from old clients. So I can't think of any other ones. So the first one was to sell blocks of hours and not sell onesie twosies. The next one was to do, what did I say? Oh yeah, support and maintenance if it's a dribbly kind of work. And then this last one is to offer two different, to offer a fixed price alongside an estimate to kind of reveal to them the risk that they're taking with an estimate and how it would probably be better for everyone if they paid a little extra for you to take on the risk so they know their budget's not gonna get blown. Okay, hopefully that's helpful. I'm Jonathan Stark. If you have a question for me, you can hashtag AskJonathan on Twitter, LinkedIn, or YouTube, and we'll get back to you as soon as we can. Bye. 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.