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 Richard Presner. I'm the worst, sorry. And the question is, if what you're selling is the outcome, how do you offer three tiers of prices? If a lower-priced option could get the job done, haven't you invalidated the case for the higher-priced option? Ooh, juicy. I love this because it gets at the nuances of the language that I and other people use to talk about this. So I think usually there are two ways to do... First of all, what Richard's talking about here is a value-priced project proposal with three options on it. And there are a couple of different ways to... I usually see two different ways to break out those options. The one way is to have three options. One is the DIY option. So let's say somebody has this project where they want to, I don't know, make their website mobile-friendly. Right now it's desktop only and they want to make it mobile-friendly. And the outcome is that they want to do something like decrease the bounce rate on mobile or they want to do something like they want to appear cutting-edge. Their brand has to be cutting-edge. It can't not work on mobile. It can't be lame on mobile. It needs to be great on mobile. And the client really values that. So let's just say the outcome is they want to decrease the bounce rate on mobile, whatever it is that you work with them. But the therapy, the thing that needs to be done that everybody agrees on is the site needs to be made responsive. So whatever kind of work you do, imagine that there's some deliverable that's going to achieve an outcome that the client really cares about. So a couple different ways you could do this. One, you could say option one is like the DIY option where you train their internal developers how to create a mobile website, a responsive website. So you're not doing the implementation. You're just doing a workshop or something like that. So you're basically, they have to do all the heavy lifting and you're just doing the upfront stuff, the planning stuff, maybe a roadmap, maybe some code samples, maybe a style guide, maybe snippets, maybe components. You just build up some stuff and you say, here you go, you run with it. Option two could be option one plus you will stay on board to oversee the project as it takes its course. As their internal developers or their outside agency actually builds the stuff, you make sure that they stay on track, they stick to the blueprint as they're building it. If they get stuck anywhere, you can help them get unstuck. If they have questions or if they're going off the rails, you can get them back on. So option two would be sort of like a done with you option where you're providing oversight on the project, but you're not actually coding it. And then the third part, the third option could be done for you. We'll do everything. We'll source a team. We'll do all the design. We'll oversee the entire project as it goes. We'll staff the project. We'll do everything. So the breakdown here is option one is DIY, option two is done with you, and option three is done for you. There's another way that you can break up the three options, which is more scope-based. So you could say where option one is kind of like low-hanging fruit. So the client needs something done, and this would be more appropriate to a solution where... I see it most commonly when a client wants an internal solution, like a workflow solution built for a department or for their entire company. Maybe they're trying to deal with outside sales or work orders, and they need something really custom. And you can kind of do the three options in scope. So their ultimate goal is they want to increase productivity of their employees or something like that. They want to be able to handle more clients with the same number of employees or fewer. All right, great. Well, you need this big system, but you could maybe break it into three phases. And the low-hanging fruit, the 20% that's going to give them 80%, you know, the 80-20 rule will just do the three main modules that you absolutely need to have done as option one. Option two, we'll add in a few more modules, and option three, we'll add even more modules. Or you could say maybe if it doesn't break down like that, you can say option one is that we'll do all these modules, just the basic stuff. Option two might include client-facing interfaces for accessing their own account inside of the system.

creating a web interface to an internal system for outside clients. And the third option could be those two things plus whatever, three months of training or it could be importing data from the old system to the new system, that could be part of option three, or they can do it manually or run the systems in parallel. But basically, the difference is you're still pricing the outcome in both of these scenarios. You're still pricing the outcome, but you're doing what Blair Enns would say, discounting for risk. So if the outcome is that we want to take the bounce rate on mobile from like 90% to 50%, and okay, we can do that for you. How much is that worth to you? Oh, that'd be worth a million bucks a year for us. So if you could 100% guarantee that you could have that done and it would have that effect, you could charge the full amount. You could charge a million dollars. Give us a million dollars, you will get a million dollars back, we'll pay for ourselves in the first year, and then after that, every year after that, forever and ever, amen, you'll be getting that extra million dollars. So you probably can't guarantee that, even if you're doing development or certainly if you're doing marketing or advertising, those sorts of upstream things, strategy, you can't 100% guarantee the outcome, so you think of it as discounting for risk. How much do you want us to move this needle? So we understand the needle that you want to have moved, how much do you want us to move it? And how much work do you want to shoulder? How much risk do you want to take? So the three different options, I've given you two very different styles, but those are the two I see the most often are either splitting up the scope or the division of labor or the risk at each different point. So thanks for the question, great question, I really like that one. Okay, I'm Jonathan Stark. If you have a question for me, hashtag AskJonathan on YouTube, Twitter, or LinkedIn, and we'll add it to the queue and 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.