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 Thrivemate who is referencing a video. This is a comment on another video. And what he says is, Hey, Jonathan, in your example, if you decide to take the implementation project for $70,000, which is based on value, of course, and you know Josh can deliver, what is your conversation with Josh for how much he will get paid? I.e., how would you split the $70,000 between you and Josh? Okay, so let me give you a little bit of the backstory. The backstory is, let's say I'm working with a client and I do some sort of strategy or design or architecture for them up front, and they really want me to do the next step, the implementation piece, the build. And I don't do that, I don't want to do that, and they don't have anyone to do it. They just want me to handle it. In the example that Thrivemate's talking about here, I go to my friend Josh, who I know does implementation, and I would say, hey, I'll charge the client $70,000 and I'll deal with it and I'll have Josh do it and Josh will be in the meetings and it'll all be totally transparent. Now this follow-up question is, how would I split the $70,000 with Josh? And the answer is, it depends. So I would want to know, there's a couple of things I would want to know before I gave that $70,000 figure. So the first thing is, I would want to know that, well I guess it's really one big thing, I would want to know that Josh is going to not cost more than $70,000, right? So I'm going to want to get a fixed price from Josh. So Josh and I are going to have to talk, and we're going to have to come to an agreement, and I'm going to say, look, I've got this client, I did this design for him, let's say, I've got this prototype, and I've got, let's say, $35,000. Do you think you can build this out for $35,000? And I'll deal with scope creep, I'll deal with all of that stuff, I'll keep it from creeping out of control, I know I can do that. And they'll say, yes or no, I can do it for $35,000, but I'm going to want to get a fixed price from them, preferably. And the exact split, it depends on the situation, it depends on how long it's going to be, it depends on the absolute value, but I'm basically going to say, I've got essentially a budget from the client of $70,000, and I want to know, let's work something out that's fair, because I'm still taking the risk, because let's say Josh bills by the hour, and he says, oh yeah, I think we can do that for $50,000, and then they work slower than I think, Josh's team works slower than I think, or there are delays, or there's some sort of something, some kind of problem, maybe the client gets out of control, I don't know. But I'm going to want to know that there's a good margin there, because I know there are going to be surprises, I know there are going to be unknowns. So if it's going to be an hourly thing, and I've got a $70,000 budget from the client, and Josh wants to bill by the hour, his estimate's going to have to be really low, like, I think we can do that for $20,000, $25,000, give or take, because I know that's going to double. I know he's wrong, and he's also, Josh, if he's billing by the hour, is thinking about it in the wrong way. He's thinking about how much work it's going to take him, not achieving the outcome. On the other hand, if he's willing to give me a fixed price, I've worked with him before, I know that he sticks to his word, then I'd be willing to go, maybe give him $50,000, and I'll keep $20,000, or even more. I might just want to get it over with. I'm not going to take no profit, but a healthy, reasonable profit is going to, what a reasonable profit is will depend on my feeling of the risk involved, because I'm not going to go back to the client for more, like, oh, wow, it turns out that $70,000 was too low, I'm going to need another $70,000, or even another $20,000. I'm not going to do that. I never go back to the well. It really all boils down to my confidence in Josh's quote to me. I'm going to have a bunch of information for him, and maybe I just say, look, we just need to achieve this outcome. The client needs to have a proof of concept that's ready for investors, something like that. Here's a mock-up, here's a prototype. What's the most you think this would cost for me to have you do? If he says something like $15,000 tops, then I'm like, cool, let's do it. I'll give you $30,000, but I'm going to hold you to $30,000, and then we've got $40,000 left over to fix surprises that come up. The answer really is that it depends on a lot of things.

on, well, one thing, risk, but how do I calculate the risk? That has to do with how crazy I think the client is, how crazy I think Josh is, and it's a guess, which is why, in the original video, I don't do this. I don't like doing this because it creates a really, I don't like the three-way transaction. I would much rather have the client go to Josh directly and they work that out. Much rather have that because I have some control over the client, I have some control over Josh, but adding an extra party in here really is, I feel like it 10Xs the complication. There's a lot more communication, a lot more, just potential for confusion, potential for assumptions. So again, I don't like doing this. I've almost never done it. I can think of very few occasions when I've done this, outsourced implementation through me. I usually just introduce the client to the person who's gonna do the implementation. They deal with that and I'll stay on board to oversee the project, but they work out the money between the two of them. Okay, I don't feel like I really answered that very well, but that's my answer. It just depends on my sense of risk. Okay, if you have questions, you can get at me with hashtag AskJonathan on YouTube, Twitter, or LinkedIn, and we will find that and answer as soon as we can. Thanks. 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.