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 Tim Schrock, and he asks, how to reply when you say $18,000 is my price, and the client says, what? That could only take you like 100 hours max, so that's $180 an hour. That's highway robbery. Okay, if a client says this to you in response to a proposal that you've submitted, you've already completely lost control of the conversation. So I'm actually going to back up and give you some advice about how you should have a sales interview and get to the proposal in the first place so that they're not even thinking about hours. So the first thing is when someone contacts you and they say, what's your hourly rate? You say, I don't have one. I'll give you a fixed price for the project. Would that be acceptable? They're almost always going to say yes. So then you get on a phone call with them or you have a meeting of some kind, and you let them brain dump about the project. Then you ask the why questions. You have a why conversation with them. Why do you even want to do this? Why not not do this? Why do this now? Why not put it off? Why is this so urgent? What's the big deal? Why would you hire someone expensive like me to do this instead of doing it in-house or outsourcing it to a low cost of living country? All of these questions raise every possible objection in the sales interview. What you're trying to do is convince yourself that you can actually deliver some kind of beneficial outcome to them that will give them positive ROI over and above whatever your prices are going to be. You ask them, what does a home run look like for you? If we really knock this out of the park, what will that mean for your company or for you personally if it's not the owner? Then finally, how could we measure progress toward this goal that you've just described to me? You've described this goal. This project is going to take three months, six months, nine months. How can we make sure we're on track so we don't get to the end and do all this work and find out like, wow, this was a total flop? They'll have some metric. They will. Whatever the thing is that they're currently measuring to know that they need to hire someone to do this project will be the metric. Once you have all that information in the proposal, you don't talk about... You mentioned some deliverables and some things you're going to do just to paint a picture of what the working relationship will be like and to let them know that you heard them in the conversation because they're going to talk about a lot of deliverables and tasks and things like that. You'll mention those things in the proposal. In the proposal, you give them three options and each one is going to have unique benefits. The benefits to them of option one, option one would be, say, $10,000. Option one is going to be, I'm going to do these things. We're going to engage in this way. The benefits to you will be X, Y, and Z. These are business outcomes. These are things that businesses care about. Things that if your project contact takes this proposal and runs it by the CFO who hasn't even talked to you, they'll be like, yeah, that would be great. Those three things sound pretty good. Are those things worth $10,000? Yeah, maybe they are. Do you believe that this person can execute them? Yeah, I think so. All right. That seems reasonable. The whole conversation, the example you give, the conversation has already spun way out of control and all they're thinking about is deliverables. They're basically thinking about, hey, we just gave you these tasks. Why don't you just do them? You have to nip that in the bud before you even write the proposal. The second option would be like, if option one was $10,000, say option two is $22,000. It's $12,000 more. What are the benefits? You get option one plus option two, the additional things in option two. The total for one and two together is $22,000. The difference is 12. Well, are the benefits of option two worth $12,000 to the client? Same thing with option three. Say option three is $50,000. Now you're like, okay, you've got all these benefits, these outcomes, these business outcomes. They could be tangible or intangible, but they're real. The client is going to look at those and say, well, are these outcomes worth this money? They're going to think a lot less about how many hours it's going to take you to deliver them because that's the focus of the conversation. Instead of, well, here's this task list, this sort of, this like tactics in absence of any overall strategy or objective or goals, like, geez, you know, I just want you to mop the floors. That should be like $10 an hour. Why is it going to be $180 an hour for you to mop the floors and then do the dishes and clean the attic? That should be simple. You're talking about the wrong thing. What you want to be talking about is a clean house. You want to talk about, you know, no pests. You want to talk about how they'll feel when the place is decluttered. It's not about how long it's going to take you to do it. If they're...

about that, you completely lost control of the conversation because, in fact, imagine if you said back to them, well, actually, we don't know that it's going to take 100 hours. In fact, it could take 200 hours, which would lower my rate to $90 an hour. We really don't know. And I'm taking on the risk by giving you a fixed price that my estimate or that the scope is roughly in this ballpark. I could be really wrong. Or maybe it's the other way. Maybe it's 50 hours. But wouldn't it be better if I finished in 50 hours than 100 or 200? Would you want me to take longer? Wouldn't that be worth less if it took me six months instead of a week? But that's a tough conversation to have at this point because they're already focused on the wrong thing. They're seeing you as a cost, not an investment in achieving an outcome. So long story short, you need to nip this kind of attitude in the bud early on, focus on the outcomes that you can deliver, and price those. And always pull the conversation back to what they'll get out of it at the end, not the inputs, not the stuff you're going to do, not the activities you're going to engage in along the way to deliver those outcomes. All right, hopefully that helps. If you have a question, you can hashtag AskJonathan on YouTube, Twitter, or LinkedIn. And I'll get to it as soon as I 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 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.