DH 033 Joel Miller
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Meet Joel Miller
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Jonathan Stark: Hello and welcome to Ditching Hourly. I’m Jonathan Stark. Today I’m joined by Joel Miller. Joel is co-owner and project manager at The Sky Floor, a web design and marketing company in the Chicago area. I asked Joel to come on Ditching Hourly to share with you his first experiences using value pricing for project work. Enjoy. Hey, Joel. Welcome to the show.
Joel Miller: Hey.
Jonathan Stark: Could you start by telling folks a little bit about yourself and what you do?
Joel Miller: Sure. I am primarily a web designer. Really, we do all kinds of design work: graphic design, print design. It just turns out to be probably 60 to 70 percent web work in any given season. My business is called The Sky Floor, and we work with really any size business. If someone comes along and they want to use us, and we can convince them of the value we provide, then we’ll work for them.
Moving Away From Hourly Billing
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Jonathan Stark: Excellent. How do you price your work?
Joel Miller: Right now, it’s still a mixture. We’ve been moving slowly toward value pricing, which is awesome. There’s really no better way to do it. Hourly is just a quagmire, and we’re really trying to move out of any contracts that involve hourly work.
Jonathan Stark: Yes, believe me, I know. The reason we ended up jumping on the call is because you had sent in an email where you had this sort of “aha” moment, or I think you used the word “epiphany.” Could you talk about that?
Turning Discovery Into Paid Consulting
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Joel Miller: Right. We’ve been slowly moving toward value pricing, but oftentimes we go in and talk to a client, and they really don’t understand what value they’re even asking us to provide. They want a new website, let’s say, and to them it’s just a commodity. They’re shopping around. They think they need a new site because maybe the president said, “We need a new website. It hasn’t been done in long enough.”
They really don’t even understand what their website is doing for their business. Is it driving leads? Even if it has e-commerce, a lot of times it seems like people don’t understand exactly how it behaves and what the real value is on a day-to-day basis. As I was reading, I was thinking, “How do I have the why conversation when they don’t even understand the value that they’re asking us to provide?” They don’t even understand what the property means for them.
I realized that we can turn that process into a consulting phase where we help them define the value. We use the tools that we have to look at what the website is doing, how it’s performing, where leads are coming from, and really get into the details of how it impacts their business. Then we can take that and set ourselves up to be the experts for the next stage, but also provide something and get paid along the way.
Why Goals Come Before Estimates
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Jonathan Stark: Yeah, absolutely. That’s one of the funny things about hourly. One of the things that really scares me about it is that someone can come to you and say, “Hey, we need a website refresh. It’s been since the ’90s. We haven’t done anything. It looks really old. We understand that you’re a web developer. One of our friends referred us to you. What’s your hourly rate?”
Most people just jump on that and say whatever their hourly rate is. Then the client says, “Okay, great. Can you send us an estimate?” Now we’re already down this path of talking about money and putting together an estimate. We think it’s going to be whatever, 100 hours, and no one has ever discussed why you’re doing it or what the goal is.
A refresh is not a very specific goal. Are you trying to attract a different clientele? What’s wrong with the current website? Why not just leave it the way it is? Yes, we can both see that it looks dated, but what problem is that causing? We’re all just assuming there’s a problem, and I might be assuming a different problem than you’re assuming.
If I go in trying to fix the wrong thing because we haven’t discussed what it was, and just make it look pretty, there’s a pretty safe bet that no specific goal has been achieved at the end of the project because there wasn’t one—at least, not an agreed-upon one. If the goal the developer or designer feels they’re trying to reach is not the one the client subconsciously wanted to reach, then the client isn’t going to be happy.
Joel Miller: Right. It doesn’t matter if you’re just the world’s best genius at estimating hours. You’re going to be wrong to a certain amount. Then you get into that cycle of, “What are you really doing? Why did this take longer?” You can overquote on the hours, but then you’re heading toward some sort of lame or bad version of value pricing. You might as well look at what the project actually means for the company or the business, how you can achieve that goal, and what that’s worth to them.
Jonathan Stark: Right. How are we going to measure progress toward that goal? How big of a goal is it? Is it a big deal? If it’s not a big deal, we’re probably not a good fit.
When you get to what you think is the end of the project, if their unstated or subconscious goal hasn’t been reached, that’s when scope starts creeping. All of a sudden, they’re micromanaging you and saying, “Can you get the logo bigger? Make the black a little blacker. Do this and do that.” They start trying to mush around your beautiful piece of art because it’s not going to do what they didn’t tell you they wanted it to do—because no one asked them.
I sound accusatory by saying “they,” but I’ve done it too, where you just jump straight to, “What do you want it to look like? What sort of feel? What other websites look the way you want it to look?” You go for comps and try to get a feel for a bunch of really tactical things. It would almost be a miracle for them to magically align and achieve some unstated goal if no one knows what it is.
Joel Miller: Right. Definitely.
Joel’s First Value-Priced Project
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Jonathan Stark: Do you remember the first time you value priced a project? I’m curious how that went, whether you had any trouble, or if it was just awesome right out of the gate.
Joel Miller: I think the only trouble is personal, really. There’s this moment where you just feel like, “Is this going to work?” because you’re so used to doing it the other way. I don’t know if it’s an American thing or a worldwide thing, but we grow up associating our time with money and how much that is. If you work for someone, they hire you and you get $9.25 an hour or whatever it is. You think, “This is just how it works.”
The cool thing about working for myself is that I can charge $50 an hour, but the things we don’t like about working for someone else by the hour are going to come true even if you’re working for yourself, quote-unquote.
Besides getting over the gap—the pause and the pushback on sending out that first proposal—it actually went really well. When I started doing it, we were extremely busy anyway. There was this sense of, “This is a great time to try it. If they say no, they say no. It’s not going to ruin my week. But if they say yes, it’s going to make it.”
The Best Time to Experiment
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Jonathan Stark: That’s a great point. A lot of times, I tell people who are in a tough position—maybe they aren’t getting enough leads and they’re having cash-flow problems—that it’s not a good time to try this. They’re going to undervalue themselves because they’re going to be, “desperate” is a strong word, but it’s going to be hard for them to negotiate from a strong position. They’re going to be very open to compromise if they really, really need the money.
If you think you’re going to do a value-priced quote in a situation like that, almost always you’re going to price it too low because you’re thinking, “I need to lower the price to get the gig, and I really need the gig.” Then you’re on the hook because, if you didn’t do a why conversation properly and you don’t know what the real goal is, scope creep can come in. You didn’t price it high enough in the first place, and you’re going to feel like you’re losing money and that you’re their slave.
It’s much better to wait for an up period on the roller coaster and say, “Okay, we don’t really need this job, so let’s just take a swing at it. If it blows up in our face, we’ll survive because we’ve got the cash flow. If the customer takes it, great. If they don’t take it, no big deal.”
Joel Miller: Right. You just get to learn what to do better, basically. Every pitch and every chance to talk to a new or potential client is a learning experience. I’ve been doing this for eight or nine years in the current formation of my business, The Sky Floor, and there’s not a month that goes by where I haven’t learned something new that changes a little bit of how I go about things in the future. I think it’s kind of scary if you stop doing that.
Jonathan Stark: Yes. Everything is practice for the next time.
Advice for Pulling the Trigger
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Jonathan Stark: Would you have any words of wisdom, encouragement, or advice for people who are in that self-doubt position, where they’re thinking about it but haven’t quite pulled the trigger?
Joel Miller: The advice I would give to someone who is in that beginning stage of wondering if they should do this, and doubting whether it’s going to work, is to try it on a new client. Then you don’t have to teach someone anything new about what you’re doing, and they probably won’t be completely thrown off guard. That’s just personal experience from our stories.
Also, just swing. Give it a shot. Even though things sometimes feel pretty dire or intense in the moment, especially when the buck stops with you, it’s really not. Next month or next year, it’s a new thing. It’s a new set of joys and frustrations with any work. Take those chances, put yourself out there, and move toward the kind of business you want to be running. I think we all have an idea of the business we want to be running. There are various roadblocks, personally and externally, that prevent us from doing it, but start making moves toward that.
Where to Find Joel
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Jonathan Stark: Excellent. That’s a great place to leave it. Joel, thanks so much for coming on. Where can people find out more about you?
Joel Miller: They can visit us at theskyfloor.com. That’s T-H-E-S-K-Y-F-L-O-O-R dot com.
Jonathan Stark: That’s it for today. I’m Jonathan Stark, and this is Ditching Hourly. Thanks for listening. The next time someone asks you for your hourly rate, I’d like you to say, “I don’t have one.” To learn what to say next, visit valuepricingbootcamp.com to sign up for my free email course. Again, that URL is valuepricingbootcamp.com.
