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 Zach Stevens who asks, have you ever actually told a client that you practice value-based pricing? The conversation would go something like this, I imagine. What's your hourly rate? Ask the client. I don't have one. Projects are compensated on a value basis, says the consultant. Is that a suitable response and what would you say? I'm really glad you asked this because it comes up a lot when people first start trying value pricing. They get all excited about it and watch a bunch of videos, maybe read a bunch of books, and then they're super jazzed about it. It tends to come out of their mouth when they first meet a client or they start having a sales interview or something like that. I never talk about how I price. I try never to talk about price ever. I just put it in the proposal. I'll talk about value in the sales conversation, like what would a home run look like? What are you trying to achieve? What would that mean for your bottom line? Things like that. Whenever price comes up in a conversation, I deflect the question as quickly as possible and get back to the project and why they would do it, what it's worth to them, who cares, why not not do it, stuff like that. In the initial phone call, when the customer asks or prospect says, hey, we'd love to work with you. What's your hourly rate? I say, I don't have one. I'll give you a fixed price for the project. Will that be acceptable? If so, then we can move forward. If not, that's fine too. We can just not work together. If they do ask, well, what are you basing your prices on? Sometimes this happens after you give a proposal and they're like, wow, this is more expensive than we expected, even though he told us 10 times it was going to be the most expensive one. Wow, it's really a lot. How did you figure out these prices? Usually what they're trying to do there is understand why would I, it doesn't seem like it'd be that hard. How come it's going to be a million bucks for this, all of these, how long is this really going to take you? They're trying to figure out what the profit distribution is. Subconsciously, they're trying to figure out what the profit distribution is because the price I set is probably pretty close to the value that they think they're going to get out of it, so what's worth to them. There's this natural human fear about someone profiting way more than their, so if I'm profiting way more than they are profiting, it doesn't feel fair. It doesn't feel acceptable. There's something that clicks in their mind. It's very subconscious though. If they're asking how I calculated the price, it's probably for that reason. I'll just say, well, based on past experience and leave it at that. Maybe I've got some more specific thing I can say like, well, I did a project like this for a company in the same space. It's very similar. It's going to be a big undertaking. It's a lot of surprises. We need latitude to be able to change tactics throughout in order to actually achieve this objective. Depending on the situation, I might get a little bit more specific, but the general answer is based on past experience. I don't let them get into how the sausage is made. I'm not going to get into like, oh, well, I calculated that this is going to be worth $12 million to you every year and therefore a million dollars should be reasonable. Why doesn't that seem reasonable? I don't get into that at all. Yeah, so I just try and deflect away from price questions whenever possible. So if in the sales interview, they're like, well, can you give us a ballpark on the price? I'll just say, well, I'm going to have to think about it. I'll put it in the proposal. I'll have it to you by Wednesday. Is that quick enough? If they're trying to get me to ballpark it. Yeah, that kind of thing. Occasionally, I'll already have a ballpark in my mind, but most people who are new to this won't have a ballpark in mind yet. So always deflect those questions back. It's none of their business how you calculate your price. And I never, ever tell them that I base on value. It's none of their business, honestly. And I think it sends the wrong signal. I think people feel like it can come across like asking, well, how much you got on you? I'm going to take all the money you have to do whatever it is that you want me to do. It's just the wrong tone. It's wrong feel. And yeah, yeah, that's basically it. So I don't mention it. I just say I'm going to give you a fixed price instead of billing you by the hour. Is that acceptable? All right. Hopefully that helps. I'm Jonathan Stark. If you have a question for me, hashtag ask Jonathan on Twitter, LinkedIn, or YouTube, and we will find it and add it to the queue, and I'll answer 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...

To be among 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.