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 Bex Spector, cool name, and it is, how do you explain to a client how you price your stuff? The ominous question that lingers, okay, you have no hourly rate, so what do you base your price on? How do I compare your value? So on and so forth. I find it very complicated to communicate this. Haven't found the answer in your videos as of yet. Would be nice if you answered. Great. Okay, so where do I start? So the first thing is you don't owe it to your clients to tell them how you calculated your price. And even if you did say to a client, like a normal hourly situation, they said, well, how do you calculate your price? And you say, well, I estimated the number of hours that I think it's going to take, which is a number that you are making up, and I multiplied it by my hourly rate, which is also a number that you made up. And I multiplied these two numbers together and I came out with this final number, which is an estimate of how much I think you'll have to pay me to get this number of tasks done. So you're taking two made-up numbers and multiplying them together and somehow putting that forth or the client is somehow perceiving those as valuable. I shouldn't say valuable. I should say valid, a valid calculation. Now, what I would say to people is you don't owe it to clients to explain to them where your pricing came from. And the answer that I would give is that I based my price on similar projects in the past. It's based on experience. And then I would quickly try and change the subject away from what they're trying to do, which is figure out your costs. They're trying to figure out your costs and break it down to an hourly rate or they're trying to compare you apples to apples with a whole bunch of other people that they're considering hiring. I would quickly turn it around and say, well, it's based on experience. And based on our conversation, it seems to me like a reasonable investment for the kind of outcome that you're looking for. But correct me if I'm wrong. Is it not true that, you know, X, Y, and Z? Then you reflect back to them what you talked about in your sales interview, the why conversation that you had, the home run that they're trying to hit, the metrics that you are going to be tracking along the way to make sure you're on track, you know, whatever leading indicator needle that you're trying to move. And you turn the question back to value. Like here are the outcomes that we're going to work together to provide. And it seems like a reasonable investment, you know, to achieve those outcomes. So immediately turn it back around. If they're trying to reverse engineer your hourly rate or compare you apples to apples with other providers, you've already, you probably already lost the project. You probably are going to be, you know, in a race to zero with other people who price by the hour and they're just going to look for the cheapest one because for some reason, you're not standing out as unique in the category. If they're worried about, you know, how much it's going to cost you to deliver in time. If they're worried about how much time it's going to cost you to deliver, you're talking about the wrong thing. So I recognize that it takes practice to get good at turning the conversation back around to the value of the outcome, the ROI that they're going to get. But it's something that you need to practice doing. You're losing control of the conversation if you can sense them trying to figure out what your hourly rate actually is. All right. I hope that helps. My name is Jonathan Stark. And if you have a question for me, you can hashtag ask Jonathan on YouTube, Twitter, or LinkedIn, and we'll find it and add it to the queue. 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.