Thread by @duanebrown

The Art of Pricing & Making MORE Money 💵

Everything I learned over the last 4 years going from 1 to a 6 person team. Save yourself time, learn from my lessons, mistakes & duh moves ... 😳

Have a question? 🤔

Ask me anything 🖖

The value you deliver (i.e. your services) needs to exceed what you are charging.

The cost is just what you charge someone. The higher value you deliver, the more someone feels they got a "deal". Talking about money should not be taboo.

There are a few ways to sell services:

⏰ Hours
📅Day Rate
🏗️Project Rate
🗓️ Monthly Retainer
💱Combination of above (mixed model)

Don't sell hours. It's the worst way to make money unless you are a lawyer or management consultants who charge $1,000/hour. 🪙

The better you get at your job, the less time it takes you but you make less money by selling hours. Don't sell hours.

If a project takes 10 hours & costs $1,000 last year. The same project now takes 5 hours, why should it only cost $500? Has value gone down? Nope!

A flat/project rate is better because even as you become more efficient, you make the same money for that project as you scale up.

Time is finite. You can not make more time. You can only make more money. Focus on making money that helps you turn a profit.

Don't be afraid to tell prospects you are a business and need to make a profit too. I use to be afraid to say this. We are running a business too.

Yes, if you are solo and out on your own. You are still a business and need to make money. The government wants a piece of the action too.... we all got taxes to pay. Don't be afraid to make a profit.

Is every prospect saying yes to your proposals? I use to think this is a good thing.

It's not. In reality it means your prices are to low. Prospects don't even need to think about going with you.

I want at least 50% of prospects to say no because they think we are expensive.

If everyone is saying yes to your proposal. Raise your prices by at least 20%. Worst case if someone says you are expensive, you can know off 10% and give them a deal. Then still make 10% more then you were before.

Don't be afraid to say what it costs to do the job properly. There will always be those who race to the bottom on price... that no one can make money/be profitable on.

You don't want to compete on price. Don't compete with this group of people.

If you are unsure what to charge. Take a year's worth of expenses and add it all up. Divided that number by 48 weeks. Then divide that number by 30 hours.

Unsure about what expenses you will have. Ask a friend/someone you know in your network. Also Google expense template.

Why 48 weeks?.... because you need vacation & sick days. Stat holidays off. Maybe even a few days at Christmas off. No one should be working 52 weeks in a year.

30 hours because few can bill 40 hours in a week consistently. You need admin, marketing & lunch time hours each week.

That number you are dividing expenses by 48 weeks and by 30 hours in a week....is your base hourly rate.

Now when you scope out a project and figure it's 15 hours of work. 15 hours X rate above is your project rate. You don't need to tell clients how long it will take.

Some may ask but we tell them we are not selling you hours, so you should not care how long it takes us. They are paying for us an outcome. The value we plan to deliver when the project is done on a certain date.

Remove hours from conversations about money as much as you can.

Pro Top: slap another 20% on that project rate to account for scope creep or the project taking longer then you thought. As humans, we are bad at estimates and projects take longer then we think.

Plus the 20% give you room to negotiate on the price ...if you want to do that.

I know I said it early but don't compete on price. Winning business you can not make money on and be profitable is the worst business to win.

Next to winning business you are not jazzed to work on and is soul crushing. Life is short to do work you hate.

I tell my arty friends... money, profit and business are not dirty words. To many people will take advantage of you if they can.

Don't let people do that. You can be nice and still run a profitable business.

Know Your Worth and stick to your guns. Just don't be cocky.

If a business has money and they can not afford to pay you. They are just cheap asses who want to screw you over. I don't care who the big brand is. They have money.

Exposure only helps that business....it won't help you.

Someone else may say yes. Let them work for free.

If someone wants a lower price, then you reduce scope or remove something from the project to meet that price. Don't just do the same work for a lower price.

Your dentist, mechanic, other professions in your life do not do the same work for a cheaper price. You should not too.

Rehearse what you are going to say to a prospect. I started doing this a few years ago, especially when we started playing around with our pricing and it has been a huge help.

Makes me come across even more confident and sound professional. Money should not be a taboo subject.

There is tons of businesses and money out there. When you say no to cheap prospects and people who don't have money.

That leaves you open for those who can pay your rates. I grow up poor, I get the fear of what if more work does not come in. If you are always marketing yourself.

Then more work should come it. One reason I set time aside each week to work on marketing our agency and working on the admin side of the business.

Your pricing as with your company name and branding is a strategic move. Don't be the cheapest person in town. When someone hears or reads your price, it sets an expectation with them.

Not pricing per say. Do NET 15 days on invoices. Also send an invoice on the day you start a project. Don't delay doing it. The longer you take to invoice, the longer it takes to get paid. Cash flow is everything in this business. People are bad at paying on time.

Follow up the day an invoice is due. I have had clients thank me for reminding them it's due. I have also had clients ignore emails and take an extra week to pay. In either case, follow up and get paid. If you want to survive get paid.

Perfect example of me letting a client know the invoice is now due. Great clients want to pay you. They view you as a partner and an important part of their business success. Win Win Baby.

I know I said it earlier and a friend said I should re-say it.

NEVER and I mean NEVER let a client get 2 invoices past due with you. There are 3 reasons why:

When a client is 2 invoices past due. This can bring about 1 of 3 outcomes...

1. You never get paid.... for realz as the French boys tell me

2. They keep being late on every invoice. So you are always 2 invoices behind

3. They hold it over you and treat you like crap

More thoughts on pricing. May sound weird but...

If you don't charge enough and manage your cash flow.

You'll have to go back and work a 9 to 5 job. Do you want that?

I never want to be forced to work for someone else. Money and time create opportunities.

I talk about value vs what you charge clients earlier:

Something may be hard/tedious to execute for a client but they still won't value that work. They only care about the outcome.

Something may be easy/quick and they value it more. Make sure you understand what clients value.

When you understand what a client values. You can understand how to much to change them.

I value Google shopping feeds but not every client does. One of the many reasons we automate this task.

Value and what they get always sits with the client. Remember that when you invoice.

If you think your prices are to low. Odds are they are.

Charge more on the next few potential clients and see how it goes. It doesn't have to be forever. You can always go back to your old pricing.

Most women, people of colour and LGBT+ don't charge enough. 2021 is your year 🙂

Thinking about this pricing thread over the break and your base hourly rate.

If you have tons of experience, or domain expertise. You can charge a lot more then your base hourly rate for a product. I once told @JeffAllenUT on a pricing webinar we did...

...I don't get out of bed for less than $150/hour. That rate is for larger long-term projects.

I now charge $300/hour for most things because it weeds out the low priced clients we don't want to work on. Don't be afraid to go above that base rate if you've the sills.