Five Pricing Strategies for Services

[@amorfati4096]

Confessions of a pricing man- is the best book i have ever read, and it’s backed by scientist thesis

[@MikeGastin]

Thanks. Never heard of it.

[@amorfati4096]

Its by Hermann Simon

[@vladimir.a.3579]

Excellent advice for someone who has an elaborate job and ... contacts. Very impossible in a country where everyone wants their work done for free, like Sweden.

[@MikeGastin]

Fair enough. I'm in the USA and business is different here than other places.

[@austincodes]

How does this channel not have more views?

[@MikeGastin]

The guy doesn’t post enough … ;) Thank you!

[@isitfridayyet]

Done both hourly and per-job. Hardest lessons were the confidence to charge what you're worth and the chutzpah to charge what you can get.

[@MikeGastin]

Charging what you're worth doesn't come naturally. At least, it didn't to me. I remember way back when I started doing contracting right out of high school, an old timer told me to figure out my time and materials and then triple that number for my quote. I never had the guts to do it and worried I'd never land a job. Of course, I never charged enough and was out of business in less than two years. That old guy was right.

[@robc5704]

Over the years I have done hourly (straight contracting) and fixed price as a vendor and a manufacturer. I found these relatively easy to work out but went broke as a manufacturer (but that wasn't the fault of the pricing, that was making something no one wanted...). I like the last one you suggested. Value based, but I have a question for you. I'm a writer, yes, really. Now I have written a number of children's stories which required illustrations. I paid handsomely for them and was invariably disappointed and so I stopped doing that. What I wanted was to find an artist that would effectively partner with me in a project which is essentially what you are selling. I will make you more money if you give me a cut of the profit. The problem is you don't know me, you don't have any warm and fuzzy feelings about the deal so it never gets off the ground. Back to the writing. If I was an award winning, well known writer then of course you would do the deal but who the hell knows me? This all gets back to risk aversion which makes your last concept nice but hard to pull off (especially with only a few runs on the board (That's a cricket analogy, sorry :-))

[@MikeGastin]

Great comment/question-thanks. First, I am not suggesting that value-based pricing means you share in the profits. When I sell a value-based deal I am working our with the prospect how much "value" my work will create for their business. Then, when we both agree on what that value is, I work with the prospect to arrive at a fee that relates to that value. But that fee is a set amount established up front and paid up front before I do the work. (I get 50% down on all projects, etc.) I think what you're trying to do with an illustrator is more like going into business together on a project. You both take a risk you both contribute to the project and you both hope to share in the results. To be clear, I think that's a good approach for a book project. But, that's a business partnership and not exactly value-based pricing. 👍🏼

[@nandakishore3068]

In highly competitive markets where market price is established, we need to look at more innovative pricing model.

[@MikeGastin]

Agreed.

[@Squagem]

The problem with VBP is that not everyone can VBP. If your client doesn't see you as essentially the only option, they simply will not pay 20-30x when they can get what they perceive as the same service from a competitor. VBP is for the top of the top in the industry, the "Kanye West" or "Taylor Swift" of your vertical -- your prospects need to think "I need Kayne for this, nobody else will do", or you'll waste a bunch of time and lose a lot of money.

[@MikeGastin]

I do VBP all the time and I'm not Kanye. I'm a hitter (I hope!) but there have to be consultants better than me. I think you're right in that you can't do VBP if you have nothing that differentiates you (if you're not creating real value), however it's erroneous to think you have to be at the very pinnacle of your industry to do VBP.

[@Squagem]

@@MikeGastin When I say VBP, I mean you anchor your fees to an expected ROI / impact metric, putting your fees in the mid 6-figures range for a single project. IME, you can "kind of" VBP before you hit the 6-figure mark, but at that point you have to be really exceptional to keep pushing up your fees (and you're also competing with world class marketing agencies at that price-point too). Are you really pulling in $2-300K+ per project as a solo consultant? If so, sign me up for your course! 😅

[@MikeGastin]

I have low-six-figure clients as an indy consultant. Not common, but I have them. I can only handle so much work on my own. The real problem for me is that because I can only do so much I am at risk of having a big hit to income. Ideally, you only want 20% of your income coming from any one client. But, let's say at any given time, I have one six-figure client and three or four high-five-figure clients. Lose that six-figure one and you feel it. Anyway, to answer, yes. I do. But I am limited in that I'm a solo, so typically it's only one or two at any given time.

[@Squagem]

@@MikeGastin wow that's remarkable! You must have much better positioning than the average independent consultant then. Good on you mate

[@MikeGastin]

@@Squagem Thanks. A lot of it has to do with who I target, the nature of the problems I solve (value I create), and specifically, my sales process. The real "magic" is in the sales process. But, I can tell you, I doubt I'd be able to make the income I do if I were selling to middle managers in Fortune 50 companies. A. they don't need me, necessarily, and B. they would not get the value. So, to you earlier point, not everyone can do it, for a number of reasons. However, it is possible. Thanks for a great convo! BTW, you think I should make a course or a mastermind? Lol. ;)