Episode 37
How to price well without talking about money
Pricing well means understanding the value of the work to the customer, and being willing to have open conversations sensitivity. We need to tell a story about the value of the work and the expertise of the person or business providing it, rather than just focusing on time and materials.
It also means being willing to challenge our own assumptions about what is a fair price and being open to exploration and dialogue with the customer to arrive at a mutually satisfactory agreement.
Links
Transcript
I tried to squeeze in a load of stuff before we did this, Uh, so I am not, as totally kind of still in calm as I might have otherwise have been.
Carlos:Well, maybe we'll have to, uh, two minute meditation before we start, cuz that'll be a great podcast for us.
Carlos:So, so the title of today's session is how do you price well without talking about money?
Carlos:And so what we wanna say, well, the question we're gonna initially answer is, how can you price well without talking about money?
Carlos:And the short answer to Ben is,
Ben:No,
Carlos:Um, so yeah, the short answer unfortunately is no.
Carlos:But if you do find it uncomfortable.
Carlos:There's probably a few reasons i, I can imagine that you find it uncomfortable.
Carlos:And the big one, one big one that springs to mind for me is, um, there's a, I dunno, there's a fear of, uh, one actually, there's a lack of confidence about the number, all right?
Carlos:And, and tied to the lack of confidence about the number is then that fear of someone just saying no, and then it ending and there's, and then you have to run, walk away in shame.
Ben:I think there is a sort of cultural thing for those of us, sort of, uh, particularly in the UK, I think, um, less than America, I think there's more permission to talk about money, more sort of cultural permission to talk about it.
Ben:In the uk if there's a, an association somehow kind of money is dirty, I'm above it.
Ben:Uh, it's not important.
Ben:Don't talk about it.
Carlos:Again, there's a lot of these stories, uh, story level, belief level, that, you know, you can't necessarily fix overnight.
Carlos:Those are, you know, maybe years of therapy crying in the corner.
Carlos:But no, there's a, there's a.
Carlos:Um, I think there's an acceptance that there are these stories, and I think one of the things that I, I'm conscious of with this course as well, we don't claim that we're gonna be able to suddenly switch your whole view about money, because I think there's so much tight, so tied to some deeper aspects of, of your sort of personality and identity.
Carlos:But we hope that by sharing some different ways of thinking about.
Carlos:your customer and your relationship with your customer and your customers' relationship to the work that you do, that will give you a much, um, more confidence or maybe unattached, hopefully some of that, those stories and those beliefs from this process of selling something to someone for a certain amount of money.
Carlos:So, how do we talk about pricing without initially straight away talking about money?
Ben:Well, I think, yeah, part of the, um, kind of reason that we were having this sort of way this, this kind of headlining, this idea that, uh, you know, the question, is there a way of talking about it without talking about it?
Ben:Cuz one of the things that comes up for all the people who've been on the, the Happy Pricing course before, when we're talking at the beginning about some of the things they're wanting to fix, there, there's a, you know, there's, nor there's a relatively sort of consistent pattern of things people want to remove the guesswork from their pricing kind of feels to finger in the air.
Ben:People want to earn what they feel is worth.
Ben:And there is also this thing, actually, people want to find a way of talking about money.
Ben:Uh, or, or they, they're, they're uncomfortable talking about money.
Ben:Uh, they want to find a way of not being able to talk about it.
Ben:And as you say, clearly that's not possible.
Ben:It's not really possible for us to fix what we're earning if we're not talking about money.
Ben:Uh, but as you've already kind of pointed to a lot of the kind of concerns and questions and sort of anxieties we have that are really out of our own making of our own, they are, they are our own stories.
Ben:Uh, and so one of the things, you know, a key thing which we, we teach on the course, which we always kind of come back to, and we sort of talk about these in, in these, uh, in these, in these podcasts, so kind of check out all of the kind of previous ones of those too, is this idea of kind of being a bit more outside in, of charting to understand that actually the value of what we do isn't really set by us.
Ben:The value of what we do is set by the person who is, uh, buying from us.
Ben:Now, clearly there's a journey.
Ben:There's a bit of a dance, there's some symbiosis to kind of get to that place of helping them understand what the value is, because oftentimes, if you just ask a client, Or your prospective client what the value of your work might be, they may not know either.
Ben:So there's a bit of a journey to kind of get to, to, to understand that.
Ben:But really the thing that we're always coming back to is, you know, what are the questions that we can ask to really understand what's important for our client or customer?
Ben:What is the thing that they really want to change?
Ben:Why is it that they're coming to this work?
Ben:And this starts to kind of point to what the value of the work is to them.
Ben:Um, and so that's really where we are, we are looking to point to.
Ben:And so the more you explore, you explore this, it just, it, it kind of, it, it, it pushes a little bit.
Ben:It's a little bit about, um, sort of pushing down the conversational road, the, the, the, the actual money bit.
Ben:But it's also about helping everybody get to a place of understanding.
Ben:Uh, getting some kind of figures into the conversation without it feeling like you are bashing somebody over their head, uh, or, and, or you are putting yourself out there with the prospect of being rejected or the potential of being rejected.
Carlos:So firstly, I think one of the things I, I'm hoping we can address is this sense, this kind of like this feeling of desperation that sometimes comes up when, when you're selling or when you're putting a price together, is like, oh, I really need the money and if I don't get this and if I don't accept this, it's all shit.
Carlos:So there's that feeling.
Carlos:How do you, even if that's there, how do you still move forward?
Carlos:And then because of that feeling of, I dunno, anxiety about you know, getting the customers in, sometimes you not thinking quite clearly or that you need a bit of chaos and you're just like, alright, I just need some steps to follow, to just make it more well, so I don't have to think too much really.
Carlos:I can just think about the problem at hand, rather about thinking about all the things.
Carlos:I can remember early days is like, um, when I was a freelancer, a lance developer, I wouldn't necessarily talk to free, uh, to prospective customers.
Carlos:I would put my profile on an ad, platform, or I would hope someone came to me or I would wait for a referral.
Carlos:So I would never really talk to potential customers as much.
Carlos:Well, no.
Carlos:Yeah, never actually at the beginning, because I was just hoping someone else would send them to me or somehow they would fall from the sky.
Ben:Mm-hmm.
Carlos:Uh, and because of that, I was very obsessed with learning how to program, learning how to build websites, talking about the difficulties of building websites and how challenging it is, rather than understanding that people don't give a shit what programming language you use or how intricate a website could be, or what platforms you need to think of as they just need a website for other reasons.
Carlos:So that's why.
Carlos:We want to sort of like give you some, some tools maybe to, to talk more about, uh, to start thinking about it in that way.
Carlos:Yeah, so before we go into that, I was wondering in terms of having these conversations, Ben, um, because in the, in the start from my experience of working with a lot with startups, there's a lot of tools out there, yeah?
Carlos:And there's this process of validation.
Carlos:I think, uh, Eric Reese calls it information accounting.
Ben:Right.
Carlos:Something like that.
Ben:Mm-hmm.
Carlos:It's like, rather than validation being necessarily, um, the amount of money you're making, it's about validation's, about how much you learn in the process.
Ben:Mm-hmm.
Carlos:So I found it, uh, particularly for startups who don't necessarily a, dunno who their customer is, don't know who, what their product is, and so dunno what the value is that they create in that space of extreme uncertainty, what do you hold onto in order to then start getting to a point of being more confident about what you charge?
Carlos:That's very much in the Startup context.
Carlos:I was wondering how that you, that you think that relates to the kind of people that you've been working who have with, who already have existing businesses.
Ben:Mm-hmm.
Carlos:And they're just trying to price more effectively or more powerfully?
Ben:Yeah.
Ben:So there's one in particular.
Ben:One, one person in particular who come, comes to mind, uh, is, uh, Marcus.
Ben:And so Marcus runs a small, uh, design business, has a few employees.
Ben:Uh, typically has kind of worked out his costing because he doesn't really like talking about money either.
Ben:Um, and so the way around that is just to have some rates, and to kind of default to the rates more or less.
Ben:And he had a, situation with a client where client was asking him about, uh, asking for, for, for a body of work, which was actually a, a follow on piece of work to something which had come, come before it.
Ben:And Marcus had sort of costed it all out, uh, based on the kind of numbers which he sort of traditionally uses.
Ben:And, uh, but before he sort of sent that off to the client because his wish was just to get it to the client and then he wouldn't have to speak about it anymore.
Ben:It could go, you know, it's, it's, it's hidden in an email or a proposal, whatever it might be, and then nobody really needs to talk about it.
Ben:It's the sort of equivalent, a little bit of what you were talking about with, uh, when you were a freelancer, you know, how do I avoid talking about this?
Ben:So, of course there's many ways to avoid talking about money.
Ben:You could just not talk about it.
Ben:You can bury some things in an email.
Ben:You can bury some things in a proposal.
Ben:Um, you can basically leave, leave it to the client to read it and work it all out.
Ben:That's not talking about it.
Ben:Um, and uh, so the, the conversation I had with Marcus is, okay, you know, how, how do you know.
Ben:That the client is expecting to, to invest this amount of money.
Ben:And, uh, for my own benefit, I was just trying to understand how this piece of work related to a piece of work that had gone before it.
Ben:And it really came, it was kind of pretty clear to me that Marcus was making huge assumptions about actually what the client wanted to spend.
Ben:He was putting a price to something, which I said was loosely based on how he puts prices together, but really the guiding idea was that he was putting a price to, which he thought was fair.
Ben:Uh, and of course that's a, a kind of useful, noble valid motivation.
Ben:But of course it is also a totally subjective measure, a really subjective judgment.
Ben:So he had this number, which he thought was fair, and uh, but in some questioning of him, I was able just to kind of, sort of tease out, cause it really was clear to me there was actually quite a big disparity between this fair number that he was putting to them and actually what the client had paid, likely paid for similar or proportional pieces of work in another situation.
Ben:And I was sort of just asking Marcus, do you think that that incongruity might actually be a bit confusing for the client?
Ben:Why they would've paid that over here?
Ben:Now they're talking about this fair number, which actually feels a lot lower.
Ben:And so in this kind of questioning, I think sort of Marcus came to the realization that maybe it kind of did warrant some further discussion, some further exploration.
Ben:And I g basically, I invited him just to have a quick conversation with the client and, uh, he was really uncomfortable about doing this.
Ben:But just to have a quick conversation with the client and, um, to go back to the client and say to them, for a project like this, clients typically invest between X and Y and the x and y numbers that I was giving marks actually were, were big.
Ben:So just to give you an idea of, and whether these actual amounts are relevant to, to you guys listening now is not really the point.
Ben:The, the process is the important thing.
Ben:But Marks's second piece of work that he was putting a, a price two was about 37, 38,000 pounds.
Ben:So it's a kind of big piece of work by lots of measures.
Ben:But actually the thing that the client had bought, Before that was actually several hundred thousand pounds, it was a very, very big web project.
Ben:So you can see what the, the kind of disconnect might be in the, in the kind of heart, the mind of the, of the client.
Ben:So I just went back to Marcus and said, you know, try saying this.
Ben:Speak to the client and just say, look, for projects like this, a client typically invests between 10 and 15,000 pounds a month.
Ben:And Marcus was obviously like, we can't do that.
Ben:That feels wrong.
Ben:I don't wanna do it.
Ben:I said, just, just try it and see what happens.
Ben:And so he did.
Ben:He had the conversation.
Ben:He phoned up and said, you know, just so I know clients do you know, just do so I can understand where you are.
Ben:Clients typically invest between 10 and 15,000 a month.
Ben:Is that kind of what you are expecting?
Ben:And then just do sit quietly to see what the client does.
Ben:Now, of course, what we're trying to do in all of these processes is understand what a client's price sensitivity is, understand what's important to the client, and, uh, we can only find that out if we are in dialogue with them, if we're in question with them, if we can really understand, like I said, what is their price sensitivity?
Ben:What is it that they're expecting to pay?
Ben:So I said to Marcus, try this.
Ben:See what they do.
Ben:You know, of course if you say it and they fall off their chair, um, then, you know, you've got the number wrong, but of course that's not, then you, that's not a fatal thing.
Ben:That's just information to kind of then to go again into the next wave of conversation.
Ben:But the thing that happened, which often happens is the client goes a bit quiet, and then slowly the client started to kind of talk about all of the things that would need to happen for them to make that level of investment.
Ben:Uh, and so the client's price sensitivity actually was.
Ben:More about that level.
Ben:And so Marcus, they ended up with a, with a big long term retainer, uh, which was worth essentially three times the amount that they had been thinking was the fair amount, uh, by being a dialer, by just finding ways of getting some money into the conversation, even though it does make them feel kind of awkward and challenge, you know, the, the, the conversation is kind of challenging, but just finding ways to get the client into the conversation around it, to understand what their sensitivity is, to understand what's important to them so that you can, with them, get to a place that says, well, if I'm gonna do this and this and this and this, and this, this is what I am willing to pay.
Ben:This is what I'm willing to invest.
Ben:And so you get to that point together.
Carlos:And I think, you know, the, one of the key things for me is trying to remove some of these assumptions that you may have about the, the ability for your customer to pay a certain amount of money.
Carlos:And then also, being aware that if you just give them a number, Without any kind of story behind that number and understanding what that number represents in terms of the things that they want, and you maybe also make telling the wrong story because you've maybe just talking about, oh, I spend this much time doing this and I do spend this much time doing this, and we do this, and you know, you talk about just time and materials as opposed to like actual things that they want to happen in their business, then the, the story of that number, that money, that, that price, it's not gonna help them make a decision, it's gonna maybe create more confusion or, or even just feel like you just don't understand them.
Carlos:And so what we'd like to do, I think, you know, with, particularly with this story, Marcus, I think there was, he'd already worked with them, so it felt like he already understood the client.
Carlos:What was stopping Marcus in this particular instance, I'm, is a real assumption that they wouldn't pay more than this amount of money based on his perceptions of what was a fair price.
Ben:Mm-hmm.
Carlos:So if we can shift, what we'd like to do is to shift you out of your own head, shift you out of just thinking about what you do, and think more about the things that you are gonna, the outcomes you're trying to create for your customers so that you can aren't thinking about, all right.
Carlos:My numbers aren't necessarily the same numbers as them.
Carlos:Uh, and how do you get to that point?
Carlos:There's a video that I shared on LinkedIn that might be of interest, and it's by with a guy called Chris Do, who's a kind of a director and designer.
Carlos:He, he, he talks a lot about, um, business and creativity, but the thing I liked about this video was he was talking about what is the value of a logo?
Carlos:And the key message for me with that is like, it all depends on who you are selling it to.
Carlos:And when you know who you are selling it to and what that logo means, or in his case when Chris was talking about what screwing up that logo means for the customer, then you kind of get a much better feel for the value of the work because it could take you 10 minutes to design a logo.
Carlos:So if you're a designer, no, I'm gonna use the logo because it's quite a simple thing to think about.
Carlos:It could be a napkin exercise and suddenly you've got a logo.
Carlos:What the customer's looking for.
Carlos:So, and he talks about, the example of Nike is if they was going to redesign that logo and you do a little redesign and it screws up, that could be hundreds of millions of pounds of costs, of advertising, of product, all the things where that logo appears.
Carlos:And suddenly just charging 500 quid for a logo, in this, in and relating to what Ben was talking in terms of the story, like where they spent a couple of hundred grand already spending just that much money just feels like really risky situation, because of the impact of it going wrong.
Carlos:And so you need to tell a story of a, or the number needs to fit the impact that is gonna create, but also there's all the work that is involved to make sure that logo is the right logo, that logo makes them feel like, okay, we've got it right.
Ben:Yeah.
Carlos:And it isn't just a napkin exercise.
Ben:This is about expertise.
Ben:And because what you are talking about there is, is, is risk, yeah?
Ben:So what, what is the risk to your client or customer that the thing that you do is not going to work?
Ben:Uh, and that actually the, the, the kind of minimizing risk is a big thing that people are paying for, people are, are buying that they, you know, that we often talk about, and one of the other things we talk about in the course that buying anything is filled with some degree of risk.
Ben:It is filled with some degree of uncertainty.
Ben:And so your example there of the logo, you know, it's not just the kind of cost of.
Ben:Rolling it out across all of the thing, you know, it's, there's, there's many, many kind of costs if it is wrong.
Ben:And there are lots of examples in the logo space where that's happened.
Ben:So what people are buying from you guys kind of listening is your expertise, is your insight, is your ability to know how to solve the problem that you solve for clients.
Ben:And that expertise there is real value in it because it minimizes risk for the client.
Carlos:Uh, and whether that's, 10 minutes of your time or 10 days of your time, it's that what that risk, that expertise does for them in terms of removing what obstacles or barriers are in their way or helps them achieve this, this kind of, this new state of their business.
Carlos:I think another aspect of that story with, with the logo was like, if you are selling to a corner shop, they don't really care or basically impact of changing their logo, uh, uh, maybe at a personal level is quite, uh, an emotional exercise, but in terms of business-wise, it might not connect the how much that's gonna affect their business.
Carlos:They don't really understand it.
Carlos:As opposed to someone like Nike, they really understand the value of changing their logo.
Carlos:So selling, you can't sell the same work essentially cause you'd be doing exactly the same amount of work.
Carlos:You can't sell it for the same amount of money to two, both to, to the same, to those two different clients.
Carlos:So I think one of the other essence, essence of that story for me is like, this whole thing, price the client, not the job.
Carlos:We get very obsessed.
Carlos:I think particularly in, in the service business.
Carlos:When you're not experienced, you obsessed with how much time you spend on something.
Carlos:Obsessed with Okay, it's, it's about all about my effort.
Carlos:You know?
Carlos:It's all about how much time it takes me, and what we wanna do is I get you out of that mindset and get you practicing.
Carlos:How do you do it?
Carlos:How do you price where it isn't about your time and effort and it's about something completely different.
Carlos:And this is why I like the idea of the thinking of to about startups, because it's all about knowledge and understanding and curiosity and really finding out more about your customers, but starting from a point of assumptions, yeah?
Carlos:Because at some point you have to guess, you have to know, like for some of you who might not know who your customer is, and what problems they're trying to solve, and you don't necessarily talk to them a lot, well, let's start off by talking to people.
Carlos:And making assumptions of who those people you need to talk to are and make assumptions of what it is they're trying to achieve so that you can start a conversation, rather than, the worst thing to do is like, tell me what you want.
Carlos:They're like, uh, I don't, I might know what I want, but it might not be what I need, and it might not have anything to do with you.
Carlos:So there's broaching a conversation with some assumptions.
Carlos:And what I wanted to do just towards the end of this is just like briefly share.
Carlos:One of the exercises that we like to do a lot with people in our communities and someone of our program, our programs, we call it the happy value statement, but it's, it's the value proposition cam, um, statement.
Carlos:The two key elements I think to just think about is who, who are you helping and what do they want to do?
Carlos:So, for instance, with us, we are helping, experienced professionals and business owners who want to earn more for what they do by teaching them some very clear strategies and tactics for pr, uh, understanding the price that they need to charge and getting them excited about owning more money.
Carlos:And unlike other programs out there, we are gonna consider what that means for you, uh, energetically in person, uh, as a person, and not just thinking purely about the business.
Carlos:So that's one way to think about this, but the key elements here really about who are you helping and what do they want to do.
Carlos:And there could be many things that your customer wants to do, many, many things.
Carlos:And the process, the purpose of this exercise is to think, what is it that.
Carlos:I think is the most valuable thing that they need to do, that I can help them with.
Ben:I mean, for me, I think that actually a lot of the, the spirit, the curiosity that a startup people in a Startup naturally bring is a, is an energy that is worthwhile connecting back to over and over and over and over again.
Ben:Because it keeps us fresh, it keeps us curious, it keeps us open.
Ben:It means the conversations, you know, we're making less and less assumptions all the time, or we are beholden less and less to our assumptions about what clients want and what's important.
Ben:And the more, you know, open and sort of in conversation we can be, actually the richer our conversa, richer our client relationships will be too.
Ben:So I think bringing the spirit of the dialogue, uh, sorry, the spirit of startup to latter stage businesses is a really helpful thing to do.
Ben:Um, and that of course does benefit or positively impact how we sell and what we sell and how much we sell for.
Carlos:Thank you very much, Ben.
Ben:Thank you.
Ben:Thank you.
Carlos:Thank you everyone.
Carlos:You take care.
Carlos:And, um, check out.
Carlos:binge watch
Ben:binge season.
Ben:Exactly.
Ben:And then join us on the live sessions.
Carlos:Catch you later.
