If you remain in the hourly world, your client is always looking for you to be more efficient, to your own detriment. Why You Should Consider Switching to Value-Based Pricing Nothing beats the feeling of showing up to do a job that you’re being paid appropriately for. Although there are risks involved, these conversations can go well! And if not, it’s a worthwhile challenge - the long-term impact on you and your business will be massive.
#Value based pricing pros and cons how to#
We speak to our clients about how to structure the conversation with their clients around price increases and scope changes. These clients will typically be those in retainer services and there may be a contract or timeframe that you need to be mindful of. Then we’ll help you to figure out how to communicate with existing clients if a change is going to be made to their offer. Once we’ve walked you through your premium package design, you’ll have another critique opportunity. How to Communicate Changes to Existing Clients You don’t want clients coming back after 6 months to use that line item against you. If you do choose to include this, be sure to put a time limit on it, include your business hours, and make it relevant to the specific service you’re providing.
Our personal favorite scope line item to discard without hesitation is “unlimited support”. Clarity in scope presentation matters a lot in the sales process. The calculation stage is a good opportunity for you to clarify the scope of your service both for yourself and prospective clients. Although time-consuming initially, it will save you time going forward and will help you to get clear about the wording of the problem and how your expertise can address it. And once isn’t enough! You need to keep addressing your average hourly rate: Make a decision based on today’s data, do the project, and recalculate. We calculate a base number of what your company needs to be charging on average per hour to remain profitable and operational. Tracking time meticulously is super stressful, which is why we do a loose calculation. This is simply not true! You ultimately need to know what an hour costs you. There is a misconception that, if you’re not charging hourly, your hourly rate is irrelevant. Instead of reacting to what the client wants, you can show up as the expert to align them with a service. Our goal is to help you develop a service that isn’t dictated by what the client says they want but rather puts you back in the driver’s seat. We just ensure all factors you want to account for have been accounted for and provide feedback. We have a completely non-judgmental approach. The next step is for you to walk every possible scenario through every feature of our calculator and submit the results for our critique. We’ll put you through a time study to track your time when it comes to individual projects or clients, and according to the results, give you advice and share strategies for your specific business. The very first thing we’ll do in The Incubator is gather the facts! You’ll share everything with us, including what you’re currently charging and how long it’s taking you to fulfill an offer. The First Steps to Transitioning to a New Pricing Model
Stay tuned as we share more about how The Incubator program is structured and how we can help you calculate the ideal pricing for your unique business. You need to be paid for every aspect of your job! There is a way to transition without dismantling your current business and The Incubator will walk you through the steps. If you continue to only get paid for the time you’re physically working on clients’ projects, you’re never going to be able to scale beyond a personal income. If you don’t want to be trading each of your hours for a dollar, it’s time to consider value-based pricing. Today, we want to introduce you to new pricing models and provide insight into how to prepare your clients for the changes.
In this episode, we fill you in on how we can help you make the transition from hourly billing to value-based pricing, creating a more predictable business and recurring income. Does your input feel aligned with your output? If you are billing hourly, chances are things are beginning to feel unbalanced.
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