Whats going on?
I’ve been reading Brennan Dunn’s Double Your Freelancing. It’s been really helpful in figuring out how to price my services and not get locked into a price per hour. If you’re unfamiliar with Value Based Pricing, it goes like this;
When [Brennan] first started freelancing, I charged $50 an hour because my former salary was a cool $105k a year. And all the best resources out there for freelancers were suggesting this-or-that calculator or telling me to just divide my salary by 2000 (the number of average working hours in a year)… so I settled on $50 an hour.
And boy, things have changed for me since then. Just a few weeks ago, I won a project at $20,000 a week — or about $600 an hour.
Truthfully, the *skills* I’m using (like how I write code or whatever) aren’t all that much different than the skills I was using when I first started freelancing. Instead, how I’m presenting and leveraging those skills have changed.
Learning how to leverage your value is extremely important when starting out as a consultant. One of the biggest challenges I’ve had so far has been figuring out exactly the right questions to ask prospective project managers to redirect the conversation to the value I’m bringing to the project rather than what my time alone is worth when the question of “What’s your hourly rate?” is asked.
Recently, I was spending time with my family and was telling them about my new business venture. The conversation eventually turned to “how much money do you charge?” I told my family I didn’t have an hourly rate, that it varied from project to project, based on what made sense to both the client and to me.
Immediately my sister chimed in, “How do you make sure your price makes the dog want to jump?” I asked her what she meant. She replied “If the meat (the cost of doing business with your organization) is too high, the dog (the prospect) isn’t even going to try and jump (negotiate on price).” She believed you can have the best designs, the greatest methodology, but if the price is way out of the price range of your client you’re going nowhere fast.
I just finished reading Keenan’s post titled WHY YOU SHOULD NEVER ASK A BUYER WHAT THEY WANT. In it he talks about the experience he had with a service provider when trying to get an audiobook created for his recently published book. In it he lists the questions the service provider should have asked (I’ll list a few here);
- Tell me what you’re trying to do.
- Why do want to do an audio book?
- What type of book is it?
- How long is the book, how many words/pages?
So how does this all tie together?
When working with a potential prospect and the question of money (What’s your daily rate?/How much is your hourly rate?/What is your salary expectation?) comes up, do your best to redirect the question. It’s critical to understand your prospect’s insecurity/challenge and how your solution can help them, rather than focusing on price.
- Yes, you provide e-learning development, so what? Why does the client need it?Learn more about the client is trying to accomplish with their project? Why are they doing it now? (Tell me what you’re trying to do)
- How is developing e-learning assets going to help you meet this goal? Tell me why? (Why do want to do an audio book?)
- What kind of content needs to be developed? Does the client need Job-Aids? E-learning Modules? A complete training curricula? (What type of book is it?)
- How much content do you have already? What else needs to be developed? (How long is the book?)