I’ve talked a bit here and there about pricing (more often there than here, as it turns out), but I was interviewed a few weeks ago by Lee Stranahan for his “How Much Should I Charge?” course and it got me thinking, so I wanted to write about it now.
(And also, Lee is worth checking out even if you don’t give a shit about pricing simply because he’s interviewed director Kevin Smith and his Facebook profile picture is of him with Johnny Rotten from the Sex Pistols. So, yeah.)
Anyway, on to the topic at hand: Pricing yourself.
And at this point, allow me to climb up onto my soapbox, because most of you out there — you designers, coaches and consultants, writers, illustrators, photographers, and whatever else — are going to screw up this whole pricing thing. You’re going to screw it up by undervaluing yourselves, because you think that what you do is a commodity, like a pack of razor blades or a toilet seat cover.
This may seem obvious, but it’s worth really thinking about, so think about it: Creative services are NOT A COMMODITY.
Read that again. Write it on your office wall. Crochet it onto your pillow. Tattoo it on your spouse.
What you do is not a commodity, so stop acting like it’s something you can pull off a shelf at Wal-Mart. Stop ranking yourself against those in your niche in the way a bargain store would. Stop competing on price. Stop thinking that if you do X and Joe Blow down the street does X, that Joe’s going to run you out of business if he charges less than you do.
Photographers aren’t interchangeable. Designers aren’t interchangeable. The price of a photographer or a designer matters to clients, but it’s only one of the deciding factors, and usually one down near the bottom. Will your price weigh in your customers minds? Yes, but only relative to the rest of what you have to offer.
Customers and clients aren’t weighing whether the price is “high” or “low.” They’re wondering if what they think they’ll receive is worth the price they’re being asked to pay.
See, there is no inherent dollar value to a photograph or an illustration. What it’s “worth” to one client is different from what it’s worth to another. For instance, I hired N.C. Winters to create the banner graphic at the top of this website. He quoted me a price and I got to decide if I wanted to pay that price to have a custom piece of his art.
I was not thinking, “If I have this banner, will it bring in X more dollars per month?”
And even if I could draw a direct line between N.C.’s art and my profit, it wouldn’t tell the whole story. Has having that banner it improved my branding? Has it made me look more reputable or professional? Has it increased my image of “cool”? Has anyone seen the art, thought it was neat, and then quite coincidentally remembered it when pointing a friend to a post I made — a friend who then referred someone who referred someone who introduced me to a good networking connection?
What is the value, in dollars, of my header graphic? And what is it that makes N.C.’s work worth more to me than other people I could have hired — people who might have charged me less?
The answer to the second question is, “It’s worth more because I liked it more.” And the answer to the first question is, “Who knows?” Because I sure don’t.
The market may give you an idea of the price range you can work within, or the price range you might try to strive to rise above, but the market does not DETERMINE your price.
The most commonly overlooked fact about subjective pricing is this: The main reason that the cheapest providers in the market are cheap is because they decided they weren’t worth much. And the main reason the most expensive providers in the market are expensive is because they decided they were worth more.
Yes, people have to agree with the expensive guy if he’s to make any money, but he never would have made that money if he hadn’t decided it first.
There are good and bad photographers. There are good and bad coaches. Which are you? If you’re good, believe it — and then hike up your pants and price yourself accordingly.
Cutting prices works for commodities, but will not win you good clients. If you’re cheap, people won’t think it’s because you’re awesome and they’re getting a good deal. Instead, they will look at your bargain basement price and will assume that you suck.
Because everyone has heard that expression — the one about how you get what you pay for.
Lee and I talked about this stuff in some serious depth (enough depth that he had to cut me off or I’d go forever), and he also got some crazy good stuff from my buddies Charlie Gilkey and Caffeinated Elf. (I know it’s good because I’ve heard it.) So let me go ahead and make a totally biased suggestion — biased because I’m in it, and biased because I’m an affiliate:
If you’re a person providing a product or service that is in ANY way subjective and if you are AT ALL uncertain about pricing, go buy Lee’s “How Much Should I Charge?” course while it’s still cheap. Because I’ll bet that most of you could be charging $20 more per hour, and recouping what you paid right away. Like my wife… she charges this one client like $25 an hour or so, which is ludicrous. She could and should very easily be charging $45. I keep telling her.
If you’re serious about your business, then for real: head over and buy this course. Then listen to what we have to say and act accordingly. The entrepreneurial world isn’t a corporation with regular raises handed down from above. Nobody’s going to hand you the increased rates that you deserve, so you need to learn to ask for what you’re truly worth. And if you’re good at what you do, you can almost certainly get it.
Go get ‘em, Sparky.
Couldn’t agree more, Johnny.
I think this goes hand in hand with the post you wrote on Copyblogger about scarcity. People are so scared of the competition that they don’t focus on their growth. Silly, really.
Thanks, Sean… and hey, I’ve been meaning to compliment you on the CB post you did about Eminem. Leaving a comment now feels like I missed the boat on an old post, so I’m just telling you that it keeps coming back into my head.
Dude. You’re worth what you can get and what you can get keeping people happy. Or whatever, but yeah, you and others underbid. I’m living proof.
I tell my clients over and over that the most important product they have to offer is themselves. It was the platform on which I built my business, and still do. As far as I know there are no other coaches in my industry charging what I charge, and I laugh because I am way above the market price.
Why? Because I’ve told my clients that I’m bringing them at LEAST that much value in returm so it makes sense to value myself that way. I also tell them that THEY need to value themselves that way, too.
If you don’t do it, no one else will either.
Faboo post. Tell yer mom I said howdy.
I’d argue that in the early stages of building a business you do have to undervalue yourself a bit. For example most bands spend their first few gigs playing for free, and you’d hope they didn’t consider themselves completely worthless (although I suppose it’s possible).
My partner charges only $25 for his handy man services and the guy is a freaking Picasso with a hammer. His work is spectacular and every single one of his clients asks why he’s so cheap. He’s reading this article tonight, damn it.
Another aspect I like to consider, since my work is freelance-based is the value of my free time. Maybe I got spoiled making $40/article in college writing for the local paper, but I refuse to write 500 words of shit copy for $10. I hear Starbucks pays $8/hour and I do love the smell of coffee.
Great Post Johnny!
You should perhaps do your Wifes’s invoicing/billing for her?! $25 per hour!!! That’s a slice of her life she’s giving dude…
Sean yup that eminem post was cool – I remember that as well.
I train/coached a young guy the other day – he said he couldn,t afford my price, tried to haggle… I said “… listen buddy
I love gift giving and I contribute to charity so I will send you my invoice and if you don’t pay it
Have it as my GIFT!”
BTW – guys – you ain’t too expensive, they just can’t afford you
And I charge between 55 and 275 $ pers session (not an hour – more like 50 minutes) none could afford an HOUR OF MY LIFE!! Its a session dammit…
Good stuff, Johnny. And I was wondering who did that header. It’s very cool…which, I guess, means you are, too!
Good stuff, Johnny. And I was wondering who did that header. Very cool….
One word…BRILLIANT!
Thanks, Johnny. I needed the reinforcement today!
Found out I didn’t get 2 separate projects. Not because I’m not good. Not because the potential clients didn’t like me or my work. But because they really don’t have the budget for ME to do their websites.
Like you said, I’m not a commodity, nor is my work. I’m really happy that neither prospect asked me to lower my rates or meet some generic web design rates (like appliances). They’ve got me in their minds for their needs or to recommend…as a premium service provider.
It’s OK. I’m still busy. And I’m worth it!
Thanks Johnny!
That was one of those posts that rattled around in my head for a long time before it finally came out. The Tarantino one too, though I’d kind of like to take my red pen to that one and start over. You know how it is. We could always say something a little better, or make the punchline just a little sharper.
This came at the right time. I think it might of been your poultry (in one of your buy-my-stuff videos) that summoned me here to read this. I think the biggest fear most people have (including me) is that no clients will want to work with you, but then again, you can’t price yourself one level above hell because … yeah. But who says hell is underground anyway?
It’s amazing to me how few people even questioned my pricing of ~$100/hour for technology consulting services for small businesses when I was 21 with little experience. Today, no one even tries to negotiate on price… The simple reason is exactly as you pointed out… My services are not a commodity and if presented properly, no one can even be considered my competition. Great post. Always great to help keep things in perspective.
Thanks for the random plug, right off the back. Excep that it makes me sound like I charge an arm and a leg for my stuff. Knew I should have charged you more, dammit. Unfortunately, most clients don’t ultimately really know or care about exactly what they want, creatively or otherwise. They want something and don’t realize all that’s involved, and think all other creatives work in the same per/hour mindset. Probably why I do less “design” and focus on painting, where it really is all about my personal creative vision, and I can charge whatever I want.
@NC – At the time, neither of us knew how awesome I was going to become.
It’s cool; I’ll keep buying your shit. I love it.
Well Said Jonathan – We are so much more than we think at times and if we just compare ourselves to ourselves we’d see great movement.
“The main reason that the cheapest providers in the market are cheap is because they decided they weren’t worth much. And the main reason the most expensive providers in the market are expensive is because they decided they were worth more. ”
I suspect you should print that up as a poster and sell it. My experience in life is that I’ve always been able to make as much as I think I’m worth. The big challenge being, of course, thinking I’m worth it at times.
Or T-shirts. I really need to get on that, maybe as a companion piece to the “I’d follow Johnny B. Truant through the pits of zombie Hell” shirts that Jess Commins keeps urging me to make.