Reader Questions Pt. 1: Pricing

Do you remember my interview on the Matt Report last year where I rambled on and on about all the things I do related to WordPress. Among the questions Matt routinely asks his guests is a question something like, “What advice do you have for the freelancer trying to go from the $500 site to the $1500, or $1500 to $2500… etc.” I’d have to go back to watch it to see exactly what I said, but I know that around the time of the show, I was myself making a pretty significant shift in how I priced my own work, so my answer was probably some shifty, hodge podge mess of “Well, you see, it all has to do with the VALUE the work provides to the client, rather than the time it takes to produce that value.”

Turns out people are still watching that interview and, for whatever reason, finding what I had to say interesting. Imagine that. 😉 I’m kidding. We all have something to share from our experiences, don’t we? I might not have it all figured out yet, but I’m going to suck it up and share what I’ve learned and AM LEARNING even now. To that end, a viewer emailed me some questions and rather than just answer him, I thought I’d answer them here in case anyone else is interested.

1.) Should I join The Skool? Is it worth it? Has it paid off for you? etc.

The Skool is a web agency education company formed by Jose Caballer of the Groop. I first encountered Jose and the Skool also on the Matt Report. Watch the video. No really. Bookmark that then watch it. If you know my story, you know I don’t come from an agency or design background. I used to be a youth pastor. To me, the “agency gurus” were somehow always going to have me beat because I just had no idea what they DID. I looked at my WordPress work compared to some of the other smallish agencies in town and thought, “WHAT? How did they get that site? I could do that?!” And then through one channel or another I’d find out what they charged for it, and I’d fall out of my chair, knowing that LITERALLY, I could do that exact site myself. I knew there was something missing between what I do/did and what agencies do/did, but short of going to work or intern for one, I had no way of finding out what it was. So, I joined the Skool. I don’t know what it costs now, but then it wasn’t very expensive then because they were in some sort of transition. I might have also begged for a discount. Maybe. I wanted to get the Agency in a Box but I couldn’t afford it, so I just soaked up everything I could from the Skool videos and documents and went from there. I also watched every video I could from This Week In Web Design on You Tube.

For me, it was worth the small investment and WOULD HAVE BEEN worth tons more. It gave me a framework for a PROCESS of sharing with clients the VALUE I was ALREADY providing to them, but didn’t have a system in place for sharing with them. The truth is, for every project, I was already working through Company Branding, User Profiles, Goals, etc (join if you want to know the rest), but 1) I wasn’t charging for that process 2) I wasn’t bringing the client in on it, because I wasn’t working with clients who VALUED that process – so I was just figuring it out for myself because I knew it mattered and 3) I didn’t have a repeatable system I could use. I just KNEW it, but it wasn’t a system. Now, it is. Jose says (and I’ve heard it other places, too) that the value of an agency is the process, the relationship, and the Skool helps me define that process (and is still helping me – I literally just watched a video again today and will watch another two tomorrow).

2.) Does TheSkool help with marketing ideas for your business?

No, and Yes. Not implicitly, but when you stop trying to sell the features of your websites, or stop trying to sell your websites by price, and start selling the value your websites provide a business based on the outcomes you can provide after completing a systematic process of Discovery, Inception and Build… you will HAVE ideas for marketing (example here). I think what’s interesting to me is that THIS is what my clients have always said they likes about me – being able to translate the concepts of what’s happening in these phases and why – so for me, the “marketing ideas the Skool provides” … eh, again, if anything it provided more of a framework for getting those ideas out. Each of those three phases have so much fodder for marketing already.  I think once you realize these systems for yourself, the most important next question becomes WHO do you want to market TO?

3.) How do you market your business besides being involved in WordCamps and other local social events? Do you do SEO, AdWords, etc.?

Nope, never any paid search and really, though I know HOW to execute a killer organic strategy, I just don’t have time for that (the maids house is always dirty). When I DO write or produce content, video, graphics, etc…, I do it right, but I don’t do it that often.  And not until October 2012 did I even have my license, so the number of “social events” I attended was pretty much limited to the monthly WordPress meetups I help run with two other guys. Even now, I can’t say I’ve been to anything outside of Startup Weekend Columbus and WakeUpStartup. I can honestly say I built my business entirely organically – both in terms of search engine marketing and referrals. Only recently (maybe the past nine months) have I been tipping the scales at half of my leads coming from search; until then almost all of my work was entirely referral. Which was GREAT – except that most of the work in the previous years was at a lower price point than I am now… so referrals from previous clients would most likely be referrals in the same price range. The leads coming from search right now are leads that have to deal with my contact form which acts like a funnel. And what’s great NOW about my leads coming from search is that my messaging and my pricing are starting to match what search has been bringing all along… so I’m seeing those leads from search starting to convert better than before when the game I was TALKING and the portfolio I was showing (I think, anyway) said “more than $1500” but my pricing structure didn’t. And, I haven’t been to any other WordCamps. I just run ours. I’d love to go to some others in 2014, though.

4.) Looking at your prices in your Contact form… wow! Are those there to scare away the people that can’t afford you? Do you have people taking you up on each of those items? Those prices seem steep to be a two-person shop, I’m just curious to how those prices are received.

No, we haven’t yet had projects at all the new price points, but we have closed contracts in the $xx,xxx range.

They’re not to scare them away, of course not! They’re there to say, “I want to work with businesses who want to see this type of return on their investment.” I do – I want really want to work with businesses who, after completing our work together, can realize significant improvements in whatever their measurable goals were. Let me explain.

There is a salon here in town who desperately needs a redesign of their website. You or I could do it. YOU would charge maybe $500 or on a great day, if you were feeling bold, $2500 for it. Let me tell you about this company, though.

They have six salons in Central Ohio. Each salon spends $50,000 a year on advertising for a total of $300,000. The average sale at each salon is $150.00. If the redesign of the website produces just 2 extra sales per week per store ($300 x 6 = $1800 x 52 = $93,000) they’d see an increase in sales of $93,000 a year in the first year alone. And that’s with just two extra sales a week. Knowing all of the major issues their site(s) have, an increase of two sales per week would not be difficult. So you would charge $1500, because you’d think in terms of “how long would it take me at $x hours to redesign the site” and I’d aim for $50K – $75K, because I know that they will see a return on their investment of that much this year PLUS $20K, and nearly $100K each year to come, for an initial investment of 16% per store’s advertising spend (or since they have an overall advertising/marketing budget, it could come from that instead). Your proposal of a $1500 site suddenly looks cheap compared to my promise of a $100K returned for years to come, doesn’t it?

The difference is that you sold your time, and I sold a value. As far as I can tell, the thing that separates the two proposals is that one starts with YOU, and the other starts with the CUSTOMER. And really, I’m still learning this as I go, so I may come back and amend this post one day. But it’s about what it’s worth to the customer, not what it’s worth to you.

Having said that, if you follow that line of thinking, you have to then reverse engineer your prices to find your ideal customer (or the other way around, whatever). If you know that you want to charge $50-75K for a website, then you need to target customers who can pay $50-75K for websites, and for whom that investment makes sense. Who are they? Probably customers who have sales of at least $5M annually. After that, you have to figure out the rest.

When you’re working with clients who are willing to say to you, “These are my goals. These are my customers. These are THEIR goals. Let’s figure out how to then make those happen.” you’re working with good clients. When you’re working with clients who say, “Just build me a pretty website, I don’t care about that stuff” you’re working with clients who don’t understand the driver of success their website can be, OR the value you can provide to them as it relates to their bottom line.

5.) What do you do with the leads that can’t afford your prices?

Well I think for the most part they stopped emailing me because of the form. I did once recently get someone who I think was using the “Strategy and Support Retainer” to ask for so much support it was basically a website build, but after going through the rate it would take to “support” her questions she decided she would figure it out herself by reading the documentation and also using the support that came with the plugins.

 

Ok that’s a long enough post for now. I hope that answered your questions. I’m not editing any of this, it was just a mind-dump in response to your questions. If anyone else reads this and has follow up questions or is absolutely outraged at my responses, please feel free to comment below. I do have a follow up post coming on FEAR and BOLDNESS related to pricing, but, that’s for tomorrow.

Best wishes for huge success in your businesses and life!

 

Angie

@angiemeeker

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4 thoughts on “Reader Questions Pt. 1: Pricing

  1. This is awesome information and I’m happy to hear people are still coming to you from the interview. Jose’s interview was so popular, he actually had me rename it, because his clients were finding it and watching it 🙂

  2. Thanks for the valuable advice, Angie! I just used the basic idea from the salon example to help show a potential client the value of the work I was proposing. It’s easy to forget that sometimes (most of the time?) the people we do business with don’t already know this value and we need to walk them through it.

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