160 WP-Tonic Show Value Pricing With Special Guest Jonathan Stark

Meet Jonathan Stark

In episode 160, consultant Jonathan Stark tells us why hourly billing is nuts. Jonathan Stark built a six figure solo consultancy by ditching hourly billing for value-based fees. He has a decade of real-world experience successfully applying value-based theories to software development projects. With his coaching program, he teaches freelancers, solo consultants, and boutique firm owners how to do the same.

You can join his daily email list at:

https://expensiveproblem.com/daily

You can also sign up at:

https://valuepricingbootcamp.com

This Week’s Sponsor

WP Security Audit Log

Our episode this week is sponsored by WP Security Audit Log. Use Coupon Code WPTONIC25 for 25% off your checkout.

 

 

 

Jonathan Stark Makes the Case for Value Pricing

One of the biggest debates in the world of web development is whether to bill hourly or using value based pricing. While most agencies use an hourly model, Jonathan advocates for value based pricing for project work. There’s a multitude of reasons why hourly billing puts clients and service providers at cross purposes.

Jonathan Stark’s belief is that hourly billing encourages aimlessness, because the service provider is penalized for efficiency in an hourly model. In hourly billing, the thing that is being purchased is time, not a business outcome.

John brought up that many people misunderstand value pricing as trying to charge as much as you possibly can. Jonathan says that people feel guilt if they are profitable, and that hourly projects are not centered around business outcomes, but effort.

An important thing to understand is that the value of a project is going to be different for every client. You cannot charge the same amount to a small business as you would for a multi-million dollar business. This is the thing that people misconstrue — value pricing cuts both ways.

Leading up to a Value Based Project

One intriguing thing that Jonathan brings up is that in the initial conversation, you actually try to talk to client out of doing work with you by using investigative questioning. By digging deep into what their needs are, you actually discover what the value of the project is to them.

Value pricing is the opposite of pulling an estimate of cost and hours from thin air. Software projects are notoriously inaccurate with estimating hours. Most web development projects go over the initial estimate of hours. Jonathan states that value based pricing is the only way to guarantee 100% customer satisfaction.

When an hourly project goes over the original estimate, the client tries to micromanage the project to get it back on track, so they can save money, making everyone unhappy. John also adds that doing Socratic questioning and discovery in an hourly model becomes a source of resentment from the client. The client will question every minute you spend diagnosing their problem, and wonder why you aren’t simply doing what they tell you to do.

Jonathan adds in a hourly project, many clients see you as a voice-controlled mouse, and if you cannot have a value conversation at the onset of a project, then that is a client you should not take on.

Why Hourly Billing Remains Popular

John asks Jonathan why do so many agencies and freelancers default to hourly billing?

Jonathan says many people don’t realize there are options besides an hourly rate. Most us take clues from what everyone else is doing. He says skills do not necessarily have a correlation to business outcomes. The majority of agencies and consultants use a fixed bid in a cost-pus model. This means they start with estimating hours, plus time and materials, plus a little padding. If their estimate is wrong, then their margin disappears. This is why most people do not do fixed bids or value pricing. They get burned once and don’t try again.

One question that Jonathan gets asked a lot is how to remain profitable using value pricing? He says you look for high-value projects where you can add a lot of value to a client, and you throw the rest away. Essentially, he is saying to not bother with low-quality prospects (because the value price for those projects will be extremely low).

Transitioning into Value Pricing

John asks what is the best way to transition into value pricing from hourly billing?

Jonathan says you have to change a lot of systems, so it is a gradual process. He says the first step is to stop trading time for money, but not jump straight to value pricing.

One way to start the transition is to do everything the way you normally would, and make one change to your proposal. Whatever your estimate is, multiply that by 85%, and offer the 1.85x option as a fixed cost option.

The first price is an estimate, meaning it can go over. Let the client know your level of confidence with this number. Add the option to select the guaranteed 1.85x price as a fixed price.

He says many clients will choose the 1.85x options, because they have the relief that the number will not go up later. Jonathan says many agencies will worry that the 185x number will still leave them underwater. He says if you don’t have confidence in your 1.85x of your original estimate, then maybe your original estimate is inaccurate.

The risk is put on the service provider, not the client, so making your price something you would be comfortable with as a fixed price will improve your estimates.

Paid Discovery and Retainers

WP-Tonic’s Jonathan asked about productized consulting and retainers.

Jonathan Stark said paid discovery is a good way to try out productized consulting, but it would be better to call it roadmapping.

There is a great value in diagnosing a problem. If the client wants to take the diagnosis and have someone else implement the prescription, that is okay.

If you present paid discovery to the right client, they will jump at the chance to have it. If a business is not mature, they will not see the value in it, because they do not have a solid revenue stream. The more roadmapping you do, the more efficient you can make the process. Efficiency is something you never think about when charging hourly.

Jonathan Stark said retainers were a loaded word. Many people think of retainers as different things. Some people think they are prepaid hours, but he says it should be for access to your knowledge, not your hands. Retainers can be more of an impartial advisory role, instead of a workmanship role. The reason is, if you make a retainer about work, you will be pawned off to working with junior developers and interns. That is low value work that anyone can do. Leveraging your knowledge is important.

If you are selling your hands, and not your brain, you will never break $100k to $150k annually, even for the most in-demand developers. Typing semicolons all day, every day should not be your end goal if you want to be a high-value consultant.

Specialization and Marketing

Positioning yourself as an expert is where the money is. Don’t sell your hands, sell your intellect. It is infinitely more valuable to be a recognized expert among your buyers than to be an expert among your peers. It is also much easier.

You have to find at least one thing you are good at. Not something you are BS-ing people about — you ahve to be genuinely good. But if you are in a roomful of marketing people, if you are the only WordPress person, you become the expert in that room. Expertise is relative to the crowd you are in.

John asked how you should choose a specialty. Jonathan said there will always be resistance from your lizard brain to focusing down on a vertical or skill. Your brain will tell you that you will lose clients, but specialization is the true key to being picked out of the crowd of service providers. Jonathan said choosing a vertical is better than picking a skill, but you have to be able to state your value proposition.

What do you offer your target market? How are you different from everyone else you are competing against? Most people don’t know who their competition is, because they are not tightly defined.

Summary

There was a lot to learn in this hour, especially if you are a consultant or agency owner trying to position yourself. What do you think about hourly billing versus value based pricing? Let us know in the comments below.

Transcript of the Show

Transcript for WP-Tonic #160 with Jonathan Stark

John:
Welcome to WP-Tonic, episode 160. Today, we’ve got the immense pleasure of having as our guest Jonathan Stark. Before we get into today’s episode, I wanted to tell you about something I like. With WP Security Audit Log, you can keep an audit log of everything that’s happening on your WordPress and Multisite. By keeping a record of every change that happens on your WordPress site, you can ensure user productivity, meet regulatory compliance requirements and identify WordPress security issues before they become a problem. For example, the plugin keeps a record and users log in and out of WordPress, change the role, passwords or other profile settings, change anything in post, page or custom post type. If a user on a WordPress Multisite is added or removed, if someone uploads or deletes a file, changes the password or email address, if the user installs, activates, deactivates, upgrades or uninstall a plugin or a theme, it is updated or upgraded. If there’s a failed log in attempt for an error request and so much more.

WP Security Audit Log is WordPress’ most comprehensive user monitoring and audit log plugin. It’s installed on 40,000 websites. You can also extend the plugin’s functionality with reporting, email notifications, Sys-log integration and other premium add-ons. So visit the plugin website at wpsecurityauditlog.com for more information. If you use the coupon code WPTONIC25, you’ll get a 25% discount during your checkout. Now onto the show. Jonathan, for those that are … Those of our listeners that don’t know who you are, just tell them briefly who you are and what you’re all about.

Jonathan Stark:
Sure. Yeah, thanks for having me on. My name is Jonathan Stark. We got a full contingent of Johns on the episode today.

John:
Yeah, we do.

Jonathan Stark:
Probably get a little confusing. But yeah, my name is Jonathan Stark and I live in lovely Providence, Rhode Island which is near Boston in the United States. I have a two businesses actually, one is a mobile strategy consulting business where I help credit means sort of make the leap to the post PC era. I’ve been doing that sort of thing for about 10 years as a solo-consultant, a little over 10 years. About two years ago, my other business that I started as kind of a side hustle is business coaching for software developers where I help them get better clients and grow their profits by breaking the trading time for money habit, so break out of that hourly trap.

John:
Definitely. I’m on your email list so I can definitely attest. I’ve gotten a lot out of it. Also want to introduce my other co-host, another Jonathan, Jonathan D, tell us about yourself.

Jonathan D:
The big D, the big D. Well, folks. I’m the founder of WP-Tonic. We’re a maintenance support company for bloggers, for WordPress consultants, for developers, for designers, anybody that wants a trusted partner, we can help you out. Isn’t that right, John?

John:
Absolutely. I’m John Locke, my business is Lockedown Design. I focus specifically on WordPress development and local SEO for blue collar industries like construction or manufacturing. First question I have for you, Jonathan and if anybody’s listened to you or read your work, they understand that you’re a big advocate for value pricing. How does value pricing differ from traditional hourly based pricing and why are you such a strong advocate for it?

Jonathan Stark:
Sure. Well, value pricing is just one of the sort of alternative approaches to hourly billing that I advocate but it’s the one that I advocate for project work. The difference really is night and day. There’s almost no comparison but just to give people a quick sort of crash course on what it is, it’s kind of like doing fixed priced project works, project work but it’s on steroids. Instead of calculating how much you should charge for a given engagement, it’s on how hard it’s going to be for you, how long it’s going to take you to do it or how much effort or number of bodies you have to throw at it. Instead of that, you calculate the price based on the value of the business outcome to your client and you sort of create a multiple of that or a fraction of that I should say. It’s like maybe if somebody’s going to make $100,000, you can charge him a tenth of that easily and it create like a no-brainer price for the client. It’s just a different way of calculating a fixed price.

John:
Now, one of the things that you talk about a lot is hourly billing, it almost puts the service provider and the clients at cross purposes. Can you speak a little bit on that?

Jonathan Stark:
Sure. I mean, hourly billing is bad for everybody involved, the client, you, the seller, whether whatever you do, let’s say you do web design, it’s bad for the project itself. It’s corrosive to the relationship, the collaboration and the project because like you said, people are at cross purposes. The fact of the matter is the faster the project gets done, the better it is for the client. I’d never had a client say, “Hey, could you take a little longer? We don’t want to release this so fast.” They always want it yesterday. Yesterday would be better than tomorrow. So it’s always good for them to have it done more quickly. But if you’re getting paid by the hour to do that project for the client, you’re going to make more money the longer it takes.

I understand that if it takes a really long time, the client’s going to start to get angry and then you have sort of these ancillary problems but the fact of the matter is, the longer it takes, the more you make which has a whole bunch of horrible side effects that we can go into if you like to drill into that.

John:
Yeah, definitely. Definitely, let’s talk about that. What are the side effects of basing project based work on the hourly billing as opposed to value based?

Jonathan Stark:
Right, so there are a couple, I’ll give you three things that are bad for everybody. The first one is that it, hourly billing, encourages a mentality that sort of … It encourages aimlessness. Typically, the way it works is that somebody will come to you, the client will come to you and say, “Hey, John, I understand you … I heard your name. I heard that you’re great at web design. Maybe I listened to the podcast and we know we need some web design work done. Could we talk about that? Here’s a punch list of things that we’d like you to do. We need the buttons to be bigger, the logo to be bigger. We want to change some colors here and there, add some photography,” and so on and so forth and they give this sort of punch list of things that they want you to do.

If you charge by the hour and of course they’re in a hurry and if you charge by the hour, it’s likely that you’ll say, “Okay, my rate is $100 an hour, $200 an hour,” or whatever it is. And they somehow, and this is the mystery to me, somehow they make a decision based on that. It’s totally irrational that they would make a decision based on that, just your hourly rate. But then for some reason they say, “Okay, go for it.” You start doing that stuff and you get to the end of the project and or you get to the end of the list, it’s not really a project, it’s just a list of stuff they want you to do and perhaps they give you some more stuff to do in the process and this scope sort of creeps all over the place.

At the end of it, if you hit some kind of business outcomes, some desirable business goal with those changes, it was pure luck because no one ever discussed what the desired outcome was. The effects of this are probably familiar to all of your listeners or anyone who billed by the hour especially for design work is that you get into these meetings where you have these debates about what color blue the blue should be or how big the logo should be or where something should be placed on the screen. It turns into this kind of like the highest paid person in the room just gets to decide ultimately what, how the design is going to look which is crazy because what really should be happening with design is that it should be in service of a goal and if nobody has defined a goal, then you can’t succeed.

If there’s no goal, you can’t succeed. If you can’t succeed then they’re going to regret spending the money on this thing. They might not blame you but they’re going to regret having spent the money because it didn’t deliver a business outcome. They wasted the money. That’s just the first thing.

John:
The reason that I’m glad that you brought that up is in our community, the WordPress community, I’ve seen a lot of people treat value pricing like it’s the devil. People have this assumption that value pricing means you’re just trying to charge as much as you possibly can. To me, value pricing is it does not work and it cannot work unless you identify the overall business objectives of a project. If you don’t dig in and do that, it’s really tough. I would love to hear a little bit more about the difference between standard, like hourly project, how those run as opposed to like a value based project when you’re doing discovery?

Jonathan Stark:
Sure. Let me address the evil part first. The thing that people don’t realize and it makes sense that they don’t realize it because when people online talk about value pricing and they’re saying how great it is, they emphasize the fact that it has dramatically increased their profits. So it seems like gouging or, “Oh, you got paid $65,000 for a WordPress website? That’s insane, the client got ripped off. You’re a bad person.” What they don’t realize is that value pricing cuts both ways. Imagine a scenario where somebody says, “Hey, we want to pay 100 bucks an hour to do a bunch of stuff for us.” Then you do it and they end up spending, whatever, $50,000 with you. They get no value out of it because they didn’t ever define an outcome. You never asked them for an outcome. You just went to work like a pair of hands being told what to do.

Is that fair? I don’t think so. They inflicted it on themselves perhaps but I feel that as the experts on the thing we do, let’s say web design but it could also be illustration or photography or anything else, I feel like it’s incumbent on us as experts to say, to have a little bit of ethics and say, “You know, I understand that you want me to do all these things but I don’t see they’re going to deliver any kind of business outcome for you. It doesn’t make sense for me why you would make the logo bigger, pay me all this money to do all these things. How are you going to get any return on investment?” This is the beauty of value pricing is that it makes you have that kind of a conversation at the beginning so you can determine whether or not the client’s going to be better off when you’re done.

When I say that value pricing cuts both ways … Oh, I can kind of answer your second question by describing where value pricing saves the customer, so it’s a good thing for the customer. Customer comes to me and says, “Hey, here’s this list of things that we need done. Maybe it’s a response, we’re thinking about doing a responsive redesign. Could you update our checkout? Could you make the buttons a little bit bigger so they work on the phone? Could you change some of the graphics so they download a little more quickly?” I could just say, “Yes, I’m 200 bucks an hour and I’ll do all those things for you,” but instead, what I would say is I would get on the phone with them and have a conversation, it’s, “Tell me everything you know about this project, everything that you think you want me to do,” and they’ll go through that and they’ll sort of brain dump for 15, 20 minutes.

Then once they’ve exhausted that thread, then I’ll say, “Awesome, thanks for that information. I’ve got all my notes here. Can we … I need a little bit of big picture context so can we back up and just tell me why you’re doing this? Why do you want to do this? Why not just leave things the way they are?” They’ll say, “Oh, we could never do that,” and then they’ll explain why they couldn’t do that because maybe a big competitor is eating their lunch or there’s some changes in their industry or something as simple as, “A CEO just finally said this is a new strategy. This is a high priority so they told us to go find someone like you.”

Okay, why? Then you go through these series of questions I call why questions where you ask them why, like I said, why are going to do this, then you go into a series of questions about why do it now, why not, why didn’t you do it six months ago, did something change, why don’t you do it six months from now, why don’t you wait, why not put this off, this is going to be expensive, risky project. It’s like heart surgery, we don’t want to lose the patient, if we can cut it off or if we want to research this a little bit more, you should. If you’re not 100% positive, don’t say, “No, we can’t do that.” Whatever reason, they’ll come up with some reason why they can’t wait.

Then the last series of questions, say, “Why are you considering expensive resource like me? Why don’t you just do it internally? You mentioned that you have internal web developers, why don’t you just have them do it? Or why don’t you outsource it to someone overseas that,” I’m in the US, “Why don’t you outsource it some place that has lower prices or why don’t you just have someone on Fiverr do it? Why would you come to someone like me who’s going to be probably the most expensive option?” And they’ll explain why, “We thought about that. We’ve tried it in the past. We got burned. We don’t want to deal with time zone. We want someone local.” They’ll have some reasons for you.

At the end of that conversation, after I’ve basically tried to talk them out of doing the project with me, I’ll either know that yes, I’ll be confident that there’s some way that their business will be better off after I’m done with the engagement than they were before I started the engagement. They will have convinced themselves of the same thing and we will all have an idea of what the value is. It’s why do this now, “Well, because if we don’t do it, we’re going to have to hire six people.” That’s a lot of salary. Tell you what, I can do this for the salary of one person which will be dramatically less money than it would cost you for six people.

But it cuts both ways. So imagine you have that conversation and they’re like, “Yeah, maybe we should outsource it.” Or, “Yeah, we don’t really need to do this right now. It’s not that urgent,” or maybe they’re just kicking the tires or maybe you say, “You know, you’re asking me to do this custom thing for you, did you know that there’s a WordPress plugin that basically does this and you can get it for 20 bucks a month or something?” If it turns out that the value to the client is really low, I can’t just charge whatever I want. I have to charge a fraction of what the value is to them. I can’t just go around saying to everybody like, “Oh, everything’s $50,000, everything’s $150,000.”

It’s just that you calculate your number based on something real which is what it’s worth to the client instead of something made up like some hourly rate I’d pull out of thin air and some estimate of the number of hours I think it might take which I pulled out of thin air and then I multiplied those two things together and come up with a number that is completely made up and probably wrong. So for people who think it’s evil or bad for the client, I say it’s the exact opposite. I think hourly is bad for the client.

John:
I’m glad you came around to that last point and just to recap what I heard for everybody else. You can’t just go around. Not every client is going to be like a $50,000 client.

Jonathan Stark:
Right.

John:
Like if it’s just like the local dog walker or the person who has like a home based business, their value is going to be very low but the price that you’re giving for each project is actually based on the value that they’re getting not the value that you’re trying to get for yourself. It’s about them really and their defining.

Jonathan Stark:
It’s 100% focused on the client. The beauty of this is and the reason why I started doing it in the first place is because it’s the only way to guarantee 100% customer satisfaction. Before I started doing this, I worked in a firm. I was the VP of a sort of a boutique software development firm and it was very common and we were completely honorable. We did everything we could to make our clients happy and it’s almost impossible with hourly billing unless you’re amazing at estimating doing hourly estimates. If you are amazing at it, okay, maybe you can keep your clients happy. But when you’re managing a team and things happen and communication, whatever, it’s just really hard for a long engagement, three to six to nine months, it’s impossible to define everything that’s going to happen and to know all the surprises.

We’re going to pull these, rip these walls down, it turns out you’ve got knob and tube wiring in the house. This completely changes the estimate but your walls are torn down. What do you want to do? Do you want us to put the walls back up which is going to cost you or do you want us to replace the electrical in your house which is going to cost you a lot more. Surprises happen. It blows estimates all the time. When you give an estimate to a client, they hear price. Like you say, “Oh, here’s my estimate. It’s $50,000.” If you go over that 50, they are not going to be happy and then they turn into clients from hell, like start micromanaging you to try and get control of the project back, fighting, recriminations, they go over hours entries, they try and get discounts on stuff, “Well, how come you charge this much last week and two weeks ago it only took one hour, last week it took two hours?”

So now you’re in this back and forth like debating what hour was worth what and start eating hours. I mean, I’m sure people who bill by the hour have had this experience from time to time, if not most times.

John:
Yeah, a few things here too. When we’re talking about discovery and how many questions you’re asking, it occurs to me that if you’re doing that with hourly, that’s going to be a source of resentment from the client because they’re just like, “Well, just do what I tell you to do I can save money. Why are you asking all these questions?” If you’re billing him for that on an hourly model, that’s going to cost resentment and the other-

Jonathan Stark:
Yeah, that happens a lot because their mentality is in the wrong place. They’re viewing you as a voice controlled mouse. You don’t want that kind of client. You can’t have that kind of a conversation with every client. In fact, the ones that you can’t have it with are called bad clients. You want to not work with them. If they churn out of your sales process because they’re unwilling to share their goals of their business with you, the goals of the project anyway, then how can you do a good job for them? The only way you can do a good job for them is to do as you’re told and that’s not the kind of relationship that I really want to have with my clients.

John:
Definitely no. A great point that you make too is unless you’re great at estimating, if you’re billing by the hour, then you’re estimates are almost always going to go over and that is going to be a source of client dissatisfaction. If customer satisfaction and business objectives are the main goal, then you have to be able to do both. But why do you think so many agencies or just even freelancers default to hourly? Is it because they tried value pricing at one point or some sort of flat rate or fixed fee and they wildly underestimated and they just never go back?

Jonathan Stark:
A lot of times, yeah. It’s funny when you think about it. When I first went solo freelancing, I didn’t decide to bill by the hour. I didn’t know there are other options. My first decision when I went … When I started freelancing was what should my hourly rate be. I didn’t even question the notion of having hourly rate. I’m sure that’s true for most people, when they first leave the relative risk free zone of full time employment and they go out on their own, the first question is how much should I charge for hour and then you look around at people who you think are roughly comparable to your skill level and you adjust up or down based on if you think you’re better or worse than they are. It’s insane. It makes no sense. It has nothing to do with the outcome that you’re going to deliver.

It’s like a carpenter and go, “I’m better in the skill saw than that guy and he charges $50 an hour so I’m going to charge $75.” It doesn’t matter how good you are with a skill saw, if you make a terrible like a house that people don’t need, it could be a beautiful house that they don’t need. It’s just useless. So a lot of people don’t even question it so a big part of my mission to rid the earth of hourly billing is to at least have people question what their … The way that they price their services. Then some people will try fixed bids and get killed, lose money, lot of money and then they’ll say value pricing doesn’t work. But they didn’t value price if they calculated the amount … If they calculated their price based on something like this, “Well, basically an hour, I think it’s going to take me 20 hours and I charge $10 an hour, $100 an hour so it would be $2,000. I’m going to tack on 15% and that will be my profit and everything will be great.”

Yeah, of course you’re going to get killed because you’re wrong, your estimate is wrong and the 15% is even enough margin to correct for your wrongness so you made no profit whatsoever and then you’re like, “Fixed bids don’t work.” The reality is that you’re calculating your price based on the wrong thing. You’re calculating it on your cost which is sometimes referred to as cost plus or time and materials. If you’re calculating your prices that way, yeah, you’re going to get killed because there’s no margin. There’s no way for you to do it right. If instead you keep your eyes out for projects that are hugely valuable to your clients or prospects I should say, so you keep your eyes out for projects that are just wildly valuable, million dollars a year, going to improve the profits of this company by a million dollars a year or this person who is a millionaire is …

It doesn’t have to be a millionaire but just sort of exaggerated to make point, this person who is a millionaire is being driven crazy by this inefficiency in his or her business so fixing that inefficiency is going to worth a lot of money to someone who has a lot more money than time. If you notice, when these kinds of jobs come in then you’re like, “Oh, this is probably going to be a great win for them because I can do it for a tenth of what it’s worth to them. So they get 10X ROI and I can probably do it in a teeny amount of time so my costs are [inaudible [00:23:56] like not even worth considering based on the price that I can charge for it. So yeah, this is a great project for me and for them,” so then you go ahead and do it.

People always ask me, “How do you calculate the profitability when you’re doing value pricing?” I’m like, “You don’t even think about that. Everything’s very profitable because you’re throwing away all the stuff that’s low value so you just wait for the really high value projects and there’s …” I mean, it’s a ridiculous question to someone who’s used to doing it. It’s almost like I don’t even know how to answer it.

John:
Totally. I think we’re up against our first break, our one break. When we come back, we’re going to be talking more with Jonathan Stark about value pricing. We’re coming back from the break and we’re talking with Jonathan Stark about value pricing. I’m going to ask one question before I turn it over to the other Jonathan. For people who are maybe coming from the hourly billing based world and they are trying to get into value pricing, what’s a good way to try and transition? Should they try something like a product ladder or product sized consulting where they have some sort of offering, where there’s blocks of service?

Jonathan Stark:
Yeah, that’s important to talk about because I get really passionate about breaking out of hourly billing, breaking out of that hourly trap. It can come across like I want everyone to do it immediately and that’s not what I want because it’s hard. It’s really hard because you often times have to change a lot of systems and processes inside of your business hourly billing is like baked into everything from accounting to reporting to invoicing, it’s just everywhere. So it takes time to root that out and it takes time to change the way you think and it takes time to change the way your clients engage with you. It’s a process.

It’s something that you should do in a very … It can be risky because if you’re really bad at determining value, you’re going to price yourself too low and then you’re going to get killed or if you don’t understand how to control scope on a project like this, you’re going to get killed. So it’s very … I feel like I’m giving people a loaded gun and they’re just sort of, “Oh, what’s this?” I’m glad you asked what are sort of first steps to start to do this. In my opinion, the first steps are to stop doing … So you stop trading time for money but don’t go straight to value pricing. Value pricing is kind of like 400-level course where it’s much easier to do things that are a little bit safer where you’re not calculating your based on the value of the individual project because that’s black magic, it takes a while to get good at that.

But you can at least break that sort of time for money thing which will change the way you think, it will start to change the way you think about the way you run your business and you can start to change your systems so that hourly billing is like slowly bleeding out of your company or your business and you don’t have to be as dependent on it. A great thing to do is to … The next time you do or ask for proposal, somebody will say, “Hey, we want you to do this web design work,” you can add … Just do everything normal like you normally would. You talk to them like you normally would. You probably try to define the scope, you probably ask them what sorts of things they want done instead of asking them why.

You say, “Okay, what things do you want me to do?” You get a list of those things. You go back to your office and you think, “All right. It’s probably going to take me this long. It’s probably going to be [fill in the blank], so my estimate, estimate it at $10,000.” So that’s probably the way that people normally do their proposals and do their sales. But the change that I would ask you to make is to just take that number, the $10,000 and multiply it by 85% and come up with $18,000 or pounds or whatever but just increase it by 85% and that as an option on the proposal as a fixed price. It will be, “$10,000, I’ll do these things you told me to do. I expect that I’ll be able to do it for that amount of money in that range of time but I could be wrong. My level of confidence is maybe 75%, reasonably confident but I’m not positive, things, there could be surprises.”

Then you say, “Now,” to your client, “If you would like me to take the risks of the surprises for you, you can pay me $18,500 upfront, 100% in advance and I will not … You will not pay another dime. You won’t have to worry about change orders. We will achieve what we are setting on to achieve here and you can know in advance of making your buying decision exactly how much it’s going to cost just like you’re going out and buying a house. You know the price before you decide to buy it.” The reaction that I get when I suggest this to people is freak out, they’re like, “No way. I would never commit to $18,500,” or only an 85% premium. To which I say, “Maybe your $10,000 number isn’t very solid. Maybe you should increase your estimate. If you’re not comfortable, if you’re not comfortable that you’re at least within an 85% margin of error then your estimate is too low.

So come on, be honest with yourself, raise your estimate to a point where you’re comfortable saying that an 85% premium to take on that additional risk is fair. In fact, this might even be a good way to calculate your estimate in the first place, is to come up with a number that you would consider doing as a fixed price and is backing into your estimate. But anyway, if you do this, you will be surprised how many clients are happy to pay the extra 85% to lock in a number because if they’ve got any experience working with hourly talent, they know that it’s a very scary process because it’s like the person who, the developer in this case or the designer, is like driving this bus and the client’s strapped to the front of it and you’re both going to end up in the same destination but it was a much scarier ride for the client than it was for the person who’s kind of in control which is the person who’s doing the development or the design. It’s a horrible experience for the client. That’s one way to do it. Add a fixed price option to an hourly estimate.

John:
I love that idea. I think it’s brilliant. Because people want to know how much it’s going to cost. I think a lot of time they look at estimate like equal surprise but estimate is just an estimate. Jonathan, the other Jonathan.

Jonathan D:
Yes.

John:
The big D.

Jonathan D:
It’s the big D here, folks. Thanks, Jonathan. What’s your response to paid discovery and also a lot of people in the WordPress development, in the WordPress industry, I’ll put it that way, they wonder if they could get on a retainer. A lot of people love putting point on retainers. What’s your attitude to paid discovery and being put on retainers?

Jonathan Stark:
Yeah, long answer to both questions so I’ll split them up. The first one is paid discovery and John mentioned earlier product tie services and that’s my second approach for people who are getting started with ditching hourly billing is to consider product ties in one of their services so that they can offer it at a published price on their website like most things that you’d buy. I mean, pretty much everything we buy in life has a published price. Very few things we decide to buy without knowing how much they’re going to be, very, very few. What I would say is creating a product tie service is a really good fit for transitioning away from hourly, at least dipping your toe in that world and paid discovery is a thing that is commonly used as a product tie service. You wouldn’t want to call it paid discovery because clients don’t react well to that language but if you call it something like a road map or an audit or something like that, it can make a lot more sense.

If you imagine a situation where someone comes to you and they say, “Hey, we want you to do these 10 things,” and you say, “Well,” you try to have that conversation with them, you’re like, “Well, I don’t know. I don’t know if it’s going to be worth it to you to pay me. I’ve just rough guessed this is going to be at least in the $50,000 range,” or whatever range it is, some expensive number, some number that seemed expensive to them and you’ll be like, “I don’t understand how. Look, I’m not convinced that it makes sense for you to give me that money. Like I don’t want to take your money unless you’re going to benefit from it because I want to have like a long and fruitful relationship with my clients and if you’re losing money every time you pay me, it’s not going to be a long relationship. So convince me that it’s a smart thing for you to do to hire me.”

If they can’t do that which is sometimes the case because they don’t … They know that they don’t know a lot of things. So if the client’s in this situation where they know they’re in a new territory … A classic example from my world is that somebody is on a WordPress, the sort of a WordPress install that they kind of cobbled together themselves to create an initial business but it’s a total disaster and they don’t have a dev environment, it’s just a mess. You know what I mean? It’s like they did a good job building a business by themselves on this WordPress platform but it’s a mess and now they have a revenue stream and they can’t grow. They can’t do a million things because they’ve kind of painted themselves into a corner because of their limited skillset.

They know they need to do something but they don’t know what to do and there are a whole bunch of things they could do. You could say, “Well, before you have me come in and try and patch this thing and that thing and this thing which isn’t really even going to work probably and even if it does, it’s a Band-Aid. If you actually are making $50,000 a month from this thing you put together, you’ve got to make the leap to a more robust platform that’s going to support the next five or 10 years of your business. So let’s talk about your comfort level with moving to something like maybe AWS or WordPress VIP or whatever, whatever the new platform is, whatever it’s going to take to untangle this Gordian knot they’ve created for themselves.”

They’ll be like, “Yeah, there’s a lot of good options. I like the idea of that. I would sleep better at night. I would stop having to answer these customer complaints constantly, those would drop close to zero.” You say, “Okay, here’s what we should do. Before you do any of this, let’s diagnose the situation out, come up with what I see as the steps you should take, a prescription for you. Once we’ve got that determined and you’ll actually know what the right path is, let’s say, then you can decide if you want to take the next steps and if you do, you can decide if you want to do it with me or you can take this out to bid for somebody else who does implementation for less money than me. But once we have a plan in place, in fact, you probably should take it to someone else because I’m kind of expensive to be doing this kind of work, the implementation work. You should probably take it to someone else but we can cross that bridge when we come to it.”

So technically what you’d be doing is paid discovery but that not to say it’s not incredibly valuable. If you say what you’re doing is giving them a diagnosis and that’s valuable so like you go to the doctor because you have abdominal pains, you go to your primary care physician and you’re like, “My stomach’s killing me,” knowing if it’s an appendicitis versus last night’s Taco Bell is a dramatic change in your mood like you could be, “I think my appendix burst.” No, you just had fourth meal and it’s coming out wrong. Knowing that is incredibly … Is a relief. If you’ve got kids, dear listener, you know this feeling because if that kid’s got abdominal pains, you’re freaking out. If the doctor can say, “No, no, no. It’s nothing serious. You just need to do this or that,” it’s a huge relief. I get chills just talking about that. Like when that happens to your kids, you’ll freak out and just knowing the level of severity is wildly valuable. It’s so valuable.

So if you imagine engaging with your clients in that sort of diagnostic and prescriptive phase of the engagement where you’re really figuring out how serious the problem is, what the problem is, maybe they don’t even know what the problem is, the website is slow, well, it could be a hundred things. Once you figure out what the problem is then you can prescribe what the course of action that you think they should take and then it’s a separate step to actually implement the therapy. So in fact, my entire business has become those first two steps, diagnose and prescribe and I don’t do any implementation work anymore. I phone that out to other people. I just make an introduction. I don’t even take a cut or anything. It’s like, “Okay, here’s what you need to do. Here’s your problem. Here’s what I think you should do about it and here’s a company that can do it for you if you don’t want to do it yourself.”

I don’t see that as … Paid discovery kind of sounds like it’s not valuable and your just trying to get paid to do a proposal. That’s not it at all in my opinion. I think if you present it to … If you present it to the right client in that way, they’ll jump at it, especially if it’s at a published price in your site. $1,000 for a mobile architecture or $1,000 for a Cloud migration plan and here’s what’s involved. “Here’s what you’ll get out of it at the end. It will take this long. I only need this much of your time. I’ll need to talk to your lead developer once or twice and it will be done within two weeks. At the end of that two weeks, you’ll have either a report or a video of me describing exactly what needs to be done, how to send out a proposal to these three companies that I recommend and thank you very much.”

What you end up with is in this case we’re talking … You could theoretically call that paid discovery. I think it’s much fairer to call it roadmap or something similar and then say once you have that to loop back to the ditching hourly thing, once you have that, you can present it on your website for a price, $2,000. If some solo individual who has really no revenue stream comes to your page and sees that, they’ll be like, “That’s crazy. I would never pay that much money for paid discovery,” because they don’t see the value in it because they wouldn’t get any value out of it. it’s really just not worth it to them because there’s no upside for them. They’re not mature enough to recognize the value from something like that. But if a much more mature business comes along, say Entertainment Weekly who happens to be on WordPress and they have some Cloud migration that they need to have done, well, guess what, they don’t want to lose to Ford the advertising contract so this needs to go smoothly and it needs to be perfect the first time.

So let’s figure out in advance exactly what we’re going to do, is it worth $1,000 to Entertainment Weekly to talk to a recognized expert on Cloud migration for WordPress? Yeah, it is. They come out of it with this thing that’s wildly valuable to them and what’s cool for you if you’re the person offering this is that that price point never has to go down. It could go just up every time you sell one, you could raise the price. You’re like, “Oh, I sold it at 1,000, let me try it at 1,500, let me try it at 2,500, let me try it at 3,500,” and as you do that, while the price is going up and your work is not increasing, in fact, you can decrease the amount of work it takes to deliver that because you can automate aspects of the delivery, you can remove things that the clients, your clients haven’t really found that valuable but are a real pain for you to do. You can create templates and libraries and all these things to make yourself more efficient at delivering this thing which increases your profits again.

Nobody ever thinks about being more efficient equaling increased profits when you’re billing by the hour. You don’t even think like that. So anyway, that was my … I told you it was going to be a long answer. That is paid discovery, road mapping, productized services, that’s sort of my pitch for all of those things.

Jonathan D:
Well, what is your attitude around retainers.

Jonathan Stark:
Yes, so the word retainer is loaded. It means something different to everybody. It’s almost something that I’ve said often and recently that my main income is from retainers but I’m actually going to change that word because it’s just so widely misunderstood. People usually when they hear the word retainer, they think of it as one of three things. Either like a legal retainer which is really just prepayment for a block of hours so you’re really just billing hourly but getting paid first which is I think a joke, anyway. That’s one.

The other thing they think is that retainer is like a maintenance contract. A maintenance contract to me is not a retainer. It’s a maintenance contract or a support contract. Before, I was referring to the phases of the client engagement and I talked about diagnostic and prescriptive and therapy, the implementation. Well, support contracts and maintenance contracts are the fourth stage which are reapplication of the therapy. It’s the lowest value part of the equation and the hardest to get a margin on. I wouldn’t waste my time with it, frankly. I don’t want to leave my clients hanging dry after a project. I’ll put them in touch with someone who is happy to do support and maintenance because that’s just the way their business model is. They have a ton of low cost employees so it kind of make sense for them to do a volume support thing. But for me, I’d rather stick … I don’t like the idea of having employees.

I’m not suited as a manager. I’m just not suited for it personality wise so I prefer to have no employees and just focus on the really high value things and not these kind of long tail engagements. In that case, what is a retainer, right? When I say I make most of my money from retainers, what is that? To me, what a retainer is it’s purely advisory. It’s a hotline to my brain. So if someone, let’s go back to the example of Entertainment Weekly doing a Cloud migration, let’s say they hired me to do the diagnosis of exactly what the problem is and then I sort of layout a roadmap of exactly what I think they should do and then I say, “I’ll put you in touch with these five companies. I think they all do reputable work and then you can have them fight it out for however they want to fight it out, price it out.”

Then if you want to keep me on as an impartial observer on the project, that will be, whatever, 7,000, $12,000 a month, something like that, depending on the nature of the engagement, if I have to fly or something, it’s going to be more. But I roll all those costs into one price if I’m going to be flying monthly to Minnesota, I’m going to say, “All right, it would be $20,000 a month. I’ll come out once a month for a two-day meeting and the rest of the time, you have 24/7 access to me via email, phone, slack, whatever it is.”

As questions come up, you can ask, “What would you do in this situation? This situation came up, what would you do?” Because they know there are a bunch of different reasons why this is valuable to them but one of the most obvious is that I have no stake in the decision. I don’t make more money if I recommend a particular thing. I make the same money no matter what. They trust that at least from a financial standpoint, I have no reason to recommend doing more implementation because I don’t make more money from that. So I can just say they just see you as this impartial expert, kind of like an expert witness who they call upon when they are feeling either out of control or uncertain or feeling a lot of risks or maybe feeling like they’re development team is taking advantage of them or gouging them or creating, just BS’ing them about how much work something’s going to be.

So half the time, I come in, it’s almost like a mediator and a lot of times, I’ll say “No, actually, this team is right. What you’re asking them to do is crazy,” and they know I’m saying it because it’s true, not because I’m going to make less money or more money or anything like that. To the right client, this is not valuable to every client but to the right client this is very valuable. I’ve had at least one of these things going for at least five years, more often I have two going at ones, sometimes three. So I promise you that there are clients out there two whom this is a valuable thing and if you are …

If you’ve been around, let’s say gray hair like me, and have a lot of experience and have some street cred in your industry, you can dramatically increase the value you’re delivering to your customers and create a really profitable offering for yourself by not doing development anymore, not doing design anymore. Stop typing those semicolons. You’re never going to make more than $200 an hour typing semicolons. Even iOS developers, top end iOS developers, it’s hard to find one that makes more than 200 and they’re probably the most in demand developers out there. If you’re a solo person, your income caps out at like a $150,000 a year. There’s no way around it. Either you have to hire people, work more or raise your rates. You can’t raise your rates too much past 200. If you want to grow your business into mid six figures, maybe to seven figures, you’re not going to do it with hourly billing.

Jonathan D:
Just fantastic answers. I think we’ll wrap up the podcast and if Jonathan’s up to it, we’ll spend like 10 minutes with some bonus content. How does that sound, John?

John:
That sounds great. I want to remind everyone, if you’re getting value from this podcast, be sure to go to iTunes. Leave us a detailed review. We’re at 66 reviews right now. We’d love to get to a hundred. If you leave us a review, we might read it on the air. With that, how do we get a hold of you, Jonathan?

Jonathan Stark:
Best place to find me is to go to valuepricingbootcamp.com and sign up for my free five-day email course where I drill in a lot of these topics in more detail and you can interact with me. I read every single reply so if you get on that list and you have a question, just hit reply and I will answer.

John:
Other Jonathan, how do we get a hold of you?

Jonathan D:
It’s quite easy, folks. You can get me on [email protected] There’s only one actually, jonathandenwood. Or you could email me at [email protected] I will answer it probably the next day. But you get a personal answer.

John:
You can get a hold of me at my website which is lockedowndesign.com. You can follow me on Twitter. I’m @Lockedown_. Follow my Facebook page at Facebook.com/lockedowndesign. For the WP Tonic, we’re saying sayonara. Peace out. We’re out of here.

Jonathan D:
Join us on the bonus content. See you later, folks.

John:
Bonus content starts. So Jonathan, you have anything?

Jonathan D:
Yeah, it’s spot on what you said about paid discovery, I’ll use the term paid discovery. I think you’re spot on soon as you say that in front of most of clients, unless they’re experienced, they’re not very happy. If you could word it in some other way, or put it to them that it has value, so they understand it has real value. I think you’re spot on. I think the reason why I put the retainer question in, Jonathan, is that almost all developers love being put on retainers, don’t they?

Jonathan Stark:
Yeah, recurring income, of course it sounds like a good deal.

Jonathan D:
But if it’s not done in the right way, it has consequences as well. It can have bad consequences on it.

Jonathan Stark:
Absolutely. If you think of it as anything other than access to your brain to answer questions, advise, pure consulting. If you think of it as anything like that has scope to it so things that are going to require a lot of research or a lot of development, you’re asking for trouble. Because there really … If that is the kind of thing you’re offering, you’re going to be viewed as staff augmentation so basically they’re going to look at you as, “Oh, it’s $5,000 a month then I can tell John to do whatever I want.” It’s not about that. It’s about answering questions. It’s about access. Anybody can ask me a question, but if you want me to get back to you fast, I’m happy to get back to you for free but it might take a month.

If you want me to get back to you quickly, very quickly on a Sunday night, hardly ever happens but I do it, because it’s an emergency and somebody will say, “Hey, this is an emergency. Got a situation. Have to make a decision before the morning. Boss just dropped this on my desk. What would you do?” I’ll spend five, 10 minutes typing up a reply or talking to them on the phone. It’s no big deal. It’s not that big a deal, even if it’s like off hours. But if you’re saying like have an agreement like for whatever, $5,000 a month, I will make sure all your plugins are all updated, make sure that all the security patches are there, I’ll fix any typos.

Now, all of the sudden, who are you dealing with on their team? You’re dealing with a junior developer or you’re dealing with a customer service person or you’re dealing with a low level marketing person because what you’re doing is not that valuable. Anyone could do it, anyone. If you want to, if you want … Look, if you are happy with your income and the profitability and your customer satisfaction levels, then don’t change anything. I don’t want you to change anything. But if you’re not happy with your customer satisfaction or your income or your profitability level, if you’re not happy with those things, then the stuff I’m talking about is the path out, is to stop positioning yourself as a pair of hands and position yourself as an expert so that they’re paying for your head instead of your hands. Sell your expertise, not your labor.

John:
Absolutely, got it.

Jonathan D:
I got another question, John.

John:
Oh, jump in. Go ahead.

Jonathan D:
Well, I agree with with everything you said but how do you know … It’s kind of unicorn kind of question, I’m going to ask you a slightly unfair question or a very broad question. How do you position your … I think, actually, I’ve just answered it. It’s come to my mind. I think to become what you’ve just outlined in our podcast and in this bonus, you got to be seen as a trusted partner, not … I think that’s the keyword. Would you agree with that? Moving from I think you said a digital mouse mover to a high valued trusted partner. You got to find clients that want that rather than just you being a digital mouse. Would you say that’s the key thing moving from being just a hand on a mouse to being a real trusted partner?

Jonathan Stark:
Yeah, trust is everything. But you need to demonstrate expertise somehow in a way that is trusted by your target market. You need to be a recognized expert among your buyers. So it’s not enough necessarily. It’s okay to be a recognized expert with your peers but it’s much better to be a recognized expert and easier in fact to be an expert with your buyers. If you are like, I don’t know, what’s a typical like a WordPress … I don’t know, what’s a typical WordPress job? Like somebody advertises themselves as just a WordPress developer, let’s say.

Jonathan D:
Yeah, yeah.

John:
Yeah, yeah.

Jonathan Stark:
So I’m a WordPress developer. If you are going to try to be considered an expert among your peers and go speak at WordPress conferences that are just attended by other WordPress developers, you need to literally be in the top five WordPress developers in the world. If you want to be viewed as a WordPress expert by your buyers, you don’t have to be that great because they … I mean, you need to be good, you need to know your stuff but you don’t need to be top 1% in the world. You just need to be way better at it than they are or anyone that they have in-house is. If you have some experience and you do know what you’re talking about, I’m not talking about BS’ing people here, but if you’ve been around and you are good at something and I know everybody that’s listening to this knows of at least one thing that they consider themselves good at, much better than their clients are, right, or they wouldn’t even be freelancing.

You know you’re good at something so what you want to do is become well-known among your buyers for being good at that thing. If you can do that and it’s not … It depends who your target market is, it can be difficult like if you’re trying to put yourself in front of doctors, that’s kind of tricky. But if you’re trying to put yourself in front of director of marketing, that’s not that hard because those people go out in the world more so than say like a surgeon. You can find them. You can put yourself in front of them, whether you go on a podcast or you start a podcast that they listen to or you create maybe an email series or webinar series that you advertise to them or you put in front of them or you blog for some industry blog or you write in a publication that they read, you go there, you’re going to be the only WordPress person playing in that space. You’re going to be the only WordPress person in that magazine because it’s mostly marketing people.

In a room full of marketing people or you go speak at a marketing conference, you’re probably going to be the only WordPress person there, maybe a small handful of WordPress people that do that as their job. Think of the answers, how good would you be able to answer questions, even general WordPress questions from someone who doesn’t know anything about WordPress but uses it everyday but doesn’t … They’re just like a user. They’re not a developer. You could tell them all kinds of things about what’s possible and how they could save time and free plugins, themes, responsive themes, “Oh, you should just use this responsive theme or you should just tweak this, use Gravity Forms. Don’t worry about it and plug that in. You can plug that into drip direct using Zapier.” All the million things that you know just from your daily work that are super valuable to somebody who doesn’t have a clue but has a job to get done.

It’s not that hard to be … The word expert is kind of a loaded term but in reality it’s relative term. It’s relative to your clients you’re an expert, not relative to the entire world of WordPress developers. It’s a term that I would recommend not using on yourself. Don’t say, “I’m a WordPress expert.” But be an expert and be recognized as one and your clients will call you that which is even better.

Jonathan D:
I think that was fantastic John. You got a finishing question, John?

John:
You know what, I’m glad that you said that a lot of the specialization and it’s just getting in front of the people who are actually going to buy your services and not the other people who do what you do because it’s so hard to stand out. One thing that I did want to ask is how do you go about finding like a specialization? How do you drill down and find that type of client that you’re perfect for?

Jonathan Stark:
This is sort of a funny thing because it’s easy in the sense of complexity but it’s hard in terms of getting yourself actually doing it. It’s like lifting up an engine block. It’s not complicated but it’s really hard. You know what I mean? Specializing down and picking a focus, I call it pigeonholing yourself is really easy. You can just pick something. It’s not hard at all. But when you go to do it, your lizard brain is going to freak out. It’s going to be like, “Oh, I’m going to lose my house if I do this. My children will starve.” All of these panic responses start flying into your brain. It happens to me. It doesn’t matter. It’s not controllable. It will happen. If you try to focus down your marketing, you will flip out. If you don’t do it though, it’s really, really hard to create that expertise of being a recognized expert with your target market. It’s almost impossible.

It’s really important to do it. I recommend that people have some sort of partner or they kind of buddy up or they hire someone to help them with it because it’s … You will have this reaction that is triggers like this irrational panic fear. There are a couple … Okay, let’s just say you’re able to do it or you want to try it so how do you try it? What’s the process? I tell people that they should craft for themselves an internal positioning statement, I call it laser focused positioning statement that you internally just something that maybe a sticky next to your bathroom mirror that you see every day, it says, “I am a blank who helps blank with blank unlike my competitors blank.” The blanks there are your discipline, your target market, the expensive problem you solve for the target market and the unique difference between you and other people who do what you do or solve the same problem.

When you go to try and do this, like I said, it will feel like you’re throwing your identity away and you’re just like, I don’t know, it’s the most bizarre reaction. You’ll feel like, “Oh, I barely get any leads now. If I just focused down on dentists, I’m going to get no leads.” But I promise you, I’ve seen it over and over again in my coaching program, the exact opposite happens, the exact opposite. It’s like magic. That’s the word people usually use. They’re like, “It’s like magic. I just said now I’d focus on dentists and everybody I know is introducing me to dentists to do WordPress work for them. It’s insane.” The reality is there’s something like 100 or 200,000 dentists in the US. How many clients could you handle in a year? It’s a gigantic market. It’s almost too big, you almost need to specialize down on say orthodontists or oral surgeons or something to really get a lot of traction in that space.

Anyway, I’m rambling a little bit. The idea is that you want to specialize either on a vertical like I’m describing, like dentists, I think that’s the easiest thing to do. It’s less threatening to your identity. You can also pick a horizontal specialty where you only do log in systems for WordPress or something like that where you just, you are the person to go to for some very optimization maybe, performance optimization or responsive WordPress or something but that takes longer to become recognized because now you’re putting yourself in competition with your peers instead of putting yourself in front of a group of non-experts that are likely buyers.

Then the last blank, oh no, I didn’t say expensive problem yet. You’re discipline, let’s say WordPress developer, your target market, dentists. The problem you help them with, what’s the value proposition? “My brother in law is a dentist. I should introduce you guys. What can you do for him?” You’re not going to say, “I can make him a website.” You want to describe a business outcome, that’s the problem or the opportunity that you capture for them. It would be something like, “I can decrease no-shows. How many no-shows does your brother have? I mean, is one person a day forget their dental appointment? I can fix that.” They’re like, “Oh wow, so you help dentists decrease their no-shows.” Yeah. Or it could be, “I help people decrease cart abandonment rate on mobile. I help Shopify stores decrease cart abandonment rate on mobile.” Wrong term for this group. But you get the idea.

Then finally, unique difference. This is the one that people have the worst time with. It’s the one that they’re least scared of but they have the worst time with it. Like, “What’s unique about me? What’s unique about me? I don’t know what’s unique about me. How do I sort of differentiate myself from my competitors?” I can always tell when people are having trouble with that, that they have no idea who their competitors are because as soon as you know who your competitors are, you can say, “Oh well, I can see 10 ways that I’m different than my competitors.” But it’s impossible to come up with that unique difference until you do a little research and say, “Okay, who am I really up against here and what’s different about me?”

That’s probably the, once you identify your competitors, that’s probably the easiest one for people to do because they’re just stating the obvious, the difference between me and this other solution is that I’m going to give you custom work and that other thing is an off the shelf solution so you’re going to get a more bespoke experience with me or it could that those other people go by the hour so you have no idea how much it’s going to cost you and I’ll give you a fixed price so that’s a big differentiator. Those are the four aspects.

Jonathan D:
Thank you, Jonathan. I’ve really enjoyed the interview and you have to come back if you enjoyed it yourself. You have to come back later on in the year and talk some more. I’ve just really enjoyed it so much.

John:
Yeah, straight fire, like they say in Philly, trust the process.

Jonathan Stark:
Excellent.

John:
Okay, we’ll respect your time and let you go. But I think our viewers will love this piece.

Jonathan D:
Thank you.

Jonathan Stark:
Awesome. All right, you guys.

John:
Thank you, Jonathan.

Transcript for WP-Tonic #160 with Jonathan Stark was last modified: by

 

SUBSCRIBE ON ITUNES

Related

160 WP-Tonic: Value Pricing With Jonathan Stark was last modified: by
>