Shall we?
Wanna play a game? Same situation. You need to make an important decision on your business. A game-changer. And you approach 2 advisors —could be a lawyer, a consultant, an accountant, a fractional CMO/CFO/COO… up to you. Both will get you to the same information to make your decision. Adv 1’s response: Let me look into it, do some research. It might be around 5 weeks.I’m estimating 60 hours at $80 per hour. Approx total: $ 4800 Adv 2’s response: That?I can tell you right away. The price…
That daily thing…
Look, this daily thing is a game-changer. In terms of: Expertise, it lets you go deep on things you love AND hate in your industry. For the ones you love, on how to make them bigger. On the ones you hate, on seeing ways to change the situation. Creativity, it pushes you to think deeper —and different. It helps you make connections you never thought of before. Deciding what to focus on (positioning/niching down/specializing), it gives you the freedom to explore all the different ideas you…
Not giving your price
Common (and sort of intuitively ) advice: “Go, talk to your prospect/customer, talk shop, ask and discuss their budget. But don’t give them a price. That should only be shown in your proposal.” Take the other road: talk price. Early. Why? Because a price has very little to do with their budget. A budget is a prevision of what (god knows where/how) they “should” have for X thing. It might be that the client means well, but without the right expertise, it’s a self-diagnose with high odds of…
Look for someone
If you’re not having the best time with how your business is doing, look for help. Look for someone who, as painful it is for them, will tell you the things straight up. Someone who’ll call out the bullshit —and call you out to hear what you won’t necessarily like. Yet, something that will be in your best interest. Here’s how you’ll know: they’ll call it out not to sell you anything, but to get your shit together. And it’s painful. I mean, it’s your business. Your own baby. In the long run…
Adding to the noise
When you’re going into the market and set yourself with what the market pays/charges/”accept”, you’re only adding to the noise. It gives your prospect one more option to choose from. This overwhelms them. Without noticing, they go into the paradox of choice: the more choices you can choose from, the more anxiety and harder it is to choose one option. So, unless your price stands out from the crowd, you won’t differentiate yourself. You’ll get compared on merely numbers. And you do NOT want…
Market-based prices
“Hell, no!” That’s the visceral, automatic reaction I get when hearing “You need to price based on your competitors’ prices”. While it sounds logical, the market can be (usually is) underpriced. There are many reasons to it, yet the most common one is because it takes a model of “What it costs me” + “My ‘desired’ margin”. A cost-plus model. Take this into account: while taking the market as a sanity check, and getting yourself a sense of confidence in what you offer, it also assumes that the…
A rate is not a price
A rate is not a price —even when it kinda feels like it. For it to be payable, you need to multiply it by another variable. Might be hours, minutes, quantity, level of effort, impressions… When you charge based on a rate, it’s based on inputs. And you usually have these (with some sort of precision) at the end of the project. If you want to give it ahead, you need to know exactly what the other variables are. Basing what you charge on your inputs takes into the mix ONLY your side, not your…
Revenue will *kill* your business
Wait, WHAT?! In the long term, revenue can (and will) kill your business. And this is not about the lack of revenue, but of your revenue stream. When left unchecked, you’ll get played by how much money you can be making. However, how much money goes into your business means nothing when your margins are thin. And here’s where pricing comes into play. Pricing is not about growth —or even revenue. It’s about how to maximize the margins to keep the business at its best. This is why pricing…
All price being equal
All prices being equal, why would they choose YOU? If everything is average, you offer something average, for the average price… it should do the work, right? Unless… Your customers care for something out of average. You do something out of average If that’s the thing, pricing according to the market makes no sense.
On revenue and your business.
Yesterday’s message was about revenue will kill your business. That is, if you’re only looking for it as the metric to follow (revenue = vanity metric). Here’s the thing Revenue alone doesn’t dictate or even diagnose if a business is doing good or bad. Profit, on the other side, does. While having multiple revenue streams is a great thing to have, if you don’t keep those on check, all your efforts will make little difference. It’ll be ultimately a race to zero. And the worst is that you can…