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You could be charging more.
Exactly how much more depends. Some people say, “Double your prices!” Other people just say, “Charge more!”
And they mean well, but ultimately they’re just guessing.
You shouldn’t have to guess when it comes to pricing.
We’ve developed a 100% bulletproof pricing system based on logic and math at ValueBasedPricing.com.
Today’s show is part three of a four-part series on client work. We’ve talked about attracting the right clients and filtering with your questionnaire, and now we’re going into the value discovery process.
The value discovery process is where you consult with the client to discover the value of their project. This is how you are able to quote a fair price.
The most notable part of this process is the omission of the “budget question”. In other words, you don’t ask the client for their budget.
Talking about budgets or giving a ballpark figure of what you will charge is positioning you as an expense. We talk about what you should do instead.
Highlights, Takeaways, & Quick Wins:
- Your client determines the value of your work, not you.
- You can’t afford to guess when it comes to pricing—trust a proven system so you can focus on doing great work.
- Begin conversations with your clients by focusing on how much value you can create for them rather than talking about budgets.
- Only after you know a project’s value can you provide a no-brainer price.
- You need to understand the way a business owner thinks if you want to to price in a way that allows you to enjoy financial freedom and make your clients more successful.
- Any budget a client has before going through a value-discovery process is arbitrary.
- Help your client understand that quantifying the value of the project is in their best interest (it helps them make better business decisions).
- No client wants tasks done, they want goals accomplished. Ask about their goals—don’t take tasks at face value.
- Go out of your way to find more problems you can solve for your client.
- How to get to the bottom of things: Ask “why” until the answer stops changing.
- Clients are going to assume responsibility for anything that you haven’t explicitly defined.
Learn to Price on Value
Learn why the pricing models you’re using now are broken and how to fix the problem.
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- 08:11 Sean: As we’ve mentioned in the other shows, the reason we’re doing this series about client work, talking about discovering value, is because we are reopening enrollment for Value-Based Pricing. It’s our flagship program, a complete system to doing client work. You can find more at ValueBasedPricing.com. Go sign up for the free three part series.
- 08:31 It’s really good. We’ve got some new stuff coming out that we’re working on, Cory, behind the scenes. Go grab that, because we’ve got more good things coming. Today, we’re talking about the meat, the middle of this whole thing, which is the value-discovery process. So much goes into setting this up, attracting the right people in the first place, filtering the bad ones out.
- 08:54 Once you’re here, this is where it gets exciting. It’s involved. There’s a lot here. We’re going to get into quite a bit in this show, but we can’t cover it all. That’s why we spent a couple of years developing Value-Based Pricing. We basically don’t want people to waste years cobbling together their own system, bits and pieces of things they’ve found in different places. We’ve made a system that works. It’s bulletproof. We want you to be able to enjoy your work again.
- 09:36 Ben: The thing you get so bogged down in, especially in the beginning, is trying to learn about how these processes work and trying to figure out what the right way is to implement this and what the best process is. Coming up with all of that stuff can take such a long time. You’re trying to come up with it as you’re working with clients and doing this other work, and along the way, you’re running into these issues.
- 10:07 That costs you more time. You’re trying to patch those holes and then you find some other things. This is really not just about making more money, although it will help you price your projects in such a way that everyone will be happy about the outcome, but a lot of it is about saving yourself all of that time. Right off the bat, as soon as you invest in this tool and start using it, you’re reclaiming a bunch of time you would have spent trying to figure all that out on your own.
Trust a proven system, don’t think about pricing anymore, and focus on doing great work.
The Problem With Budgets
- 10:42 Sean: We touched on the budget discussion a little bit in the last episode, and I want to revisit that here to set the stage, just so people are on the same page. A lot of people may be new and just be listening to this series. A lot of people may have heard a lot of things before. If you’ve heard a lot of these things before, many of the things we’re talking about here, you will have heard me say similar things, but little nuggets will come out. I’ve pulled a lot of material out of the course for today’s episode.
- 11:15 There are going to be a lot of nuggets that come out that, I think, are going to make things click for you. It’s going to make things more clear for you, so I want you to make a concerted effort to not zone out. Don’t tune out, but press through, because I’m going to say something in this episode that is going to click for you and cause a breakthrough—it’s going to be different for different people. I want you to open your mind and listen for that.
- 11:45 I want to talk about the problem with budgets. When you talk about budgets or you give a ballpark figure of what you’re going to charge, that is positioning you as an expense. The people you’re working with are business owners. We have expenses and investments. Expenses are the things that are set, things you have to pay for. We consider those things expenses, at least our accountant does. For taxes, they’re expenses.
- 12:25 If you’re positioning yourself as an expense to your client, your client will, necessarily, want to keep the amount that they want to pay you down. It’s natural. You need to do whatever you can to position yourself as an investment to your client. That word, “position,” is very important. This is something you do, and you are doing, throughout the whole process of working with this client. You’re positioning yourself.
- 12:52 So much of not only business, professionalism, but also pricing, is positioning. You need to position yourself as an investment. When you talk about budgets and ballpark figures, you’re allowing the client to classify you, immediately, as an expense. “You’re a number, and that’s how much I’m going to pay. That’s how much this expense will be.” That’s something you want to avoid doing if you want to be able to have a good relationship with them, but also be able to charge not just more, but a fair price. That’s what Value-Based Pricing does.
- 13:38 Mathematically, logically, it is fair for both parties. No other pricing methodology does this, can ensure this. This is what you want. You don’t want to just make more and take advantage of the client. People say things like, “You should be charging more,” and they mean well. They’re trying to help you. Maybe it’s true, in a lot of cases. It may happen to be true, but they’re just guessing.
- 14:05 They say things like, “Double your rates,” or, “Charge more,” but it’s arbitrary. It’s not based on anything. It’s very likely that you could be under-charging, and maybe doubling helps you. What if I was charging the right amount and I doubled my rates? What if I was already charging too much, and I doubled my rates? Then I’m just price-gouging. I’m not really serving the client or setting myself up for reliable success.
- 14:38 Ben: I like what you said about positioning and how it’s really intentional. I get this picture in my head. Here in this room, there are lights and cameras, and all of these things are set up. I think of positioning as this deliberate process. A lot of thought goes into where you place a light in the room so that it lights the subject properly and it creates the right kind of color profile, so it softens the shadows. You have to do all that stuff.
- 15:24 Not taking the intentional steps of positioning yourself as an investment with your client is kind of like setting a light in a room and turning it on and saying, “Okay, I guess that’s fine wherever it is, and then leaving it up to the subject to say, “Okay, you try and find the best spot to stand.” You would never do that. That would be ridiculous, because you wouldn’t get the best results that way. I like the intentionality that goes into actually positioning yourself.
- 15:58 Sean: When you do talk about budgets and ballpark figures right off the bat, you’re starting off the relationship by talking about how much money the client will give you. It’s very important how you start a relationship. It’s about how much you can get, how much you can extract from them.
- 16:25 I know, I talk about value a lot, probably to the point where people are tired of it. There’s a reason why we talk about it so much. Value is the cornerstone of everything you do. It needs to be. It has to be. You don’t want to start off the relationship with your client talking about how much you can get from them. You want to focus the conversation on how much you can give, how much you can provide value.
- 16:51 The model is, once you establish that and you reach a point where you’re quantified that value, you come up with this price that is a fraction of it, and it’s always a no-brainer. That’s the idea. Everyone else is trying this uphill battle. They’re like, “Come on!” You’re dragging your client up a hill, and that’s not the direction you want to go. Establish the value, and the price ends up being a much smaller amount, so it’s a no-brainer to them. That can’t happen when you price-anchor yourself to a budget right off the bat.
Business owners want to minimize expenses and maximize investments.
You can’t afford to guess when it comes to pricing.
Begin your conversations with your client by underscoring how much value you will create for them.
- 17:29 Sean: I’ll tell you why budgets don’t work in a second, but you must get the client to define the value of the project. They have to be the one to define it. You can’t ballpark it. You’re used to ballparking your price, but when you go into Value-Based Pricing, you’re going to take that ballparking mindset, and you’re going to try and ballpark the value. “It’s probably worth about $10,000 to them.” You can’t be the one to define it.
- 18:01 Only the client can. If they don’t define it, then everything else is going to fall apart. They’re the ones who are ultimately going to say yes. If they’re not saying yes, if the price isn’t a no-brainer, then something happened along the way. Something went wrong.
- 18:28 That no-brainer price is going to be more than you’ve ever charged for any project. That’s how this works. You’re not even aware of this whole other arena. You’re stuck in this commodity market where the price is the price, and you’re looking at competitors and what they charge. You’re going off of the client budget, which is based on the competitors and what they charge. You’re in this little world that spins around, but that’s not the whole world. That’s just the commoditized market that you’ve chosen to play in.
- 19:02 There are so many other clients who don’t play in that realm, who don’t go on Fiver, who don’t come to you with low budgets and try to lowball you and talk you down on price. You think that’s the whole world because you’ve chosen to play there. I’m trying to open this up for you. Come out of that world that you’re living in right now. There’s so much more out here.
- 19:25 Ben: Stop playing in the toddler playground.
- 19:28 Sean: You’re in the sandbox, and there are a couple of other kids in the sandbox. There’s a bully. There’s so much more outside of the sandbox, on the playground, for one, but even the world entirely, outside of the playground. There’s so much more out there, but while you’re there, the sandbox is your world. You’re like, “Stay off of my turf, man. I’ll trade you this shovel for a bucket.” That’s your world. You feel like that’s all there is.
- 20:13 Ben: I’ve been listening, because you said to focus. This whole time, though, I’ve been sitting here thinking about what you’ve mentioned before. If the first thing your potential client brings up is budget or they ask you the question of budget, what’s the one thing you can say?
- 20:40 Sean: We did have that question. We can address it now. Let me finish this budget section and then we’ll get to that.
- 21:33 Budgets are arbitrary. I used to do the work. I used to work all of the wrong ways for years. I then found out better ways to price, and I started positioning myself as a professional. We talked about this a little bit in the last episode, so I’m not going to go super long on it. I have since come out of doing client work, although we’re probably going to get back into it with our media agency.
- 22:12 It’s going to come in handy once more. I’ve since come out of actually doing the client work to be able to teach doing the client work, to be able to have a couple of years to develop a system for doing it. Now, I’m in a position where I am the business owner. I have hired people for $600, $2,000, $7,000, $50,000. I am your client. I am the client. I have been on both sides of the relationship.
- 22:44 This is not a very common situation. Most people are either always clients or always professionals. They’re doing the work, performing the services. I’ve been on both sides, so I have a unique perspective to provide to you. The perspective I have is one, right now, of a business owner. You need to listen to me.
- 23:15 You have to understand my psychology. A client may tell you that their budget is $5,000, but if you tell them you can create $100,000 of value for them in the next few months for $10,000, any business owner with any kind of sense is going to take that offer. They want that. They might come to you and say, “I only have $5,000,” but if you go through a value-discovery process, you’ll often find that the problem they’re trying to solve, the goal they have, isn’t actually lined up with the task they wanted you to perform.
- 23:56 A lot of people are coming to you with tasks, “Do this thing.” All of the mindless service providers are going, “Okay. I will perform task. Thank you for money.” Why? Why do you want me to perform this task? It’s a simple question. You come to find out that there are all of these other goals behind the scenes. Every client you work with wants to accomplish something bigger than what they’re having you do. Once you understand that, you position yourself as a partner in their success. This changes everything.
Only after you know a project’s value, because the client told you and you asked the right questions, can you provide a no-brainer price.
The client cannot know their budget until they know the value.
Any budget a client has before going through a value-discovery process is arbitrary.
You need to understand the way a business owner thinks if you want to to price in a way that allows you to enjoy financial freedom and makes your clients more successful.
Ask About Your Client’s Goals
- 24:37 Sean: That’s all I want. I don’t want to have to think about this stuff. I don’t want to have to manage someone that I hire. I want them to take charge. I want to paint such a clear picture of the desired end result that they use all of their expertise in a way that maximizes that result, that maximizes my success. If they ask me the questions, the only reason I don’t tell you about my goals is because you don’t ask me.
- 25:06 I have to work really hard. I work with people who are not totally professional. Maybe that’s my mistake. Maybe I should keep looking, but for whatever reason, I’m like, “I need this job done. This person’s pretty good. I’m going to go with them.” The only reason I don’t tell them my goals is because they don’t ask me. We talked in the last episode about how I paid someone 40% more than what they charged me.
- 25:31 I’m trying to be a great client. You’re not making it easy for me. I’m not picking on the one guy I was talking about, but in the general sense, you’re not making it easy for me. I want to tell you this information, but most people aren’t like me. Most people haven’t spent years developing a system of doing this and going out of their way. I don’t want to go out of my way. I’m too busy. I’m trying. I’m like, “By the way, what I want to accomplish with all of this… not that you’re asking me… is this goal.”
- 26:03 They’re like, “Oh yeah, I could help you…” Come on, man. You’re leaving so much money on the table. I want to pay you money. I’ve got 99 problems. I’ve got a lot of problems, and all I want is people to solve them. I might come to you with one problem, because I think you can solve one problem. If you’re dumb, you’ll solve that problem. “No, Sean, that’s smart.” No. What would be smart would be to ask me why. Why do I want you to solve this problem?
- 26:49 What am I trying to accomplish? Because then I’ll have three problems for you. Then I’ll have five. I have an endless supply of problems that, if solved, would create value for me, which means I have enough money to pay you, which means that budgets are arbitrary. Why are budgets arbitrary? The client can’t know the budget until they know the value. Are we on the same page?
If the Client Doesn’t Have the Money
- 27:14 Cory: I just have one question screaming in my head when you say a statement like that. What if they say they have a $5,000 budget, and that’s before going through the value-discovery process, and then you say, “Guess what? I can actually make you $100,000.” Yeah, they can probably be like, “Oh, I guess we can probably spend a little more than that.” If you said, “$10,000,” they could say, “We don’t have $10,000.”
- 27:44 Sean: This is the nuance I mentioned, and I’m glad you brought this up, because I didn’t go back and clarify. You’re not going to someone and saying, “I can create $100,000 worth of value for you!” What is that doing? It’s you defining the value. I gave a shorthand example, but if you went through a value-discovery process, which we’re going to get to later, and came to the result, the conclusion, that you could create $100,000 worth of value, then the $10,000 price point or the $20,000, that fraction, becomes a no-brainer.
- 28:26 It’s two parts. First of all, you’re not throwing it out there. You’re concluding, arriving at, uncovering the fact that you can create $100,000 worth of value. They’re the ones saying that. You’re never saying that. We teach you, inside Value-Based Pricing, how to ask the right questions to arrive at a place where the client defines the value. Let’s say that was $100,000. There are three custom-developed pricing tools we have inside this system, so there’s a lot of math and percentages, taking multiple spreadsheets, which is why we wanted to make it easy for you. After all of the math, let’s say we came up with a price of $20,000.
- 29:17 Let’s also say, to answer your question, Cory, that the client doesn’t have $20,000 to realize the $100,000 of value. What do you do? If they don’t have the money, they can’t do the project. That’s a reality. It’s basically the wrong question to ask. In almost all cases, it doesn’t matter. If you can create $100,000 worth of value for me and you’re not selling me on this, I told you, I said that the work you were going to do would create this much value for me.
- 29:52 “How can they know that, Sean?” They know their business. I’m only teaching you how to ask the question so they arrive at a place where they tell you. They know their business. If it’s a website, they know their traffic. They know their visitors. They know their target audience, their conversion rate, their average price point, the customer lifetime value. If you tweak any of those levers, they know the end result. It’s all about asking the right questions.
- 30:22 Since it’s coming from them, you don’t have to do any convincing. Since they know it, they will get the money. I know my business. Everything I’m saying, I would never have understood this years ago. I wasn’t in this place. I wasn’t a client. I didn’t think like a client. Now, I think like a business owner. I know my business. I know the levers we can pull. I know how much money we would make. It’s math and logic for me, because I know my business.
- 30:56 The reason I don’t pull those levers myself is because of problem A, problem B, and problem C, that I don’t have time to solve, I can’t solve, or I don’t have the resources to solve. Is it starting to make more sense?
- 31:08 Cory: Yeah, that’s a good answer.
- 31:08 Sean: You’re asking me, uncovering, and helping me reach a point where I realize, “Yeah, you know what, I’m answering your questions, and if you did this, this would be the financial result for me.” You say, “I’m going to charge you a fraction of that.” I’m going to say, “Alright, I’m going to get the money.” That’s what I’m going to say. If you tell me, for $2,000, you can give me $15,000, I’m going to find the $2,000. I don’t care if I don’t have it right now.
- 31:42 Ben: Or, worst case scenario, if they’re fully convinced of the value and they can’t get the money right away, they’ll at least say, “As soon as I have the money, let’s book this and get it going.”
- 31:56 Sean: I’m checking in with the chat, seeing if this is helping, me role-playing the client. You don’t get this kind of insight. The client isn’t telling you this stuff. I’m switching it around, between being the client. I’m there, because this is my world. I’m ready to give you money. I have money I want to give you, so you can solve problems that will make more for me. I’m also trying to teach you this. That’s the whole problem with budgets. Don’t ask for a budget, because clients can’t know their budget before they know the value because you haven’t gone through the value-discovery process yet. They can’t know. You shouldn’t ask.
You’re not selling the client on the value you will create because they already know it.
What if the Client Isn’t Willing?
- 32:50 Sean: Before we talk about the process itself, you need to understand what value is. We have to define value. When I say “we,” I mean you with your clients are defining it. We’re coming up with it by asking the client and having them tell you. The value must be determined by them, the client. If it’s not determined by them, the value isn’t going to be accurate. Things will be left out or included that shouldn’t have been there.
- 33:20 You’re going to end up charging too much or too little. Either way, it’s not fair. That’s what Value-Based Pricing is designed to be. It’s designed to be fair. Let’s say, you’re going to go into this value discover process, and what if the client isn’t willing? You’ve got all of these questions, and you’re like, “They’re not going to answer this stuff. Why would they talk to me about their business?” I brought some material out from the course for you.
- 34:04 This is kind of selling. You’re selling the idea that what you’re about to do, what you’re about to spend time on, is in their best interest. They’re just looking out for number one. They’re only going to spend time on it if it makes sense. They’re going to see it as you prying into their business. “Why are you prying? Stop asking me questions. Just do the work. How much is it going to cost? Just give me a ballpark.”
- 34:28 “I know, you don’t know the price. Just give me a ballpark.” Like we talked about in the other episode, Justin and I spent three hours on a single sentence reply that gets them back on track and solves all the problems. It’s what we teach in the course, but I’ll tell you the goal of this single sentence reply that’s perfect. The goal is to get the client back on track and understand that, for you, you’re not trying to be an expense, but framed in their benefit.
- 35:08 You’re not focused on how much they’re going to pay you. You’re not focused on how to get as much money as you can from them. You’re trying to make them successful. You’re trying to maximize the value for them. You don’t want to extract any money from them until you’re 100% sure that you can create value for them. It has to be fair. It has to make total sense. You don’t know that yet, because you haven’t gone into this value discover process. Those are the goals, if that helps.
- 35:42 Ben: That does help. That helps a lot. It’s so hard for my brain to let go of anything that has to do with the money, because I’m going off of the client’s cues. Their focus is on the money. They’re looking at this thing over here, and it’s making me want to look at this other thing over here. I’m trying to say, “No, let’s look at this thing over here. We’re not even talking about that. We’re talking about this.”
- 36:24 Sean: If they’re bringing a budget to you, and we talked about this earlier in the series, but the client is going to assume responsibility for anything that you haven’t explicitly defined, for anything where you haven’t said, “This is what you’re responsible for, this is what you’re not.” They’re trying to come up with prices because you haven’t set their role. You’re in charge of this whole thing. They’re just like, “Oh, he hasn’t talked about it. She hasn’t mentioned anything, so I guess I’m supposed to bring it up.”
- 36:59 You’ve got to direct their focus. “You know what, I totally understand, but that’s not important right now. This is.” But you have to say that in a tactful way. You’ve got to refocus them. Sarah in the chat says, “Give me a ballpark! No. Problem solved.” It’s tongue-in-cheek, it’s a joke, but the reason the problem isn’t solved is because the client doesn’t understand why you’re saying that or that it’s in their best interest. You just look indignant.
- 37:28 They think you’re being stubborn, but you have to sell this idea. How do you sell it? You frame it in their best interest. Here’s a dozen bullets on how this is for them, not just you. You have to explain how it’s in their best interest. Here’s what quantifying value does. This is the value discovery process we’re about to go into. You’re selling the client on why you should spend time talking. Here’s what it does for them, why focusing on value helps them:
- Helps them make informed business decisions.
- Makes sure projects are based on facts and figures, not feelings and desires.
- Helps with forecasts.
- Addresses and removes doubts.
- Makes sure the work is focused on producing a tangible return.
- Prevents the work from getting derailed.
- Prevents the scope from expanding arbitrarily.
- Takes the guesswork out of whether pursuing the project makes good business sense.
- 38:26 You want to highlight these benefits and bring them to your client’s attention. There’s a list for you. That’s how you sell the client on what we’re about to go into. “Quantified” means “to measure.” If you’re making a cake and you’re a pro grandma, you can add a pinch of this and a dash of that. If you don’t know what you’re doing, you want to quantify each ingredient. Measure it.
- 39:42 Picture a half cup, a plastic measuring cup, and you fill it with flour, let’s say. You run your other index finger across the top of the opening, so you level it out. You wouldn’t want it to mound up, because then it’s more than half a cup. You’ve got to measure, to quantify. That’s what we mean when we say quantify. It’s the same for the client.
- 40:30 This is what turns a $300 project or a $3,000 budget into $30,000 or $100,000 or more. It’s what turns a week long project into full time work for a year. You have to open your mind, expand your mind. Understand that people don’t want tasks done, they want goals achieved. You’ve just chosen to limit the scope. You’re looking at one zoom. Change your zoom lens! The world is a bigger place. There’s more going on here. Once you position yourself as a partner in your client’s success, all the doors are open.
- 41:11 All you need is that trust established. Once they realize, “I tried to figure out what he was going to charge me, and he just said, ‘Don’t worry about that right now. We’re going to make this make sense for you.’ At every step of the way, it was all about me. I have never experienced this before. He kept coming up with solutions for things. It was like he was looking for my problems, looking for ways to make my life better, to make me more successful, to create more value.”
- 41:40 I’ve hired people like that to do a job, and then I’ve hired them to join my team full time. That’s how it works. I’m not saying that you have to join a team. Maybe you don’t want to work for someone. That’s fine. I’m saying that there are opportunities there. Maybe you work on a year-long project. How great would it be to never worry about attracting clients for the next year? You don’t have to worry about where the next paycheck is coming from. That’s what we’re talking about here. That’s what this makes possible.
You have to help your client understand that quantifying the value is in their best interest.
You have to direct the client and take charge in the project, because that’s what they’re hiring you to do.
As value is quantified in the mind of your client, the scope of the project can shift and become something greater than it once was.
You’re Responsible to Help Your Client Understand
- 42:08 Ben: I think about it from the client’s perspective. Even for the client, a lot of times, the problem might be somewhat vague. They think they know, “Okay, this seems like it would be a good solution for that. When people come to my website, I’m not getting a lot of click-throughs. I think I need a redesign.” I think the first thing people do, most of the time, is they try and figure out how much that’s going to cost them.
- 42:53 They want to know whether or not it’s something they can invest in right now. It gets the focused, first, on the cost. I want to be careful not to villainize clients for thinking about the cost first. As a business person, it is smart to think about what the cost of something is going to be and to try to figure that out. You’re constantly thinking about the numbers in your business.
- 43:23 The only difference is, they don’t know that what you have to offer is an investment, and that’s what you’re trying to help them see. If it’s a cost, they can’t estimate properly until they know what your service is and what you’re capable of offering. Even if they know their numbers really well, it’s difficult for them to determine, “How much is this really going to bring in? What kind of return am I going to get on this money?”
- 44:05 They’re just making guesses. You are bringing clarity to the whole situation by helping them discover that. You’re helping the client get to a place where they can make an eductated decision instead of an uneducated guess.
- 44:25 Sean: That’s a really good observation, and it underscores the importance of taking responsibility. Oftentimes, the client is going to see you as an expense, but who is responsible for that? Who’s responsible for the positioning, what they see, and what you’re projecting before they get to the point of wanting to hire you? Are you positioning yourself as a problem-solver? Or does your portfolio just look like a bunch of images?
- 44:56 There’s no question as to why they might be coming to you, thinking you’re an expense. The fact that they do, initially, like we talked about in the last episode, doesn’t necessarily mean that they’re going to be a bad fit. If you explain to them why you’re not talking about budgets or focusing on money right off the bat and they’re on board, great. If they push back, that’s a red flag. That’s really good.
Your client doesn’t know what value you can bring them yet because they haven’t had the conversation with you.
The Value Discovery Process
- 45:22 Sean: Sarah says, “How do you ideally kick-off the value discovery process?” I’m going to go through this. These are my notes, bullets off the top of my head. This is not an exhaustive list. I have ten bullets that I came up with, but in the value discovering module of Value-Based Pricing alone, there are 17 lessons! We go into even greater depth. In answer to Sarah’s question, first, you have to understand what value is.
- Understand value
- Avoid talking about expenses (budgets, wrong conversations about money, etc)
- Focus on value (not on price!)
- Constantly filter
- Find their goals
- Quantify value
- Discover value
- Get content
- Take advantage of richer dialog
- Examine project scope
- 46:53 Throughout the whole project, you’re looking for red flags. If you find one, it’s because there’s a hole in your process. Patch it for next time. Red flags are like roaches. For every one you see, there are 50 you don’t see. A red flag is bad news. If you’re in the middle of a project, you have to finish the project. That’s the reality of it. But always be filtering, looking for those things.
- 47:21 Find their goals because, again, people don’t want tasks done, they want goals achieved. Quantifying is measuring, like baking a cake. I want to touch on one of the points, “take advantage of richer dialogue.” This basically means, I’ve illustrated that the scope can shift. It’s malleable. It can expand and increase. There are more problems for you to solve out there. Once you shift clients’ perspective to where they see you as a partner in their success, there’s a lot more potential here, but you don’t want to wait for things to fall in your lap.
- 48:14 This process works so well that things will fall in your lap, but you’re leaving money on the table. There’s so much money on the table. We played poker the other night, and we didn’t actually use money. We just used poker chips. I brought this up because I wanted you, Ben, to picture that round table. Can you describe the table, the size of it?
- 49:03 Ben: It was round, and it was big enough for four grown men to sit comfortably around and have plenty of space for their chips and salsa.
- 49:13 Sean: Would you say a five foot diameter?
- 49:16 Ben: Sure, yeah.
- 49:18 Sean: Decent size. Imagine so much money, cash of all kinds, piled up on this five foot diameter, dark, wooden table, that it’s falling over the edge of this round table. It’s falling over the edge into your lap. That’s how well this works, that stuff will fall into your lap. But look at how much you’re leaving on the table!
- 49:41 Ben: Most of it.
- 49:43 Sean: That’s what I mean by “take advantage of richer dialogue.” You have so much material here, from the value discovery process, going into this with the client and asking about how you can achieve their goals. By “richer dialogue,” I mean the kind of conversations you’re having when you go through this process vs. just performing tasks as instructed. You have so much more information about them, their company, their goals, what they want to accomplish, and how much things are worth to them.
- 50:32 Am I getting that point across? It’s hard to stay high level but give a sense of things.
- 50:41 Ben: The reason they got in touch with you is because they had a single problem in mind. Thinking about all of the problems at the same time is overwhelming, and they think, “I need to solve one problem at a time.” If you’re curating properly, hopefully you come across as the person to solve that problem, but that doesn’t mean that is the only kind of problem you solve.
- 51:06 Sean: Goodness, yeah. It’s like with Justin. He was able to solve one thing for me, but he has gone on to do untold number of different things in all different kinds of areas. We produced this course together, the Value-Based Pricing system. He build CommunityTalk. He’s done different plugins and media servers and stuff, random different things, where I would have thought, “I’ll need to go to someone else for that.” He was able to do that, but we built trust on one specific thing first.
If you take advantage of the information you get from richer dialogue, you should be going out of your way to solve more problems for the client.
Questions to Ask Your Clients
- 51:52 Sean: Cory and Ben, ask me questions you have about this value discovery process. What’s going through your mind? What’s not clear? What questions do you have?
- 52:02 Ben: My biggest question is, what questions should I ask?
- 52:07 Sean: Okay. Great. I love that. Rather than me ranting, I’ll personalize this. “What is it you’re trying to accomplish here?” Try that out.
- 52:19 Ben: What do you want to accomplish?
- 52:24 Sean: I don’t know if we can role play in this context, because we haven’t set it up with a project, but let’s focus on giving you questions you can run with. For instance, “What are you trying to accomplish here?” It’s all about going deeper, deeper, deeper. Let’s say they answer. You go, “So, is that the main goal here, or is there something bigger?” Try that. See where that goes. “What are we trying to get to? What kind of difference do you think this would have in your bottom line?”
- 53:02 They’re trying to accomplish something. “We’re trying to go from this to that. We want to change the home page. We want to build this app.” “How does that play into your overall strategy and who you’re trying to reach? How do you anticipate your audience will respond to this?” They reply. “What would that look like?”
- 53:22 Ben: “Why are you trying to get them to respond that way?”
- 53:24 Sean: Why? That is an excellent question. That’s your go-to question. We have all the questions inside Value-Based Pricing, but I can’t remember them all off the top of my head. The go-to question for your client should be, “Why?” Ask why and ask why again. You’re going to get more. Ask why again. And you’re going to get more.
- 54:02 You’re going to get so much that way. Do you have any questions, Cory?
Ask “why” until the answer stops changing.
How to Know When Value Discovery Is Over
- 54:10 Sean: Because I would like to make this show tailored to the listener, and not just me ranting. I want to check in, and you’re here.
- 54:22 Ben: Why do you want it tailored to the listener?
- 54:24 Sean: Because I want to read minds. I’ve been on both sides. I’ve been the professional, I’ve been the client. I can come up with questions. I can guess, but I want to read minds. The only way to read minds is to ask questions, to listen to people that are in that place, your target audience. What are the real questions and struggles they have? I can create great conversations that are entertaining and stimulating, but I want to read minds.
- 54:55 That’s how we’re going to create content that’s legendary. I sent a push notification that said, “You should be charging more, but instead, you’re guessing when it comes to pricing.” Alex came in and said, “Woah, I just got an email from a client, and I was guessing when it comes to pricing.” That’s reading minds! I don’t just say “guessing,” it’s because other people say “guessing.” The people we want to help say, “I’m just guessing.” So that’s the language I use. That’s the answer to your question.
- 56:08 This could go on forever. How do you know when it’s over? Value discovery ends when all of the following statements are true, and not just kind of true or mostly true, but 100% true:
- You have a clear and complete understanding of the client’s true goals.
- You have a clear and complete understanding of the value the client places on the project.
- You have all the content required for the project.
- You have zero doubts about the project.
- You have zero doubts about the client.
- You are confident you are not making any assumptions about the client or the project.
- You are confident the client is not making any assumptions about you or the project.
- You are ready to quote a price that’s going to be a fraction of the value you deliver, and will yield you a profit after covering your costs.
- 58:10 Within the value discovery process module alone, and I think there are six modules, there are 17 lessons on that. It’s very in-depth. Check it out. ValueBasedPricing.com. There’s a lot there, but I think I’ve given you plenty to chew on for today.
Clients Who Can’t Afford You
- 58:29 Sean: Sarah says, “Some people have great ambitions, but very little money. They can give you a fantastic brief, and you can have an amazing value discovery process, only to find out that they’re broke and can’t afford your services even though they would love to. How can you spot that early on?” You ask questions. You end the value discovery process whenever you want to. If you’re already like, “I’ve seen a red flag,” like we’ve talked about, disqualify. The point of a filter is to keep the bad out, not to qualify the bad and let it in.
- 59:02 When you see a red flag, you’re done. That’s it. You wrap up the process, you move on, you use the “how to pass on a client politely without burning a bridge” script that we provided in the last episode, which is another reason to look at the show notes. Wrap it up and pass on. You ask those questions in the value-discovery process.
- 59:31 If this is a problem you’re running into a lot, you might want to move up the questions that discover it to the front of the process.
- 59:41 Ben: I was just thinking, though. I’m talking about this really abstractly, but in the order things need to be discovered in order for the client to accurately represent the value that your service would bring them, it seems like that still has to be later in the process. It might just be one of those things. In my mind, I think, “That’s just the cost of doing business,” unless I recognize a red flag early on. If they show me no red flags, I feel like I’m not doing them justice by trying to push for that answer too soon.
- 01:00:26 Sean: You’re right, Ben. You’re keeping me honest. I’m shortcutting things for the sake of time on the podcast. If you go through the whole process, ask all of the questions, provide a proposal, and only then realizing that a client can’t afford this is indicative of a problem that happened earlier on.
- 01:00:52 I can’t tell you what that problem is, because it can be any one of a million problems. I can tell you how to audit it, and that’s what we teach. Included in that, because it’s so nuanced, there are lessons called things like Business Basics and Things to Look for in Your Client. It’s to the point where, if the client actually didn’t have the money to pay for these services, they would exhibit a number of these problems that fall under the business basics category.
- 01:01:20 You’re able to filter that out, in nine out of ten cases or more, very early in the process, before you waste a bunch of time.
Discovering Value for the Intangible
- 01:01:30 Sean: Alex says, “How would I go about discovering the value of commissioned artwork? Doesn’t seem as clean cut as the value prop of a website or logo. Is artwork really completely subjective? How would I measure the value of it to the potential client?” Real quick here. In all cases where you can draw a connection to financial gain for your client, Value-Based Pricing can work. We teach you how to do this. If you can answer yes to all of the following questions, Value-Based Pricing is for you:
- Do you do client work?
- Is your work customized for each individual client?
- Do your clients realize a financial gain, or avoid a financial loss, as a result of your work?
- 01:02:21 Value-Based Pricing works in a place where you’re providing tailored, customized services for a single client, and they are receiving financial gain or avoiding financial loss.
- 01:02:34 Ben: Is this direct financial gain?
- 01:02:36 Sean: Dollars.
- 01:02:41 Ben: You’ve told the story about your wedding photos. You’ve said that you would pay money to be able to have those photos. That’s more indirect. That’s probably not as much what you’re talking about with financial gain or financial loss.
- 01:03:06 Sean: That’s true, as a generalization. That general example is intangible, indirect value. Financial gain has a dollar amount. How much is this worth to you? It’s not like you ask that question directly, but you end up in that place. You end up in that result, boxing it in, until you get a dollar amount. You have to connect the dots to value. The value has to be quantifiable. It’s not a pinch or a dash, it’s half a cup. It’s got to have measurability. It has to have that dollar sign.
- 01:03:50 When it comes to intangible or classically intangible value examples, like wedding photos and artwork, all of these things that are really hard to pin down, this is important to understand. As a blanket, I would say, there has to be financial gain. People say, “Oh, well, that rules out all of these other things.” It may. But if you go through a value discovery process with me on the wedding photos and how much I would pay to get them back and I give you a dollar amount, that is quantifiable value.
- 01:04:27 I told you. For those that don’t know the story, we hired a girl who was in high school to shoot our wedding. She did the photos for our wedding. We were being cheap. It was someone we knew. She messed up. She formatted the card. We lost all of our wedding photos. Terrible.
- 01:04:48 Ben: It hurts me every time.
- 01:04:50 Sean: I’m not telling it the tear-jerking way. It’s still bad. It’s just tragic. I’ve told it in other places, so I’m not going to do the whole thing, but we don’t have our wedding photos. If you ask my wife how much we’d pay to get them back, it would probably be thousands. We didn’t pay thousands for a photographer in the beginning, but this is an example of avoiding loss.
- 01:05:29 What if Dropbox got destroyed, Backblaze got destroyed, my Time Machine hard drive crapped out, and my Mac was burned in a fire. I’ve got a lot of backups because I’ve learned the hard way. Let’s say they’re all gone. What would I pay to get all my data back? And my website and the backup for the website were destroyed. I don’t even know right now, Ben, because it’s such an emotional thing.
- 01:05:58 If you worked through a process, we could probably get to a value. It’s going to be a lot of money. That’s why these data services that take your hard drive that was smashed with a hammer and still get the data off of it—if that’s important data, the value is very high. Maybe you go through a process with me, and I say, “We would spend $3,000 to get our wedding photos back.” Maybe I won’t say $30,000. We’ve already lived without them for seven years, and I’m not going to pay $30,000 for that. But if I told you, “It’s worth $3,000 to me,” that’s a real value.
- 01:06:38 Ben: Rewind to before you got the wedding photographer, before the wedding took place. You decided, instead of going with a friend, to go with a professional, and this person did follow this Value-Based Pricing process before it existed somehow. That was the way they did it. They sat down with you. Would it be appropriate for them to tell a story about wedding photos being lost, or maybe not even that bad.
- 01:07:20 Maybe they just talk about really poorly framed, out of focus, blurry, didn’t capture the right moments photos. They’re okay, but this isn’t something you’re going to enjoy looking back on. How do you talk about that in a situation where there isn’t a direct, tangible financial loss or gain?
- 01:07:50 Sean: It has to be there. I can’t tell you where the buried treasure is. I can’t tell you if there is buried treasure underneath the sand. I can tell you exactly how to extract it, uncover it, and discover it. That’s what we’re talking about here. Maybe there is tangible treasure down there. Maybe there’s just a note that says, “You mean the world to me.” I don’t know, but I can’t hire my whole pirate crew to cross the ocean to come and dig up this note.
- 01:08:20 Did you ever see Muppet Treasure Island? They weren’t happy when there was no tangible treasure there. The value discovery process is discovery. That’s the important word. You are discovering, uncovering. You’re an archeologist. I picture someone with a paintbrush, getting the sand off of the fossil. In the past year, I’ve taken on your role of storyteller and analogy-maker.
- 01:09:10 Ben: That’s good. It’s a good skill to have.
- 01:09:13 Sean: I’m just kidding. You’re way better. You’re discovering, uncovering, but the value needs to be there. You’re not selling value in this value discovery process. “This should be worth this much to you! What if you didn’t get it? What would you pay to get it back?” You’re not selling. There’s tangible value there or there isn’t. You have to discover it.
- 01:09:44 Let’s get back to the answer to Alex. The thing is, you have to keep in mind that you don’t determine the value. In Value-Based Pricing, we teach you to ask the questions, listen to the client, and do the math. Many times, that financial gain is obvious. That makes things easy. Other times, it’s not so obvious, but in either case, the client is the one to tell you what that value is.
- 01:10:23 The best way to explain it would be in an analogy. It’s like a ship. Think of a physical anchor on a ship. You want to attach it to something sturdy on the floor of the ocean or the lake. It needs to be something sturdy. If you have intangible value, like, “It’s priceless! It means so much to me,” that’s like mist or seaweed at the bottom. You can’t anchor your ship to it. That’s what Value-Based Pricing is. It’s a price that is anchored to the value. Value-Based Pricing only works when the value is tangible. Hopefully that helps.
Value isn’t just adding to the bottom line, but maybe you could help me avoid the disaster of losing something I value.
There has to be a direct tangible financial gain for Value-Based Pricing to work.
If the client can’t or won’t provide a monetary value in answer to your questions, then Value-Based Pricing can’t work.
- 01:11:28 Sean: Sarah says, “From personal experience, what does your own value discovery process looks like? Do you ask everything all at once? Do you have a series of emails? How do you explain to your client how the process will go?” I just did a quick brain dump. This is off the top of my head, but hopefully it helps you. What would I do in what order? You’d want to set expectations for the call.
- 01:12:06 What call? You want to have a call with your client, if you can’t meet in person. Here’s how we bring in your question, Cory. Cory said, “Is it ideal to meet with your potential client in person in the onboarding stage? Does it just depend on whether or not the prospect is local?” It doesn’t matter. You can still make this happen. Get on a call live with them. Here’s the ideal order: in person, best. On a call with video, second best. On a call without video, third best. There’s no other option.
- 01:12:50 Set expectations for the call. Why are we getting on the call? How long is it going to be? What’s the purpose for the call? Set expectations. Have the call, ask the questions, and get to the bottom of things. That’s the whole episode we just talked about, so that’s big. Reiterate and confirm. “Here’s what I heard. This is what we talked about. Does that sound right?” You’re doing this at the end of the call.
- 01:13:20 You can’t communicate too much. We have so many lessons about communication inside the course. If you come up with any other questions you feel are important, that you think you should have asked, ask them. Eventually, you present the proposal. This is outside of the context or scope of this episode, but when it comes to presenting the proposal, the key word is “present.” It’s a verb, and action. Present the proposal, don’t drop it off at someone’s front door like a yellow pages that nobody wants. The main thing is, people don’t want yellow pages.
- 01:14:21 Cory: I like that. Present the price as if it’s very well thought out, and not just like, “Here it is, pay it.”
- 01:14:26 Sean: The proposal.
- 01:14:27 Cory: Right, the proposal. I also like setting the expectations for the call, so they’re not in the call going, “Where’s the price, where’s the price, where’s the price?” You should probably have said, “I’m not going to give the price in this call. That’s not what this call is for.” Set expectations. I still wonder, though. My first client, which I think we’ve talked a lot about, I met with them in person, and it was really good, but I didn’t know how to end it. I was like, “I think that’s all the questions I have. I think I’m good here.”
- 01:15:05 Sean: Set expectations.
- 01:15:09 Cory: I didn’t know how to end it. How do I wrap it up?
- 01:15:11 Sean: What happens next?
- 01:15:15 Cory: I told them, “I’ll send you an email with the price,” or something like that.
- 01:15:20 Sean: Is that what happens next? It sounds like you don’t know what happens next, which is why you’re having trouble concluding the call. If you knew what happened next, you could get them on board. They’re just as clueless. They don’t know what happens next, so you thank them for their time, say, “This was great. Looking forward to working together. The next step is this, and I’m going to follow up with that. You can expect to hear from me in the next timeframe, after which we will such-and-such.”
- 01:15:54 Ben: I’ve been thinking a lot about my process because of some recent issues. What I didn’t include in my process was actually presenting the proposal.
- 01:16:24 It also sets expectations for what exactly you’re going to be doing, what you’re not going to be doing. The problem I forgot to consider when I was rewriting my process was that the client, a few times, came to me and asked me, “Oh, were you going to do this? I couldn’t remember or not whether that was in the contract.” We hadn’t actually talked about it. The proposal and the contract are two different things.
- 01:17:03 Going through the proposal and then presenting the contract and going through that, those are all opportunities to add layers of clarity about what you’re going to be doing, what your role is, and what their role is.
- 01:17:15 Sean: Build trust. All that.
- 01:17:18 Ben: The second follow up, though. There’s the value discovery, and then you mentioned a follow up before the proposal. I like that, because you’re on the spot, having that conversation. The follow up gives you an opportunity to ask any questions you forgot to ask, or just get a little bit more clarity. Then, say, “Hey, I’m almost done with your proposal. Let’s go ahead and schedule a time when I can go over that with you.” It gives you an opportunity to set that in stone instead of saying, “You’ll be hearing from me within the next week.”
- 01:17:53 Sean: Something else we talk about in the course is, whenever you have calls, do these follow ups. Everything is in writing. There’s a written track record. There are so many benefits, but few people do this.
After the call with your client, follow up and reiterate and confirm again.
The presentation of the proposal is vital, because it gives you another opportunity to clarify your role and the client’s role.