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There are 3 ways you can price your service:
- Hourly Pricing
- Flat Rate Pricing
- Value-Based Pricing
I’ve talked about Value-Based Pricing on the seanwes podcast for over 7 years now, so it might surprise you to learn we’re not using Value-Based Pricing for the Daily Content Machine.
This comes down to the difference between providing custom work vs. a productized service.
A productized service is not customized for each client. This means the price is fixed—like a product.
When does it make sense to offer a productized service instead of a custom-tailored service? You’ll get the answer.
Once you decide on the type of service you want to provide, and your pricing model, then you have to come up with the actual price. You also have to decide whether or not you want to have different packages—and what prices those should have.
We’re covering all of that in today’s episode.
- Book: Overlap
- Podcast: 359: Make Some Extra Money by Doing Client Work
- Podcast: 497: Build a Profitable Agency – Part 2: Finding New Clients
Note: This transcript of the episode was machine-generated and has not been edited for correctness. It’s provided for your convenience when searching. Please excuse any errors.
Sean: [00:00:00] What is the easiest way to sell an $800? Watch the answer next to an $8,000 watch that’s price anchoring.
Dan: [00:00:29] Good morning, Sean,
Sean: [00:00:31] How are you today?
Dan: [00:00:34] doing very well. How are you doing today?
Sean: [00:00:36] I’m good feeling, feeling energized, excited to get back into this series on building a profitable agency. We’re on part three today, pricing your service. Last last week, we talked about finding clients. And before that, what did we talk about? Oh, it was a flagship service. So we’ve been alluding to this part for a while now.
Pricing and packaging. so I’m excited to get into this.
Dan: [00:01:01] We’re going to pull back the curtain a little bit,
Sean: [00:01:03] Yeah. Anything,
Dan: [00:01:04] bit more than we have been.
Sean: [00:01:05] any, I guess if anyone, for some reason just jumped to this part, it’s a, it’s a five part series. So you you’d be, you’d be well served to go back and listen to part one and two. Those were really good. but what we’re talking about today is specifically the way you want to price your service.
Like what should the price be? How should you price it? What pricing model should you use? And then all of the like psychology that goes into price, anchoring and packaging. So the first thing I want to talk about is productized services versus value based pricing. Now I’ve been talking about value based pricing for over seven years now on the Sean West podcast.
And we have a course on it, value based pricing.com. The course on value based pricing, everything you need to know. It’s it’s excellent. 72 lessons, you got pricing calculators. Very, very good value based pricing.com been talking about it seven years. So of course, when it comes to the daily content machine and Sean was media providing our own flagship service, of course we’d use value based pricing, right?
Dan: [00:02:17] Obviously it’s the best way to make money. Isn’t it.
Sean: [00:02:19] Well, it’s, it’s a pretty good way to make money. It’s not the only way to make money. Value based pricing is good for custom services. It needs to be custom tailored for each client now. Okay. Let’s put it this way. When should you do productized services versus custom services, custom services you should do when you like doing the work yourself.
When you want to work with a few clients and when you want to maximize revenue without scaling. So we’ve talked previously about how, Hey, if you’re gonna, if you’re going to scale this thing that, that involves hiring other people to do the work, and you’re not necessarily going to be doing the work that you love so much.
So you might need to fall in love with the business of this thing, as opposed to. Working inside of it and doing the thing. Now, if you don’t like that idea, you’re like, I don’t want to hire someone else to do the work. I love doing the work. I want to do the work myself. Then you probably want to do custom services as opposed to productized because custom services work well.
When you like doing the work yourself productized services. Work. Well, when you want someone else to do the work for you, or when you want to work with a lot of clients or when you want to maximize revenue by scaling. So productize means your service is packaged like a product. When you go into an Apple store to buy an iPhone, they don’t ask you what you’re going to use it for and how much it’s going to be worth to you.
And you know, how much money do you make per year? And do you run a business? It’s just a product. Anyone can buy an iPhone, no matter how much money you have, no matter what you do with it. That’s a product. Similarly, a productized service just is what it is now. It’s not going to be custom tailored to each client.
It’s like, here’s what you get. And that’s why it’s typically a lower price when something is just packaged. It’s not custom. You charge less for it. So that’s kind of when to do custom services versus productized services, but then there’s ways to price. So let’s say you chose custom services. I like doing the work.
I want to work with a few clients. I want to maximize revenue by scaling. Well, there’s three ways you can price. And only one of them I recommend. So the first two, I do not recommend the first way you can price your custom service is hourly pricing. Then the second way is flat rate pricing. The third way is value based pricing.
The problem with hourly is it incentivizes you to take longer, to make more money. The problem with flat rate pricing for custom services, is it incentivizes you to take shortcuts, you know, basically take less time, do whatever it takes to collapse the amount of time to make more money. I don’t recommend either hourly or flat rate pricing for customer services.
I do recommend value based pricing for custom services because value based pricing is where your sedatives and the client’s incentives are aligned mind. You both have the same goal. The client’s goal as always is to be more successful with value based pricing. Your goal is also to help the client succeed because when they do well, when you help them do well, you do well because you’re pricing based on the value they get.
So that’s custom services. When it comes to productized services, how should you price? Well, it’s pretty obvious it’s a product. So it’s going to have a flat rate. It’s not going to be an hourly thing. It’s not going to be a value priced thing. It’s just a flat rate. But as we’re going to talk about in a little bit, you can package that up and position that differently.
So there’s different options. Even if you have just one single service. So Dan, tell me if that made sense, tell me if that’s confusing or we need clarity on anything.
Dan: [00:06:18] There’s a lot of different options, but I think, I think once you’ve separated, should you do custom services or should you do productized? The pricing thing becomes simple with productized. You want to start with a flat rate, right? And then we’ll get into the nuances of, of packaging. I mean, I know value based pricing is a complex topic.
It’s why we have an entire masterclass on it. And, so I don’t know how much more we want to go into that here, unless people, you know, want to ask a specific question about it in the community chat. Of course.
Sean: [00:06:50] Okay then I guess we’ll continue. So I want to talk about price anchoring. What is price anchoring? Well, no number is large or small. All numbers are relative. Okay. So like a hundred. That’s not a big number or a small number. It’s just a number, but it’s only bigger, small relative to another number. So the way price anchoring works is the first number you see is the anchor.
Any other number you see after that is relative it’s taken as relative to the anchor. So is 10 a big number or a small number? Well, now we’re thinking in the direction of that 10 is a small number because I just said a hundred, so it’s a hundred versus 10, but if I said a billion, well, a hundred, isn’t a lot compared to a billion.
So that that’s, that’s how anchoring works. A good illustration of this is what is the easiest way to sell an $800. Watch the answer next to an $8,000 watch. That’s price anchoring. The number someone sees first is the anchor you want to anchor the price. How do you anchor the price? Well, first of all, you need to control what the prospect sees before they see the price.
If you lead with your price, that’s the anchor. Okay. So if it’s just like, bam, here’s the price they’re going to think of? Well, that’s a lot. You know, because that’s the anchor, it’s not relative to anything. So you want to control the order in which the prospect sees certain numbers. So you want to anchor your price by putting a bigger number in front of them first, what should that number be?
Well, it could be, here’s the cost of not doing this. It could be here’s the cost of doing this in some other way, or with some other person or company, it could be a. It could be really, really anything. As long as it’s relevant, the number you put in front of them can be almost anything. As long as you find a way to make it relevant.
It can’t be like here’s how much an elephant costs, unless your service has something to do with elephants. so just get a number in front of them before they see the price and try to make it relevant. So I’m going to show you, Let me see if I can land that plane for the clip, just get a number in front of them before they see the price and try and make it relevant. So I want to show you how I price anchor the daily content machine. I do two levels of price anchoring. I believe we might have divulged the price that we charge in one of the earlier episodes. and probably to a lot of you that came across as large because I didn’t price anchor it. but I’m going to do a better job here of showing you how I price anchor the service, because I don’t want my potential customers to see the price as large.
I want them to think of this as a, as a good deal, as a good value relative to whatever, but they’re getting out of it. Right? So anchor level one, this is the price anchor level one. I’m actually going to do two levels of price anchoring for daily content machine price, anchor level one is. To do all of this.
And I should probably preface this by reminding you what our service is. So at Shawn West media, we have a single, we have a single flagship product is called daily content machine. What we do is we turn your weekly show into daily clips. So you record once a week. We turned that into daily clips for the top five platforms, every single, then you have a video of going out on five platforms, it’s over a hundred videos per month.
We do that for you. All you have to do is show up once a week and record just like I’m doing here. Once a week, I record the Shawn West podcast and then it gets turned in, turned into clips every single day. So that’s what we do for our clients. Now, what would a client have to do in order to create this for themselves?
Like I mentioned earlier, one of the things you can, you can show is here’s the cost of not doing this. Right, but you could also say here’s the cost of doing this some other way. So for instance, I probably would not for the daily content machine, try to go the route of here’s the cost of not doing this.
I could, it’s just a little bit less effective. Cause like it’s hard to quantify. What is the cost of not putting daily content out? Well, what is the cost of not being known? What is the cost of being irrelevant? What’s the cost of not existing or being on people’s radar? What’s the cost of them not knowing you exist, being unable to recommend you.
Right? Cause it’s not just about like when I put these clips out and I also have a little call to action at the end that says, Hey, we can make these clips for you. Schedule a consultation, daily content, machine.co. It’s not just about transacting with my audience. I’m not just trying to get them to become my clients.
I’m also trying to arm them with the ability to become my brand ambassadors. So when they know what I’m about, because I put out daily content, I stay top of mind so that when they meet or talk to someone else who is looking for a way to make daily content, a way to turn their long form recordings into short clips, they just go, you should see what Sean’s doing.
You should see what Sean’s doing. You should see what Sean’s doing. So I see this happening on Twitter. I’ll get mentioned in notifications of people, replying to other people’s tweets. Where that person says, I just need, I have all of this long form content webinars, these podcasts, you know, and I’m recording all this video.
It’s like an hour long, but I need a way to make clips out of this so I can post it on social media and they say, you should check out what Sean’s doing. And then they tag me. That’s really powerful. So what is the cost of not staying top of mind? Well, it’s, it’s, it’s. Not getting any of the business, not getting all of the business, but that’s hard to quantify.
Right. So that’s why I don’t think I would go that route. I’d more lean on the route of, you know, what, let’s just eat narrow this down even further. Let’s assume this person understands fundamentally the cost of being unknown, the cost of not being out there. Well then what, what might they do? Well, they might start to investigate.
Like, what would it take? To put out daily content like Sean or Gary V or whatever. These other people who are just cranking out the clips, what would it take? And so they start looking around at what well, other services, or maybe hiring someone to work for them full time. Right. So that’s what I’m going to price anchor against.
I’m going to price anchor against the cost of doing this some other way. So let’s take the full time employee route. What would it take to make. Daily clips for five social media platforms from long form content. And here’s the, here’s the key differentiator with our service. We’re not just making the clips that you tell us to make.
You don’t have to fill out forms and say, here, make a clip here in, in timestamp, out timestamp. Here’s the title. You don’t have to fill out forms for every single clip. We do all that for you. You just press record and then you press stop and you’re done. We transcribe it. We find the clippable moments. We remove the tangents and the filler words in the silence.
And you’re just left with the takeaways who else is doing this? You’re not going to find another service doing this. So you’d have to have your own full time employee. Well, what does that full time employee need to be able to do? They need to be able to a transcribe the content B find the clippable moments, meaning find the moments where you say something really good that could work as a takeaway, as a clip.
Just no other context, right. Just works on its own. See, they need to edit out all of the tangents, filler words and silence. D they need to write Epic titles, compelling titles, like I’ve mentioned to you before we write 10 titles for every clip internally, just to find the best one. So this person you’re hiring full time.
They need to be really good at writing titles or, you know, have some experience with copywriting E they need to understand social media. What is working right now on social media? How should the clip be structured? Should have a hook to engage people in the first few seconds. Hint. Yes. What, what are the right aspect ratios?
What are the maximum length? You know, what, what is working right now? So they need to be knowledgeable about what is working in social media. This person we’re describing at this point is like a super knowledgeable rock star, video copywriting, extraordinary. They’re like, this is a very valuable person.
What, what might you be able to pay this person and have them do all of that for you every single week to make 150 video clips per month? I mean conservatively someone with that much skills, maybe five to $7,000, possibly more depending on where they live in the world. Okay. So I’ve done this a very long way to kind of walk you through, like how I think about this, how I agitate the pain with the prospect, but all of that is to say, you see how I’ve really accurately priced, anchored the service.
So right now you’re going, yeah, that makes a lot of sense either. I go with another service. Who makes me fill out forms for every clip I want. And I have to find timestamps and all this junk. And also they won’t edit my filler words. They won’t edit the silence. They won’t write the titles. They won’t find the clippable moments.
They won’t write the descriptions. Right. So you’re like, forget it. I don’t want to go with another service that basically makes me pay them to have another full time job. So I’m going to need an employee. Well, now you’re telling me this employee and I’m following, I’m tracking with everything you’re saying this is going to cost me $7,000 a month.
So you’re, you’re basically, you’re, you’re tracking with me on what it would take to do this without the daily content machine. And then I come in and here’s anchor price, anchor level two. So what you want to take away from this on a meta level is you don’t, you are not limited to only one level of price anchoring.
You can have multiple levels of price anchoring. So my second level of price green gets into packages, but Dan we’ve, we’ve got some lawnmowers outside, so I want to take a break so I can take a drink of water and we can let the lawnmowers go. Tell me what you’re, what you’re thinking. If you have questions, if you’re seeing questions.
Dan: [00:17:19] There’s a couple of questions. I think people still have about value based pricing. So maybe we come back to those towards the end of the show. But the thing that jumped out at me is it goes back to our previous episode. So go check out the episode right before this one about finding the right client, because notice that Sean completely jumped right over clients, who we would have to convince.
That they need daily content, right? So the, the whole way that we can position and package our service, the way that that you’re describing is by only going after the clients that are already sold on daily content, because otherwise there’s nothing to position. Again, we have to be able to go to people where we can say, so have you considered what it is it’s actually going to take to get daily content?
If those people were going. Why would I want daily content? Well, now the whole, all of the price anchoring, you just did falls apart because they’re like, I’m not going to hire a video
Sean: [00:18:14] This is, this is a great point. Like I definitely fell into this trap and I know a lot of people do. It’s like, but what about all the people who aren’t convinced, you know, I want to convince them and it’s just an, it’s an uphill
Dan: [00:18:26] must be my customer.
Sean: [00:18:28] It’s it’s so it’s so hard. You’re playing on hard mode, like playing on easy mode.
I’m not saying you shouldn’t also try to that’s top of funnel stuff we’re talking about here. Like making people aware that they even have a problem. Right. Before we, before we agitate the pain and present the solution, you know, we’re moving down the funnel. Right. What I had done wrong before is I built the funnel top to bottom.
You want to build the funnel bottom up, start closest to the money and work backwards. Start closest to the money and work backwards. What happens right before you get money? Well, you close the deal. Okay. You close the deal with, with whom with, with the person who is seriously considering you and is almost convinced, has a few questions.
Okay. Well, where does that person come from? Well, either, either they’re very aware they’re there. what’s the word like there. Problem aware. Right. They’re very problem aware. and so, so to the point where you’ve either defined the problem better than anyone else such that they’re like, I want to go with you, or it could be a combination of these things, or they they’ve say been in your audience, been consuming your content for a considerable amount of time, and they’re already warm leads.
They’re like they, they can basically make this leap where even if you don’t have the perfect. Buyer’s journey, the perfect sales funnel built out. And there’s all of these gaps that trust built over time, over years through consistency in content, output, bridges, the gaps. So in other words, these people could come from your existing audience.
They already know like, and trust you. So let’s just start with those people. They can give you, they want to give you money. They don’t even need to be convinced. It’s not like, Oh, I’ll show you examples of my work. And I promise I can do well. And here’s some tests they don’t need that. They don’t need that stuff.
You’re over-complicating it. They don’t need the fancy landing page. We still don’t even have a website. You go to Sean West media.com. It redirects to a form. You go to daily content, machine.co it redirects to a form. Not saying we don’t want a website. Eventually we do, but we don’t need one to start. You don’t need one to start like Dan saying.
Don’t start by trying to convince people that they want this service, or you’re going to have bad time. Start with people who already want it already trust. You already know they have a problem and just have a few questions. Close the deal, get money in the bank and start doing the work. I like that. Dan that’s that’s that’s a really good point.
Dan: [00:21:14] That was a, that was an excellent
Sean: [00:21:16] other insights do you have?
Dan: [00:21:19] I was, it just reminded me that I was talking to a friend about this. So maybe this will help it become concrete for people. I know someone who is posting their stuff on Instagram and they eventually want to use that as a funnel to. Get people into like a, like a Patrion or something like that, where they’re getting paid.
And they were upset that they, they didn’t seem to be getting the traction on Instagram that they wanted. And, you know, it takes a long time to get traction that aside. But I made that exact same point with them. I was like focused on getting like one person to become your page. Like focus on taking just one yeah.
Person through the funnel you have. Cause then, you know, it works like the worst thing they could do right now is find some way to get a hundred times as many Instagram followers. Cause they don’t even know if they can make a sale.
Sean: [00:22:03] it, can I, can I push a little on one point there? I would, I would tweak it to say, instead of saying, take one person all the way through the funnel and make sure it works. I would say if it’s a five step funnel, it takes someone who’s already on step four to step five.
Dan: [00:22:23] Like just to complete a transaction. In other words,
Sean: [00:22:25] Yes, exactly. And then, then build step three, then build step two, then build step one, which for us would be top of funnel content. Like let’s get. You know, a website and let’s start putting out content. Like, one of the things I want to do is like, I want to create like really good pillar pieces of content on just like why you should film your podcast.
You know, I’ve been tweeting about this. Like if you’re not filming your podcast, you’re making a huge mistake. Cause it’s just, it’s, there’s so much there you can do with that. This is a clip. We’ll make this clip. If you’re not filming your podcast, you’re making. A huge mistake. All of that content can be repurposed into anything else.
Clips for days on all of the social media platforms, it can be transcribed. You can turn that writing into guides, into email autoresponders into course outlines into speeches, into books, into blog posts. It can turn into everything, you know, film your podcast and you get all the versions, all the formats, right?
Yeah. We’ve got video. You can strip out the audio, you can transcribe it into writing that one thing turns into everything else, but you can’t. Yeah. Go back and recreate, reproduce video for podcasts that you didn’t film video. So just film yourself, film yourself. Now, even if you’re a guest on someone else’s podcast and they don’t do a video podcast, they just do an audio podcast.
Fine. Get your phone, set it up and just film yourself, just start filming yourself. Then you have it for yourself and you can turn it into clips, but you can’t, you can’t go back. The point of a podcast is not the podcast. The point of a podcast is the video you create when you film yourself and everything else you can do with that.
So Dan that right there, I’m just like doing this live right. That right. There is a piece of content. That’s like a pillar piece of top of funnel content. So imagine we have a website, you know, daily content, machine.co you know, whatever. Right. They go there and there’s content on here. So that other people can share this stuff.
And it’s like, you know, they, they come across someone who’s just doing audio and it’s like, Oh, you know, I saw this really good article, this really good video about why you should film your podcast and then they can send it to them. And then this person who’s never even thinking about doing anything else with their otherwise audio only podcast will go, Hmm.
You know what? I should fill my podcast. And then Dan, that person is a step closer to hiring Sean with media, but we don’t start there. Starting, there is hard mode. There’s already people like right here at step four who are just like, will you, will you take my money? I just have a question about like converting the currency and you’re like, get out of the way.
I need to find people to convince.
Dan: [00:25:24] Yeah, take the, the, the low hanging fruit, right? Like just pet, just pick it. It’s right there. Don’t, don’t worry about building a ladder so you can climb the tree, just the fruits right there. Just reach up and grab it. That’s my analogy for the show.
Sean: [00:25:39] Okay, low hanging fruit. So price, anchor level two, we talked about price anchor level one, which is in my example, talking about what it would take to do this some other way, right? You’d have to pay an employee $7,000 a month. They’d have to be a rockstar. And just constantly up to date on what’s working on social media, or you can hire us, right?
But now we’re going to get into this next level where I don’t just say so here’s the price and see it’s lower than what I just told you. No, let’s do even more. The more layers of price anchoring you do, the more convinced someone’s going to beat. You want to get to this no brainer result. Your productized service should be a no brainer result.
We can come back Dan and like the Q and a and stuff towards the end of the episode, and talk more about value based pricing for someone who, you know, wants to do the custom thing. They don’t want to scale. They do want to do the work themselves. and you know, they want to charge more per client and all of that.
but the, the focus of the series is taking you behind the scenes of building a profitable agency, which is where you are scaling. And you’re not necessarily wanting to do the work yourself, which in our case means we’re going to go the productized service routes. That’s going to be the main focus. but, but like I said before, if you want someone else to do the work for you, you want to get paid automatically while someone else does the work.
And you want to scale this and work with more clients, the more the merrier, because we have profit margin, right? And you want to turn this into an agency. Productized service makes that very easy because you can create a machine. You create all these pieces that work together. And when there’s very few, very variables, you know, it can just be humming along with, with a little bit of maintenance.
So in our case, we are doing a productized service. Which means we have a flat rate, as we talked about, right. Only custom services can do value based pricing. but just because we have a flat rate doesn’t mean we can’t have packages. So we talked a little bit about in the first part of this series, how I came to the price point.
So rather than tell you that right now, in case you forgot, I’m going to walk you through what the client experience is. The first thing I show the client. Is our main package. And here’s what I show them. I say our main package is 3,299 a month. I’d probably say 32 99, you know? cause you know, if you’re thinking at that level, just like 32 99, like yeah, of course we’re talking thousands, right?
So 32 99 gets you what it gets you daily video clips for the top five platforms, seven days a week, not five days a week. Because Dan it’s gotta be any time the sun comes up and I think it comes up on the weekend. So every day that ends in the letter. Why new clips, seven days a week, we’re providing that for you.
Now, something else I do is there’s, there’s a commitment, right? So we have a commitment level where they sign a contract for a certain number of months, but this commitment is not required when you’re on the main package for 32 99. What I then show them next is the loyalty rate. Now our loyalty rate is 24 99.
So that’s $2,499 a month, 24 99. This is actually the package we want people to go with. So we, we, we started here actually. So I talked about this in part one, we think about the who, right? The, the person that we’re going after, who is this? Why do they want this service? What value does it provide to them?
And in our case, we’re going after six figure seven figure business owners. And what I know from both being one and talking to them is there’s kind of a sweet spot, like around $2,000 a month. so I won’t go into that again cause it’s in part one, but that, so I’m working backwards from that. Right. I want to get to 24 99.
That’s a pretty good spot. But to get people to do the 24 99, we need to create another package that is higher. That price anchors our package. It makes our package look lower. We don’t want to just show 24 99 because 24 99 compared to spending no money is a lot of money. We need to think about 24 99 in the context of not spending 32 99.
That’s the point of the package. You know, most of the clients that they’re not going to go with that monthly package. Cause they’re like, I understand content marketing takes time. I’m not going to see results overnight. I need to stick with this and be consistent. So I’m going to do this more than a month anyway.
So of course, I’d go with the 24 99. Now you see what happens here? Is it changes from, do I want to hire Sean with media? Which is a yes or no question. I don’t like one of those options, one of those answers, it goes from that to which package do I want? I’ll take either. I’m happy with either answer answered.
They give me right. But we’re, we’re engineering the question the right way so that it results in two answers that are both favorable to us. I don’t want the version of the question that is yes or no, because then I engineer the no result and I don’t get, I don’t get the business. Right. So. We want them to go well, yeah, I’m not, I’m not crazy.
I’m not dumb. I’m going to do the 24 99 package. That’s the decision they’re making instead of do I want to hire them? I think not that’s what’s happening when you only have one package. So this is our second level of price. Anchoring 32 99 is the main rate, but you really want the loyalty rate of 24 99.
How do you get that? Well, there’s a six month commitment. So, if you do this for six months, you commit for six months, you get the loyalty rate. It’s a, it’s actually going to get a little bit sweeter here. Cause it sounds like there’s two packages. There’s going to be a third package that I’m going to tell you about in a minute.
So right now we have two packages. I want the one with the six month commitment, but I make it even, I create even more of a push with this next piece. What you’ll see also on these two packages is one of them, the main package for 32 99. It has a $999 sign up fee. So you want to do one month. Okay. It’s 32 99, but you also have to pay us $999 the first month.
Now, why would we do this? Well, of course, I explained it to them when I present it. And the reason is what we’re doing is we are creating a custom template for your brand, which includes. A custom professionally animated outro with a call to action. Like, what do you want them to do? You want them to schedule a console?
You want them to download your guide or your lead magnet or buy your book or whatever. We’re professionally animating that it looks super polished. I mean, you should see all the key frames and stuff that we’re doing. Like we’re working really hard on it. Now it, and I tell them this. I say you, obviously, you understand it makes less sense for us to do all of that upfront custom design work for free.
If we’re not going to work together long term, if we’re just going to work together one month. So that’s why if you go with the loyalty package, that’s the 24 99 with the six month commitment, we waive the sign up fee. Meaning we give you all of that. Some design work, the professional animation for free.
It is included in the package. So you see them sweetening the deal it’s like, of course I would go with this option. Right. So of course, every, every client does now. I mentioned there was a third package and, and so far this isn’t something that I show on the same page. It’s been something that I kind of present separately.
I usually get on a call. Right. So I’m on a realtime call, a consultation call. They’re considering this. And so I’m able to share slides. So actually have some slides that kind of visually show this it’s like animated. It looks really cool, but it’s like, okay, look, here’s the six months. And it’s like, you know, you see like all the six months come out and it’s like, month, one month, two month three.
And it shows 24 99, 24 99, 24 99. And I say, here’s the thing. Six month commitment. That doesn’t mean you have to pay all six months upfront. It’s still build only 24 99. By the way side note, like copywriting psychology note. I say that sentence, just so the phrase only 24 99 echoes in their mind. That’s the only reason I engineered that sentence.
So I, so I say, I’ll say it again. Pay attention to the sentence now, just because there’s a six month commitment doesn’t mean you have to pay all six months upfront. It’s still billed only 24 99 a month. Just a little subtle psychology thing. but however I say, if you would like to pay for all six months upfront, here’s what we’re going to do for you.
I switched to the next slide. It animates. It shows the little brackets around only five of the months. And then the six month turns a green instead of 24 99. It says free. And then a new message comes up. That’s like, we’re going to give you $2,499 off. So we’ve effectively created a third package here, which you can copy, feel free to steal this.
We’ve got the monthly rate, the standard rate with a signup fee, the tire. We’ve got the loyalty rate. That’s the lower rate with the wave sign up fee locked in for six months. And then we have, by the way, if you want to pay upfront, we’ll give you another. 2,499 off effectively give them one month free. If they pay for five months upfront.
Now that lowers our effective profit margin over the course of half a year, but it’s a, it’s a, it’s a trade off. Right. And you can always, you can disable this third package whenever you want, but at any time where you would value, front-loading that cashflow and that would, that would help you not just front loading, but locking it in right.
Cause here’s what I’ll just, I’ll just tell you with our early clients. When we first started this service, we only had a three month commitment and we had clients that did three months and left and they actually, to this day, I was actually talking to them earlier today and they referred to it as a trial.
It was never supposed to be a trial. That’s our fault because we had only a three month commitment. They actually got in their mind that this was a trial. Cause that’s, that’s how short they perceived three months to be. I was like, this is a huge mistake. This should be a six month commitment for them to get that loyalty rate.
It should be a six month commitment. And so I changed the terms and every client, after that didn’t blink, they were like, yeah, of course I want the six month. So, so be, be willing to adapt and pay attention to how people respond, how they think about it, what they call it. We certainly don’t want it to be a trial.
So that was, that was this, this client’s mentality going in. And it resulted in them churning because they were just like, I’m just trying this out. Right. So that was, that was something that we learned from, and we changed it to a six month and it’s, it’s a lot better now.
Dan: [00:36:59] I want to make sure I want to make sure people really get the paid upfront thing, because let’s think this through for a second. What this means is people are thinking in terms of the number they see, right, 24 99 a month, while they think 24 99, they’re not thinking well, that means that over 12 months, it’s this, but when you say pay up front and we’ll give you a month off.
Notice that Sean never said here’s how much that costs. Well, I’ll do the math. Can I do a math Sean, like right on the show, but I’ll do the math for you. Let’s see if I can do it in my head. It’s $12,495. But if you had a website that said 32 99, right. Which is the anchor, we don’t, we, well, if people want to pay that fine, but really we’re anchoring them to pay 24 99.
And then in addition, there was another thing that said 12 four 95. No, one’s going to click on that one. Right. That that’s the perfect example of just like, Oh, well now I’m not even thinking about
Sean: [00:37:58] Oh, are you saying if we were to position the third, like quote unquote package as give us 12,400,
Dan: [00:38:05] Yes, exactly.
Sean: [00:38:07] We don’t
Dan: [00:38:07] It wouldn’t work. It wouldn’t work at all. In fact, it would positively anchor the 32 99 packages we don’t want to do so instead, instead, the paid upfront option is only positioned is only even mentioned. Once the client, once the customer has like expressed an interest in, Oh yeah. Okay. 24 99 a month, six month commitment I’m in.
And only then do we say, by the way, would you like 24 99 off of your six month commitment and then, and we’ve, and we’ve had a pretty good, pretty darn good uptake on that. We would not have gotten any uptake on that. If we’d tried to sell people at $12,495 packet.
Sean: [00:38:47] It’s an excellent point. I’m glad, I’m glad you pointed that out. So this is just an option for you, right? Like you don’t, you don’t have to, you don’t have to do this extra package, right. Because, for us, you know, we haven’t even, what are the next two parts of this series? Dan? What are the titles? Part
Dan: [00:39:07] believe we are. It’s what we’ve got automation, which is how to make money while you sleep. And then we’re talking about hiring the right people. So it’s all about the scaling side of
Sean: [00:39:16] ma would you make a note in hiring to talk, unless you think we should do it now to talk about profit margin? Maybe we should do it now. It’s the pricing, you know?
Dan: [00:39:29] Yeah. Put all the, put all the numbers right next to each
Sean: [00:39:32] Yeah. True. Okay. I did say at the start of the series, we, we had a long conversation trying to decide, like, do we disclose real numbers in Giovanni?
And the chest says now, please. so I will tell you, I started, I started with the decision to create a 50% profit margin, and I decided to work backwards from that. So the only, the only. Constraint on that was that, you know, like I, we, we decided it’s, it should be 24 99, right. So it was like, that’s the sweet spot we want to hit.
And I really, I really wanted the, I really wanted the price to work. So I was hoping that the margin didn’t make it impossible. Right. Because if I wanted a 50% margin, but if we couldn’t get our costs below half of 2,500, which is 1250, Then it wouldn’t work, which, which would either mean, well, it’s, you know, we’re not jumping to, Oh, the model isn’t viable.
It would mean we’d have to charge more, which kind of makes sense. and in fact, you just, two days ago, you know, I had a prospect asked me, you know, about the price and stuff, and we ended up talking about it. And, and he was super relieved. He was like, Oh, okay. Yeah, I’m sold just like immediately he’s like done deal.
He was like, I thought you might’ve said, it, it would be like around 8,000 a month and he’s like, which, you know, don’t get me wrong. It would, the value is there, like it would be worth it. Right. but he said, I, I probably will regret telling you this in the future. but like, that’s see, that’s what I know about the right prospect.
The value to them is huge. You know, if he’s thinking it’s going to be 8,000, realize people don’t spend $8,000 on something that they think is worth $8,000. Dan’s not going to buy an Apple watch because he thinks it’s worth the, I don’t know, four, five 99 or whatever it is that he’s paying for it. He thinks it’s worth more otherwise.
Why waste the time of like going through the checkout? Like, cause it’s, time’s valuable then it’s actually. It’s a net negative. If he thinks it’s worth exactly what he’s paying for exactly what he’s paying, he thinks it’s worth more. So if the prospect is willing to pay 8,000, it’s not worth 8,000 to them, it is worth more than 8,000 or they wouldn’t go through the trouble of transacting.
So the point is that values there. I could increase the price more. Obviously the headroom is there. But I want this to be like no brainer level. I want it to be extremely compelling. I want it to occupy a spot on their, their list of expenses, their line items. That’s like, I, of course, I’m not going to cancel that, you know, and there’s sweet spots for everything.
Your sweet spot personally, as a consumer, you know, might be in the like $9 a month range, $12 a month range, you know, you’re. Your Spotify or Apple music, your Netflix, you know, whatever. Right. They try also to occupy a no brainer level. Now, for some of those services, if they charged $20 or $30, you might still do it because it’s worth it to you.
But every time you see it on your statement, you’d be, you kind of reconsider it. Like every time it’s like a question, Mark, do I want to keep doing this? Do I want to keep doing this? They don’t want to occupy that spot. They want to, they want to fly under the radar. Where it’s like, every time you see it, you’re like totally worth it.
Like that’s such a crazy deal. Yeah. And you just never interrogate it. You never think about it. Uh that’s. That’s what we want here. So yeah. Profit margin. If 50% didn’t work at the price point of $2,500, I’d have to go up, but I really didn’t want to, I want to fly under the radar, even if I could make more money in theory, because I want to make up for this at scale.
I don’t, you know, back to like custom work versus productized services. I don’t just want like a handful of clients. I want like dozens of clients, maybe hundreds of clients. Right? So like, if I have that many, then the, the amount we’re making at a 50% profit margin is fantastic. And I don’t even care if we could charge 3000 or we could charge 4,000 or we could charge 5,000 because.
Like I’d rather be the no brainer option and just dominate. So like one, your turn would be lower. Now you might be thinking, well, Sean, who cares if your churn is higher at 49, 99 a month, you’d make more, even if more people churn, that’s true, but we wouldn’t be the obvious option. We wouldn’t be the obvious option.
Dan’s making a face here. What, what are you thinking there? When I said
Dan: [00:44:24] the thing, people, the thing people leave out when they talk like that is they’re missing out on the concept of customer acquisition cost, which is that it’s not, it’s not free to go get a new customer like having, if I had an existing client pays 24 99 a month, our profit on that is higher than if we have to go get a new client to pay us 24 99 next month.
Does that make sense? I’m saying that’s why you don’t want churn. You, you might actually be better off like making, having a bit less top end revenue, but keeping your clients around for longer than if you were charging more money.
Sean: [00:45:02] That that makes sense. Oh, I guess what I was trying to point out is like, there is a threshold or a, or a Delta where you charge more money and have higher churn, but have greater monthly recurring and greater lifetime value. Obviously at some point you don’t, but you could have fewer clients, paying more, and even turning slightly higher, and make more in the long run.
And, and so my point is like, I understand that, but then I couldn’t dominate. Like, I want to dominate. I want to have hundreds of clients and I want this to be the only obvious option and every other competitor to be wondering how the heck are they charging that little? That’s what I’m trying to do. I’m playing the long game here.
how do we get on this?
Dan: [00:46:02] How you wanted to figure out how can we offer this service at that price without having to charge more,
Sean: [00:46:07] so profit margin. This is where it was like, Oh, do we really want to talk about the standard? We really want to disclose, you know, and we thought about all the downsides and stuff, but like the reason we’re doing the service, no, let’s put it this way. The reason we’re doing this podcast is I want to help you.
I don’t know if you notice, I don’t, I don’t do sponsors or ads like. This actually costs us thousands of dollars to produce, like in, in time, like my time Dan’s time, our team’s time to produce this episode to host this episode, to spend the day, days and hours that it takes to turn it into clips and everything like that literally cost us thousands of dollars and we do it.
We do it for free. You don’t have to pay for this. We just give it to you. I am genuinely interested in helping you succeed. I am genuinely interested in helping you build your own profitable agency. This has been the theme on the show for seven years. It’s why, it’s why you can also go to overlap book.com, scroll down and read the book for free that I spent years, you know, thinking about writing.
It paying editors, you know, all of this stuff, right? Like I genuinely want to help you. Like, I want to have a thing that pays my bills that pays, you know, our expenses and everything. And then I just want to help the most people, because I think that’s just a winning strategy. Cause then that builds, you know, my brand and air quotes, but it’s essentially my reputation, which reputation is the leverage.
Then I can do anything. The reason I can, I can sell Sean was conference or Sean was water bottles or Sean was shirts or Sean Wes mugs, or Sean with Dan’s making a, flying through the air thing,
Dan: [00:48:03] Sean was airlines.
Sean: [00:48:04] with airlines. That’s the power of brand. The reason we’re able to sell this daily content machine so easily.
And I realized this is going to be a struggle for me later, because like right now we’re getting a lot of clients who know me, right? Like they know me, they trust me and they’re like, I don’t need to know anything else. It’s Shawn West media. Then it’s going to be quality. It’s going to be the best money can buy.
That is huge. That power of brand is huge. I’m not thinking about the short term transaction with you listening to this podcast right now, getting tons of insights and value in like, wow, I can’t believe like, you know, I’m just getting all of this on a podcast and I don’t have to pay for consulting or whatever, like good.
I want, I want you to feel that way because of, you know, what we’ll do together in 15 years or who you, who, who you’ll tell about my brand and my show and everything that we’re doing here over the next 30 years. So it’s a, it’s a very, it’s a very longterm game. So that’s why I’m doing the show. That’s why I’m pulling back the curtain.
It doesn’t otherwise make any other sense for me to divulge actual numbers and profit margin and, and everything. Because, you know, you could very certainly argue as, as we did Dan and I, we explored in a conversation about whether to divulge these numbers, that it is a competitive disadvantage. We’re kind of just opening up all of our numbers, you know, and it’s like other people can kind of study that and copy that and like, Oh, this is possible.
That’s possible. You know, like, you know, what, what will contractors think? What will people who work for us? Think when they know, Ooh, he Shaun’s making this much money. Like, and you know, I’m thinking through all of this, right? Like, you know, contractors working for us that they may not understand everything that goes into running a business.
So they might just be thinking like, Oh, Shawn’s just buying Rolexes with all of my hard work or whatever. And it’s like, actually, like, here’s something you didn’t consider, like acquiring that customer costs hundreds of dollars, you know, like it costs money to run this thing. It costs money to pay for, you know, all of the servers and the software and like, You know, I, it costs money to hire the next person proactively before they’re making money for you.
Like I’m not pulling money out of this thing. I’m reinvesting everything. Cause I want this to grow. I want it to be bigger. Like let’s get to a hundred clients and then the profit margin off of that, like we can take 5% of that profit and that’s substantial and we can do cool things with that. You know, we could.
We start building a software company. Right. We could do cool things with sabbaticals. We could do cool things with pro bono. We could do cool thing. Yeah. Dan’s thinking Dan’s got an idea.
Dan: [00:50:56] I just, I wanted to make sure people are tracking. Cause I think there, there are a lot of people, you know, and they’re meaning well, but they just hear the word profit. Margin. And they think it means Rolexes. Like they think the point of profit margin is to, is to line your own pockets. But if you ever want to grow business the way you grow, like where do you get the money to grow it with?
You either borrow that money from someone else and then have to pay it all back later, which is super risky. Or you need profit. The profit is the money you use to grow your business.
Sean: [00:51:27] Yeah. So we’ve got a real time question here from Garrett. Do you make the contractor sign non-competes or do they have the freedom to go and try starting their own competing firm? They have the freedom. They have the freedom. It’s the difference between scarcity mindset and abundance mindset. It’s not a zero sum game.
Go out there. Copy all of my methods. Why else am I doing this podcast? I’m literally giving you all of the ways to compete with me, but, but I don’t, I don’t mind. Why don’t I mind? Well, one, if you see everyone who does the same thing, as you as competition, you’ll never have community. So I choose to think in terms of community, over competition, but too, I’ve got the power of brand behind me.
Go, go make Acme daily content, inc. And I’m perfectly happy with letting people choose that versus Sean with media, because I’m happy with the brand. And I’m also happy for you to, to attempt to undercut me in price. and I’m smiling because. You’re you’re gonna find out just how much work it is. And you’re going to find out just how good we are at processes and systems to be able to dial it down to this degree.
So I’m not worried about that, but 50% profit margin is what we’re working backwards from. So what does that mean? Well, it means 1250 of that is hard costs. Like, so a client pays us $2,500. Immediately. Half of that is, is allocated. Right. And obviously we have to use some of that extra money to do, you know, there’s always like, like we want to hire a new person or there’s this other variable or like right now, you know, it just to be Frank, like we started out using one project management system and we’re in the middle of switching and it’s a really big deal when you have many clients.
Each with many projects, like for each week they have a project and each project per week per client has 1300 tasks. We’re in the process of Jan Dan’s heads, like rolling we’re in the process of switching that to another project management system. That’s, that’s difficult, but it’s, it’s, it’s a longterm decision we need to make.
It’s going to take a lot of our time. And, but, but the reason we can do things like that is because of. Profit margin. You have to have profit margin. You’ve got to start with that profit margin. You can’t just think like a, I’m going to figure this out. I guess I’ll charge the service. I guess I’ll find people who will pay for it.
And who knows how much it costs me to actually produce this or how long. And hopefully there’s some profit leftover at the end. Like that’s the fastest way to die.
Dan: [00:54:10] Yeah, you’re going to go out of business if you do it that way. The, I, you know, we, we spent a lot of time like figuring out, okay, here’s the kind of price point we want to hit. And here’s the profit margin we need. Well, that leaves us. That means we can afford about this much in costs and now let’s figure out, can we make that model work?
And, and we’ve been checking in as we go. So like now that we’ve got clients and we’re doing, you know, it goes from theory to practice. Now we’re doing the real client work. We have to keep checking in and going like, okay, can we do what we need to do at the level of quality we want inside of those costs?
Right? Because if it turns out the answer is no we’d need to charge more money or else make less profit, you can decide to do either one of those things. But again, like the less profit you make, the harder it is to stay in business.
Sean: [00:54:59] It’s very true. So someone might be wondering what should the price of your service be? Well, that depends. It depends on the service. It depends on the industry. It depends on the person who is the person that you’re trying to reach. Who are you selling this service to? What is it that they want? What are their struggles and goals?
What is it that they get out of this? What is the value they get from your service? And then what can they afford? Do they have the money, the ability to pay you for this service? Because you can say, Oh, the service is worth this, you know, you should want it. It should be this, this amount, you know, and you should make more from it.
But like they, the client has to be able to actually do that. So you have to work backwards, you gotta work backwards from that person. and then I would recommend trying to find a sweet spot. I’m trying to find a sweet spot. Assuming you’re doing a productized service, which is like just a fixed price, right?
That means each client gets the same package result. You want to find a price that’s in that sweet spot where that it’s like the Netflix for you or the Spotify or the Apple subscription for you, where you see that on your credit card statement. And you’re like, that’s fine. Right. What, what is that spot for your client?
And that could be thousands of dollars a month, right? Depending on the level of the client, but what is that sweet spot? So try and identify the sweet spot, but then you need, you think about profit margin. You have to decide from the beginning, what you want your profit margin to be and, and what you are, what you’re willing to do to accept an and the lowest you’re willing to go.
Don’t end up with some profit margin. Don’t end up hoping. Engineer it into the package, into the product, into the offering, which means you need to know what it costs to produce this service. Like actual hard costs that could be servers, subscriptions, et cetera, but it could also be your time. It could also be contractors time.
You know, this, this is a lot simpler when you treat your business like a business and you stop acting like a freelancer and mixing up your personal and business bank accounts, like you gotta stop that. Pay yourself a salary. What is your salary and your business? Don’t I don’t know what you need to know.
It’s a business and you work in it, you happen to own it, but you also work in it. So you need to pay yourself a salary just for good business practice. But also what that does is it gives you an actual, tangible value of your time. It’s quantifiable. So it’s like, okay, how long does it take me to do the work and provide this service?
It takes this many hours over this many days. Well, this is how much I pay myself. This is my salary. Therefore, these are the costs. Now, you know, the costs of fulfilling the service, delivering the service, and you can decide, you can evaluate, do I have the profit margin I’m looking for? So that profit margin I’m, I’m suggesting, you know, Hey for services, you know, let’s try and get like 50%, you know, maybe, you know, somewhere around there would be really good.
So if your sweet spot offering. Combined with your fixed costs does not result in the profit margin. You want say 50%, you’ve got to increase the price. I mean, I guess you could decrease the expenses, but like, do you want to negotiate your server bill or your internet bill? Like, okay, you got $15 extra a month.
Maybe like it’s, it’s, it’s much easier to. Make more money than it is to make up money by decreasing expenses. So in that case you would just have to increase the price. And then there’s the variable of like, okay, well, if I increase it, am I still in the no brainer range? That’s not to say if you exit the no brainer range, that it’s impossible to run a sustainable profitable business, because I’m not saying that, but it sure is nice to be in that no-brainer range.
Dan: [00:59:00] I I’m going to ask a question because I think a lot of people probably wondering how did you decide 50%? Right? So if a person is sitting there and they’re going, all right, I’m going to, I’m going to have a flagship surface. I need a profit margin. How do you figure out what a good profit margin is? Most people don’t talk about this.
Are you supposed to be making a 98% profit margin is a 5% profit margin. Okay. Like what, how do you know what you should aim for?
Sean: [00:59:28] That’s a good question. I guess, I ran a non-profitable business for a long time at which the only reason it ran for a long time is because I was just constantly shoveling money into it, like coal into a train, you know, just like keep going, keep going. And it’s just like, it’s not producing its own fuel.
and that was exhausting. So. Some, you know, lots of businesses. I mean, restaurants kind of infamously have like 3% profit margins and you know, it’s ridiculous. And when they, when they say they would joke about like, we’re a few days from, we’re always only, ever a few days from going out of business, but we saw that that was real with, with the pandemic and restaurants closing down, it was like, boom, they’re gone.
Like in no time they’re gone. That sucks. Yeah, that just, that’s so stressful. And it’s so sad. Cause you know, you’ve got people who love their favorite restaurant, but like, you know, it’s gone now. I’m sorry. so it’s just, you, you don’t want to be there, you know, like yeah, you could, you could run a 5% profit margin business.
It’s just not fun. It’s not fun and it’s stressful and you can’t do things. So for me, the lower end of the threshold is like 20%. At a really, I would rather it be 25% is like my low end profit margin, because you just want to be able to like, breathe, like, you know, stretch a little bit, like not stress all the time, month to month.
it also affords you the ability to do things. So for instance, like if we did that kind of third package, so to speak of allowing clients to pay upfront and giving them a month off, well, what that does to our profit margin is it takes it from 50% to 33% over that half year, which is not trivial, but it does two things for us.
One, Well, it, it, it locks in the client for six months and it front loads, the revenue. So it’s a cashflow injection. That, that is just really nice. Like, you know, in, in general, nothing’s guaranteed people can cancel you churn exists, but, but then, you know, once in a blue moon you have pandemics and like really weird things, you know?
And so like, You know, what is the value of cash now versus cash cash later? Well, it’s, it’s, it’s higher now. I’d rather have it now because later is not guaranteed. You know, if anything is guaranteed, it’s it’s that the value of money will be less because of inflation. So there’s that too. but in a lot of cases you might want less money now.
Do you want $12,500 now wired to your bank? Or do you want 15,000 over the next six months? Maybe you see what I mean? Like there’s not like always a right answer. It depends on where your business is at, because what can you do with $12,500 right now? Well, if you can do some really good stuff, like, Oh, I can hire some people we can scale.
I can take on more clients faster, sooner, like. You know, you might want that because then you’ll be in a much better place come six months from now than you would have been otherwise. But if you already have two, three, four, or five, $600,000 in the bank, and you’re not doing anything with it, and you don’t know what to do with it, like adding 12,000 more right now doesn’t really move the needle.
It doesn’t do anything. So, I mean, since it doesn’t matter, you might as well take 15,000 over six months.
Dan: [01:03:10] I was, I was thinking of a very similar point that a net present value is like the. Investing term of money where like a hundred dollars today is better than a hundred dollars a year from now. Cause it’s, you can invest it today. And when you’re running a business, that’s doubly true. But under the circumstances that you said like it, so it depends on your position, especially early on having more money upfront is good because you know, you’re, you’re probably short on capital.
You’re not making that much yet. So having that money up front means you can grow your business. And I think that the way to think about it is I sure would love to have 15 grand though in six months. But if you get 12, $12,000 now, and then you double your revenue or increase your revenue by even 10 or 20%, six months from now, great.
Now you’re making way more than that. $15,000. That’s powerful. That’s the power of investing, like literally investing in your business.
Sean: [01:04:10] Yeah, that’s good. Okay. What do we have here?
Dan: [01:04:15] We’ve got, we got a, we got a couple of things next. I think we’ve, I think we’ve talked pretty compellingly about designing that offer with your various packages. but, but we, we really wanted to outline for someone like if you have a productized service, there are some things you’re going to have to do differently.
Okay, well, so we’re talking a lot about productized services and we want to make this really, really clear because you might be used to offering a service. Like if you’ve done freelance work, things like that, freelance design work, let’s say when you’re offering something productized, every client has to get the same.
Thing like the same type of deliverable at the same level of quality in return for the same amount of money. The only way you can do that is if you have really well documented processes, and if you want this to work without driving yourself crazy, you’ve got to err on the side of simplicity. Like, you’ve got to make everything as, as simple as possible.
And one of the things you’ll run into, cause we’ve already run into this is you will find the, you know, your clients will want you to deviate from your process. They’ll want their own specific thing because they do, they have their own needs and requirements. So, you know, we deliver, we deliver seven daily clips every week to our clients that come from our clients long form content.
Sean: [01:05:39] Yeah, I’m sorry. Sorry to interrupt. I was just going to say, and it’s multiple versions of seven daily clips, just so people are tracking. It’s not just seven files.
Dan: [01:05:50] And no, it’s more than seven files because it’s seven clips that are going to go on five different social media platforms. But, but the point is that like the package of things we deliver. That package contains the same thing, whether your client a or client B it’s just that client A’s clips are based on client A’s content, client B’s clips are based on client B’s content, but if a client came to us and they said, but I also really want to post videos on,
Sean: [01:06:17] Some other platform or some other
Dan: [01:06:19] other platform.
Exactly. Could you also make a version that has a seven by three ratio for, I don’t know why. I don’t even know if that’s a real thing, but we would say no to that in general, because now your service isn’t productized anymore. Now you’re doing extra work for just one client, but they’re saving you, excuse me, that they’re paying you the same amount of money.
And it’s not just that they’re paying you the same amount when you try to scale. This starts to fall apart real quickly, because if one, if one of your 10 clients want something a little different, maybe it takes you an extra 20 minutes of work to accommodate that. But if 20 of your hundred clients all want slightly different things, now you’re in big trouble because now you’re trying to manage like 20 plus versions of the same process.
While those people are all paying you the same money. Your, your, your expenses literally go up because the amount of time it takes to service, all those different needs just keeps increasing.
Sean: [01:07:25] And you will feel the pole to say yes to these special requests for a lot of reasons. It could be because you started off the relationship by violating the rule of reciprocity. You know, maybe you started with an ask. And so now they’re asking you and you, you don’t really know why you don’t remember, but it was because.
They, they gave you something you asked for now, you’re like, I probably should just do this for them, you know, and that’s what’s going on. Or this could be a really high profile client that you want to keep like, Ooh, it looks good to have this client, so I should bend over backwards and give them whatever they want and you bend over backwards and then you bend over backwards and then you bend over backwards and you’ve just got this convoluted, not of deviations from your standard process.
And then it’s like, You know, problems happen because your team is trying to follow the standard process and everything has an asterisk. This is how we do things, this, this, this, and this, except unless it’s this client, which case we do this, but only in these cases sometimes, you know, and then just starts to get off the tracks.
So it’s tough. It’s very tough. And it can be tough for a lot of reasons, but if you have a product tie service and your client asks for customizations, you gotta say no. Cause remember, you know, w we’ll use our example here. They’re only paying us 24 99. You will be hard pressed. I’ll put it that way to get a full time employee pay them $7,000 a month and have them deliver what we deliver at the level of quality we deliver it.
I think it is. It’s almost impossible just because the level of expertise and specialty this person would have to have. To be able to provide everything at, at the level of quality we do is just it’s unprecedented. And, and if such a person exists, they would not, they would, they would charge way more. Are they more than likely are not, they’re not going to work for you, they’re working for themselves.
You know, so, but, but let’s just say that they could, hypothetically you’re paying them three times as much. So it’s like, Hey, at any point, client. You can certainly have all of these custom requests fulfilled that change every single week and are different and deviate from the process. you’ll just need to go pay someone else three times more.
That’s always an option. However, and we’ve got our own standardized response to these type of requests that we’re unable to fulfill. We say something to the effect of the reason we are able to provide. This service at such a high quality and at such an affordable rate is because of just how streamlined everything is and what might appear on the outside to be a small, minor, reasonable request.
In fact, I grant you, this is a very reasonable request. It’s very understandable. it’s actually, for us internally, a huge deviation. It has a, it has a massive impact. On our process, like you’re thinking, Oh, just make this one extroversion, but it’s like, this person has to do this this way. And this person hasn’t been trained that way.
And then when they’re supposed to fill out this checklist about uploading, that that doesn’t exist. And then that has to be reviewed and it’s like, it just explodes. The whole thing just, just blows up. Right. And so what I end with saying is like, no, this are job, our desire rather. Is to make our client’s job as easy as possible.
We want to make everything as easy as possible for you. And if this were a minor thing for us, a minor had minor implications on our process. I had obliged in a heartbeat, unfortunately it doesn’t. And so w we’ll need to stick to the standard way of doing things. That’s my paraphrasing of the typical response.
We have to a client asking for a deviation. Anything else on like, Simplifying really, really hammering these things, with regards to productized services, Dan.
Dan: [01:11:27] I think we’ve made the point and, but maybe people just need to hear it over and over again, a few times. Like you really do. I need to stay the course. And you won’t want to, you’re not going to want to say no, you’re going to want to say yes. And the wanting to say yes, always comes out of scarcity. It always comes out of some fear that like, I’ll never get another client or this client is going to make or break my business because they’re.
They’re big or they’re influential or, you know, we want them for some other reason, but if you want to keep this thing going, you gotta get in that mindset of abundance, right? I mean, one of the reasons you build something productized is on the notion. If there were only one or two clients we could possibly get for Shawn West media, we shouldn’t offer them a productized service.
We should be charging them each as much money as we can
Sean: [01:12:13] It should be valued value based pricing.
Dan: [01:12:16] Then it should be value based pricing, but like we’re operating off the assumption that behind this one client, who’s asking us to do custom stuff. There’s a hundred more that we don’t have yet who will come under our process.
And that’s the way you have to think about it.
Sean: [01:12:30] If you don’t say no, you can’t grow
Dan: [01:12:33] It rhymes. So it has to be true.
Sean: [01:12:35] this correct. If you want to do custom work, that’s fine. Like do custom work, just get paid 10 times as much to do it for 5%. As many clients. That’s the way to do it. Okay. Last thing here, before we get to questions, want to talk just briefly about validation, the only way to validate your product or your service is to take payment.
What does validate mean? That means you have this idea. I want to start a business. I want to sell a product. I want to provide this service. I think it will be great. I think people will want it. I think they’ll pay for it. I should do this. I should, I should quit my job and do this. Okay. You’re you’re about to take this leap, right?
Maybe it’s a risk or something you want to sell something. You’ve got this idea. You need to validate the idea. Is this valid? Will it work? Can this work? Can it be sustainable? The only way to know is to take payment. You cannot say you can’t post something on your Instagram and be like, Hey everyone, would you buy this?
And they’ll be like, yes, OMG, I love you. Crying. Emoji hearts, hearts, hearts. No, that’s not validation. That’s when it comes time to like, get your wallet. And like get the credit card, you know, like, like get the credit card out that that is validation. And that’s where you’ll, you’ll meet some resistance, like, Oh, I don’t really want it.
Like, Hey yeah, you can buy it right now. You know, give me your card. I’ll swipe it. You can go to the website, you know, prepay, you know, Oh, I don’t want to, I don’t want to do that. And suddenly those hundred people who were like, yes, please crying emoji. Now one out of a hundred of those people are actually buying.
The only way to validate is to take payment, get paid in advance for this thing. That’s how you can validate it. Don’t even bother building the whole thing. Just give people a deal, an early access price, introductory price, beta group pilot program. Put something for sale on a website with a checkout form and tell people to go buy.
Then, you know, you have something just making clips, Dan. That’s all we do here.
Dan: [01:14:42] All day long clips clips for days. That was some good fiery Sean though.
Sean: [01:14:46] What questions do we have that you think, we haven’t addressed already.
Dan: [01:14:54] Well, well, Garrett Garrett had an interesting one and I don’t know how deep we want to go on this, but, but, you know, we were talking about this whole idea of trying to structure, figure out your profit margin and then, you know, make the system work. Garrett was curious how long it takes us to produce a week’s worth of daily clips for one client.
I mean, do we want to speak to that? Like just the, the. How many hours, how many hours does it take?
Sean: [01:15:20] Yeah, can you, can you try and rephrase it for me?
Dan: [01:15:28] Okay. So to produce daily clips for one week for one client, for five platforms, we produce them for how many hours of effort does it take?
Sean: [01:15:39] Are we getting that real
Dan: [01:15:41] I don’t know. I don’t know. Garrett wants us to.
Sean: [01:15:44] well now I’m asking Dan, did we get that real.
Dan: [01:15:48] Do we get that real? I mean, you know, we’ve been talking about how, if we, if you just like, let’s be honest, it is a competitive disadvantage to reveal all the, all the aspects of how your, how your business
Sean: [01:16:04] We’re going to do it, Dan, we’re going to do it.
Dan: [01:16:07] think, I think, I think when, when, yeah, you can check in on us in a year. You, Oh, you just want me to, to, to spit out the numbers to just lay it all on the line, because I’ll do that for Garrett.
Sean: [01:16:19] Yeah, I think, no, I think we should. And here’s the reason why the reason we’re able to do it in the amount of time we do is because of our process and, and because of things that would be difficult for people to replicate without our knowledge and insight. So I don’t really, I don’t really mind it’s like here, this is what, this is what we’re able to do it in.
Try and match us. And match the quality output. So I’m not actually that worried. So, I’ll just tell people added up all of the people involved. It is 1.5 days of person hours. So if you consider a work day is eight hours roughly rounded 12 hours. It’s pretty good. Isn’t it?
Dan: [01:17:07] That’s a, that is, I think, I think, well, I want it well, you know, Garrett, if you’re still listening, does that surprise you?
Sean: [01:17:14] It’s complicated though. Let me tell you it’s complicated. It does not happen like Monday morning and by Tuesday at noon, it’s done. There’s all kinds of handoffs, quality checkpoints, revising, editing, rewriting, reproducing, like. It is complicated. There’s a lot, there’s a lot of moving parts, so to speak, we try and simplify it as much as possible, but, that end result speaks to the efficacy of our systems.
Not to, well, I mean, 1300 tasks speaks for itself.
Dan: [01:17:52] It does.
Sean: [01:17:52] too real for Dan. He has two real he’s in
Dan: [01:17:55] real for me. I am in it. It’s a it’s thorough. I, you know, I, I like this transparency though, because it really is operating from a position. It feels like it’s operating from a position of strength because it’s like you said, someone could go. Embers have access to the training.
Like they can learn how to do the stuff that we do. And then I guess they could take that knowledge and go start their own thing, except they’re competing against our brand and people who have their own brands, but don’t know the process can try to design the thing that delivers the same amount of quality at the same cost level, as we do.
Good luck. And then ultimately, if someone does all of these things and drives us straight out of business, well, we’ll just have to go start in different business,
Sean: [01:18:37] Yeah. And see,
Dan: [01:18:38] that’s
Sean: [01:18:38] I love that part. I love that part too, because first of all, I agree, it’s probably not going to happen. but, but second of all, it’s like, you know, I did this episode, I don’t know. Maybe you can find it two hands and a willingness to work. That’s all you need. I am never, ever, ever going to be out of work ever because I learn voraciously.
I work hard. I understand how to solve problems. I have a plethora of skills, a plethora, Dan
Dan: [01:19:19] You have an entire plethora? That’s a lot.
Sean: [01:19:22] Yeah. It is a lot of cornucopia.
Dan: [01:19:24] a plethora actually.
Sean: [01:19:25] so 1.8 cornucopias.
Dan: [01:19:28] Plethora is 1.8. Cornucopias
Sean: [01:19:30] It’s just a
Dan: [01:19:31] the real takeaway from this episode,
Sean: [01:19:33] yeah. Metric
Dan: [01:19:35] you want to know how to price your service.
Sean: [01:19:38] but I have a lot of server services. I have a lot of skills. I have a lot of abilities and a willingness to learn a willingness to learn two hands and willingness to work. Like that’s it. That’s all you need. So fine. Let someone else put us out of business. I’ll find another problem to solve and solve it better than anyone else and deliver the highest quality for the most compelling price.
I’ll just do it again. I’ll do it again. I’ll do it again. So there’s that, but also, I’m not worried for this other reason, Dan, you got all these people. Most people aren’t listening to me. Some smart people are listening to me, of those smart people. there’s smarter people who do something about what they heard me say.
And then of those people, it’s like, you know, which of them really has what it takes. Like, like I do my best to try and give you sequential steps of like, do this, do this, do this, here you go. Here’s the blueprints. But inevitably, like there’s little bits of tape and glue. You need to kind of put this all together yourself and like, are you willing to bridge the gap?
Are you willing to do this until it works? Are you willing to iterate? And then you have the layer of brand and it’s like, by this point, like, What’s what’s even left. Who’s even left. Like at this point, do we have like a handful of people doing this other service and then you have the whole, it’s not a zero sum game.
Like the more the merrier, if, if this market can’t sustain a few other competitors, like, well then, you know, we’re, we’re not even in a good business, but, but I think we are right. And I think it can sustain some competitors. So I’m not worried.
Dan: [01:21:11] Yeah. I honestly don’t think most successes are based on, you know, there’s an, there’s an idea of called like security by obscurity in technology. And it’s generally considered a bad practice where it’s like, well, make sure no one ever finds out this one secret piece of information or else they’ll gain access to this system.
For example, that’s a bad plan because it’s. People will eventually discover your secrets. And I think the same in business, there are very few businesses that are in whose success is entirely predicated on. Oh, we just can’t let anyone find out our one terrible secret or else. The whole thing comes down like a house of cards.
If that really were the way your business worked. Maybe that’s not a great model for a business because it’s not at all robust because eventually you might tell everyone how your business works on a podcast, but even if you don’t maybe hackers break into your WordPress site and steal it, like it can’t be that way.
Like your business can’t depend on the secrecy. It has to be based on the merits of what you’ve built and that means people can compete with you. And then they either, you know, succeed or not.
Sean: [01:22:20] Did they, did you already say security by obscurity? Cause that’s like your favorite analogy.
Dan: [01:22:26] Yes, I did. I did say that. I’ve said, I said it so many times. Sean doesn’t even hear the words anymore. They just
Sean: [01:22:30] That’s probably it also, I was in the chat where I see you’ve posted the, the episode that I assume is related to two hands and a willingness to work.
Dan: [01:22:41] It’s you do mention it in the description. Do you have two hands and a willingness to work?
Sean: [01:22:45] Okay. Alright, so a three 59 that’s that’s a good episode there. Giovanni
Dan: [01:22:51] I mean, it’s a,
Sean: [01:22:52] yeah, go ahead.
Dan: [01:22:53] I was just going to say it’s about making extra money, doing some client work, but that’s the point I think is the, you can get so afraid. What will I do if I lose everything and then I’ll lose everything if someone’s allowed to compete with me. But the other way to look at it is like the competition is probably not going to drive you out of business in the first place.
And that, I mean, maybe it will, but then even if it does, you can just go do something else. You will not be destroyed,
Sean: [01:23:21] I did do a podcast episode called don’t compete, dominate, or something like that. And I think that’s another reason why I want to just give it all away because it’s like fuel for me, you know? And it’s like, it’s like even more. I want to focus on dominating and not competing. So what, what is less scarcity mindset driven?
Then giving away all the blueprints so that people can compete with you then than just divulging all of your secrets, all your processes, all your profit margins and everything. Giovanni asks any advice on how and where to find people who’d be ready to buy. And that’s part two. So if you missed it in your podcast app, go back to the last episode, finding, finding clients.
I think it was called finding something clients. Dan helped me out
Dan: [01:24:15] Sorry. I did. I missed what you said there, but yeah, it’s finding new clients build a profitable agency part to finding new ones.
Sean: [01:24:21] two. There you go. So that was a, that was another jam packed one. I think it was like just two hours of that was me, like just punching, punching my open Palm with a
Dan: [01:24:34] Just two hours
Sean: [01:24:35] two hours of
Dan: [01:24:36] It was so good. Yeah,
Sean: [01:24:40] all right,
Dan: [01:24:40] it was real good.
Sean: [01:24:42] Any final thoughts, many. Maybe we want to tease what’s coming up. Why should people stick around?
Dan: [01:24:49] We can definitely do that. And then we can, well, you know, people were asking earlier about value based pricing. We didn’t want to get into it too much cause it’s kind of a tangent to this episode.
Sean: [01:24:59] I’m very passionate about it. So just ask me
Dan: [01:25:01] is the thing, so we can cover them or save them to the after show. I don’t know.
Sean: [01:25:05] now. Let’s do it here. What questions can you think of
Dan: [01:25:08] Okay, well, well, I think that there were a couple and they come down to a classic thing with value based pricing we’ve seen before. So I’ll lay them out. We had a Prinav was asking, can value based pricing work for customized services. If the outcome of the project can’t be measured in numbers, such as an increase in profits.
And before you answer that one, I’m going to bring in the other one, Hallo was wondering of, I know you just want to
Sean: [01:25:34] Chomping at the bit. Yep.
Dan: [01:25:35] He really is. He can see it, but no, if you’re watching the video stream, you can see it.
Sean: [01:25:39] Wait, wait, wait, video stream video. We filmed
Dan: [01:25:42] Sean, what do you want to, what you want to do is you want to record yourself on a podcast.
Sean: [01:25:46] Wait, wait, wait. But there’s a video version of this podcast. Where would we find this? Do we find this in the same place? We find all the, all of the links you put in the chat that you don’t then mention on the show. Is that the same
Dan: [01:26:01] That would be a good, that would be a good place to find them. Yeah. And you, you would find all of those things. Oh, do you want to tell them
Sean: [01:26:07] Well, I was just trying to figure it out for myself. Like if this episode is four 98, surely it’s not as simple as, as looking at the episode number and then knowing at all times, if I ever want to find anything, search the transcript of, of anything that was said, find all the links that I could just go to Sean west.com/whatever that episode number is like.
Sean was.com/four 98. That’s a long question, but surely it’s not that simple. And surely I wouldn’t also find the video version of this. What I thought was an audio podcast there.
Dan: [01:26:41] I’m starting to think this might be a rhetorical question because yes, Sean, you could find all of those email@example.com slash slash four 98 for this
Sean: [01:26:49] cool. Cool. So I couldn’t answer you wouldn’t let me answer pronounced first question. Cause you were, you were saying something else.
Dan: [01:26:56] no, because there is a related question. Halla provides Hannah art services. So for example, for weddings, And, she said I’ve tried pricing by hour, but sometimes I work fast, faster than others. I’ve tried setting a standard price for bridal arms and feet. That is to say drawing on those things, but it gets complicated when people want simpler designs.
I can’t justify pricing the same for a simple design and an intricate one. And, in the chat, Jeremy, was, jumping in on both of these, talking about, how, you know, the, these well, OK. So, so I’m gonna. Jeremy is being helpful here, but, but I think maybe we need a bit of a course correction because he was saying, you know, this is definitely a value based price, value based priced service.
If you’re going to do this for weddings, what’s the value of the bride has for looking the way she wants on the big day. It might be difficult to nail down, but that’s a conversation that needs to happen. You definitely don’t need to be charging for time on that.
Sean: [01:27:48] let me jump in on the difficult to nail down part. when I put together the value based pricing firstname.lastname@example.org the course on value based pricing five years ago. I was working with, Justin, my partner, who was on the team. And we were very passionate about value based pricing together.
We spent months. In fact, we spent, gosh, I think we, we worked on it two years before we launched a pilot program that we ran for. I said six months, it was just very refined. And he and I spent hours and hours and hours on the phone talking about like single concepts, single questions, like thinking through, not thinking on like thinking through most people don’t think through things.
They think on things I’m talking about thinking through to conclusion, evaluating all the factors. And here’s the conclusion. We came to two years in, after many phone calls, many, many hours spent on just this one question, which is can value based pricing, work for services, where the client does not realize financial gain.
And the answer is no, unfortunately like I’m just telling you, we thought through it. We worked through, it came to a conclusion logically thinking about everything. Unfortunately, if the client does not realize financial gain, you can’t value price it in any way that is other than arbitrary, you can make up prices, but we’re talking about quantifiable, like in the value based pricing program, the course we teach you, we have actual tools like it is mathematical.
The price is a mathematical calculation of a quantifiable value. You can’t get that when the value is intangible. So when the, when the value is that, you know, the client would say it’s priceless, it puts a smile on my face. I couldn’t even tell you. It’s invaluable. It’s intangible. You cannot, you can’t use value based pricing.
It just doesn’t work. And we hated that conclusion. Just like to be Frank. I hated the conclusion that. In order to save your passion and avoid burnout when trying to, you know, create a business that can sustain you financially, you have to overlap. I’ve said this in a number of times before, but I actually, I actually don’t like, I don’t like the conclusion of overlapping.
It’s not fun. It’s like, Oh, I have to keep my day job and make sure it pays my bills and do this thing on the side and make sure that starts making money before I quit. Like, I don’t like it. It’s not fun. It’s just that I spent three or four years thinking about it and three or 400 conversations with people.
And I thought through the situation, and that’s the conclusion I came to the same with a value based pricing value based pricing requires three things you have to provide ad services, not products. Apple can’t sell an iPhone, you know, different rates depending on what your salary is, you know, people would be outraged.
It has to be services. These services have to be custom for each client, meaning it can’t be productized because that’s basically a product. And then the third is that the client needs to realize financial gain. And in the course in the program, we teach you exactly how to quantify that you go through a value discovery process and you end at a number.
A number is something you can work with a number of something you can calculate and perform math on, but it doesn’t work when the value is intangible, unfortunately. And so that is a whole, that’s a whole problem solving. You’re welcome to, to work on that, but I’m telling you after two years, what we know is that you can’t, you can’t value price it in a way that is quantifiable and mathematical only arbitrary.
You can make up prices, but it’s not quantifiably value priced. So, unfortunately that’s just, that’s just a problem to be solved. I don’t have an answer for you as to like, how do I, how do I price services that provide an intangible value to someone?
Dan: [01:32:11] That’s so unsatisfying and yet
Sean: [01:32:14] I don’t know.
Dan: [01:32:15] it’s, it’s, it’s not easy, but, Jeremy asked to, follow up in the chat. He said, can value be comparative, a similar result provided by an existing product costs. X let’s say so. Therefore that’s the value.
Sean: [01:32:28] What does this mean to you? I’m having a hard time.
Dan: [01:32:31] Yeah, Jeremy. I mean, if you want to give us an example, a more concrete example, maybe, but, but I think he’s saying, you know, if, if you you’re, you’re going to do some work for someone and if instead they used a product to get that done, it would cost them X. So therefore you’re going to charge them about X.
Sean: [01:32:52] Is there a question?
Dan: [01:32:53] me, leaves me out in the cold.
Sean: [01:32:56] Yeah,
Dan: [01:32:56] I mean, okay, sorry. So, Hey, so he, elaborates hallah is doing designs. So compare it to something that’s already available in the market with a known price tag. I mean, you, you, this is one of those things where you’re pricing against your competitors, right?
Sean: [01:33:11] Which is, which
Dan: [01:33:12] do other hand artists
Sean: [01:33:13] It’s we’re now
Dan: [01:33:14] is arbitrary and, and I mean, this is where lots of people have complaints about like when other people in your industry are undercutting on price. For example, It affects your ability to charge what you want. Right. So that value based pricing is like, is like a way to escape from that.
But like you said, it only works in certain situations. Doesn’t work in a case like this, for example, where
Sean: [01:33:36] only works where it’s certain client services, custom tailored financial gain.
Dan: [01:33:44] Let me, let me try to, can I try to throw one thing out about this?
Sean: [01:33:47] Yes, but I just want to say this much. if the value is intangible, the price is arbitrary. Now you can go.
Dan: [01:33:57] Okay, I’m going to jump off of that. If the is in tangible, the price is arbitrary and when you’re charging an arbitrary price, a big part of that comes down to what your customer can afford. So this is where if, if you can’t have a value based. Discussion on price. If you can’t segment your client base by finding the people for whom your work has the most value, you can still segment your client base.
A simple example of this is when it comes to weddings, weddings are all the things that go into a wedding are an example of a product category with no ceiling. Like if you want to pay, let’s say. A thousand dollars for a wedding dress. You can do that. But on the other hand, if you have $10,000 or half a million dollars, someone will happily sell you a wedding dress for that much money.
Like at that, because again, at that point, the price is arbitrary. And so it comes down to what you can. So you as a service provider, you’re you can say your best bet. I don’t know, but a good bet might be. Choose your audience. So if you, if you feel like you’re not making enough money off of doing henna designs, for example, and you can’t justify charging on say an hourly basis, maybe go find customers that have 10 times as much money and charge them a lot more
Sean: [01:35:17] This is exactly it. It’s a, it’s such a good point that you’re making, because, because if the value is in tangible, the price is arbitrary. Use that to your advantage, meaning make up a price that is super high for people who have a boatload of money. That’s what you should do. What is the, what is the price of a painting?
There’s no answer to that because it can be $5. It can be 50, it can be 500, it can be 50,000. It can be $5 million. People have bought paintings at all of those prices. So make up your own. Stop playing on hard mode. You’re already playing the intangible value game. So like in, in the, the pricing matrix that I’ve talked about, you know, I’ve posted a, you know, recent to this podcast episode, I’ve posted an Instagram carousel, but maybe we can w let’s put a link to that.
Dan, will you make a note to put a link to the pricing matrix, Instagram carousel. In the show notes for this episode at dot com slash four, nine, eight, there’s this matrix, right? You’ve got the person you’ve got the, the product, right. Or it could be service, but go with me here at work either way. You’ve got people who have money and people who don’t have money, meaning people who can spend and people who can’t spend.
And now you’ve got a product that either makes money for people, or it is a nice to have. Meaning it doesn’t make money for people. That’s fine. There’s nothing wrong with that. But the easiest way to make money is to provide a moneymaking product or service to people who have money. If you try to sell a nice to have product or service to people who don’t have money, you’re going to have a hard time.
If you provide a moneymaking service to a person who doesn’t have money, It’s it’s easier than trying to sell a nice to have, but it’s still difficult, right? If you try and sell, what, what was the other combination here? A nice to have to someone who does have money. That’s also relatively easy. I wouldn’t say it’s as easy as selling a moneymaker to a person who has money, but you can sell anything to people who have money because they have money.
So take your nice to have, take the thing for which you can only determine, creates an intangible value for your client or customer and sell it to people who have money. So what, at what price, whatever you want, you set the price. And here’s the crazy thing. Like, I’m glad we’re here because after reaching the conclusion I did, several years ago.
Which I’ve now boiled down into a single statement. That is if the value is intangible, the price is arbitrary. After reaching that conclusion, I was like, well, you know, I’m not, I’m, I’m not going to further investigate the solving of this problem because in my mind, at that time, the context was value based pricing.
The conclusion was value based pricing wouldn’t work. So I just kind of backed away from that. That’s a problem to be solved another time, but I’m glad that we kind of forced me to think through this here for the person who creates the thing that provides intangible value. This is what I would say, make up the price.
And here’s the crazy thing. The price you set, because this is all arbitrary. This is what will happen. The price you set will attract the client of that caliber. Are you with me because it’s all arbitrary. Like you’ve seen paintings that, you know, this is a whole separate debate that we’re not going to have on this show, but it’s drizzled paint.
It looks like someone spilled a couple of buckets on the canvas. I’m not, I’m not going to say I’m not going to say what I think about that. You may be, can derive what I think about it. You can infer what I think about it, but let’s just say such paintings have sold for a lot of money. A lot of money and you know, you can have the whole skill debate here, but, I guess where I will lend my opinion is I think such paintings require, let’s say significantly less skill than others yet they sell for a lot of money.
So you might be thinking I’m not skilled enough to sell a painting for $5,000. That’s the wrong way to think about it. It clearly has nothing to do with skill. It has only everything to do with perceived value. How do people perceive value? How do they infer value? There’s a lot. There’s a lot of factors.
I’m not going to be able to think of them all off the top of my head on a kind of tangent for this episode that I didn’t prepare on, but one of them is price. A significant one is price. If you see a $5 coffee and you see a 59 cent coffee, which one’s better, probably the $5 coffee. Why? I don’t know you, you literally have no, no other information about this, except the price.
You know, maybe, maybe in some cases you might have brand, you might have design, you might have, you know, w whatever right. Context, but probably the biggest signifier. From which people in for value, for things that provide what is otherwise intangible value is the price. Meaning you can make it up because it’s all arbitrary.
So I don’t know, I’m kind of talking around it, but what do you think about that, Dan?
Dan: [01:41:04] I think, I think that’s a really important concept because I think people get uncomfortable. I think people get uncomfortable with this a lot, especially if they want to provide services, maybe to people that don’t have a lot of money, but you know, we’ve talked about this before and then we’ll have that link.
I really like your Instagram carousel on this. It’s a nice, nice way of visualizing it. This, product matrix, you know, where if you, if you really want to provide something to people who don’t have the money. That’s fine. Still start off by selling to people who have lots of money. Cause then you’ll make a bunch of money and you can then afford to do things for people who don’t.
So let’s say that you’re a henna artists for weddings, well, pay your rent by charging a lot of money to people who have a lot of money to spend on that. And then if let’s say you want to do some art for people who are having a wedding and they can’t really afford you do it for free. Or for cheap and you can afford to do that because most people we’re paying you lots of money that you have the ultimate.
Yeah. Ultimate freedom at that point.
Sean: [01:42:12] That’s my favorite thing, because when I say, when I tell people, you should sell things that make money to people who have money, because that’s the easiest way. There’s a lot of bleeding hearts out there who really care about people who don’t have resources.
They don’t have money, they don’t have the means and they want, they want to give things to those people. They want to help. And I’m like, I totally get it. One of the best ways you can do that is first spend just a season of your life, not your entire life doing, playing on easy mode, which is where you just do money, making stuff for people who have money, make a bunch of money.
And then here’s the cool part. You can go give away services and products to people who don’t have the means. You can do it for free, not just like, you know, super low priced or whatever. You know, my, my whole mantra is full price or free charge, full price. To the people who have money and then give to the people who don’t have money, give it away for free.
Like, isn’t that so cool. Instead of like playing in the scarcity, you know, the level of like, I want to do coaching, I guess I should, maybe I can charge $49. I don’t know. I don’t know if anyone would do that. Maybe if I give them two hours, maybe if I do it every week and you’re just like you’re so in scarcity charged $499, you need 10% as many clients.
So even if you got like two clients, you’re still, you’re still making more money, you know, and then you, you can take that money and you can go to the person who you really were enjoying, helping, but they can’t afford your services. Now that you’re going to charge for them, you’re doing a little bit of pro bono, you know, you’re like, okay, now I’m going to charge.
And they’re like, ah, I can’t afford you well, instead of doing it super cheap and de-valuing yourself do it super premimake a bunch of money and then give it away for free to the people who can’t afford you. Then you can really create an impact. So I just, I love that. I love that idea. I thought we were going to do like a, I said, I think it will be like an hour and 15 minutes, Dan, but then you got all these questions
Dan: [01:44:12] I think we’re good questions.
Sean: [01:44:14] were good questions. That was a good show.
Dan: [01:44:17] show.
Sean: [01:44:18] Good show, sir, you want to wrap this up?
Dan: [01:44:22] Yeah. Sean, where can people go to find us online?
Sean: [01:44:24] You can go to Sean west.com. You can sign up for membership. There shall miss.com is the best place to support the show. Obviously you get access to all of our courses, the programs value based pricing. Like we talked about today, we normally charged $2,500 for that course. And now it’s in the membership like members get access to that for free.
And by the way, just so you know, I took care of all the people who bought from us early. I gave them years of membership. So they not only got to keep that course, which no one else does. Everyone else only has access. They got to keep it. And we gave them all of our other programs and years of membership.
So actually gave back like over a million dollars worth of membership to our most loyal customers. But the cool thing is for you is now that’s free. Inside the membership all $9,000, eight, $9,000 of our programs are there. You can get inside the community. You can listen to the show live. It’s the live streams.
You can ask your questions. We do a weekly office hours. We call it fired up Mondays. You may have heard one of those one or two here on the podcast. Every week, little office hours live stream for you just to help you get unstuck, help you get some clarity and just a little bit of accountability. Check in, get your week going.
All of that. Shawn west.com. You can sign up for membership. Thanks. For supporting the show. Dan, where can people find you online?
Dan: [01:45:41] Now you can check me email@example.com. It was a good episode.
Sean: [01:45:48] What’s a good one.
Dan: [01:45:50] I’m excited for the next one.
Sean: [01:45:51] It’s been a good series.
I think it surpassed my expectations. Well, no, the series just as a whole, this episode. Yeah, actually barely surpassed. I thought it was going to be good, but I think, I think it was really good. I think the stuff at the end about the intangible value stuff really like put it over over the top.
Dan: [01:46:59] I mean, I’ve seen that question so many times in the community and it makes sense because you know, the simplistic view is we PR we kind of do position value based pricing as this is the way,
Sean: [01:47:11] This is the way.
Dan: [01:47:12] doing client work, you want to do it. But then there’s always people that are like, I should be able to make lots of money off a wedding.
Right. People spend lots of money on their weddings. Can I value based price this? No. Oh, how do I know what to charge then? And, and this is the first time I’ve actually heard us, like have a really good actually
Sean: [01:47:31] it.
Dan: [01:47:32] here’s the strategy.
Sean: [01:47:33] The answer is you don’t know, you make it up. So use that to your advantage.
Dan: [01:47:39] Use it to your advantage by, by erring on the high side, I think.
So many people just don’t want to chart are terrified. We’re terrified of asking for money.
Sean: [01:47:49] Yeah. Yeah. You’re already terrified for asking $50, let alone 5,000. So that that’s, that’s another, that’s another really good point. It’s probably not probably, it’s definitely the mindset that holds people back. The lack of confidence, the insecurity, the imposter syndrome. But I think we talked about it on the last episode about confidence, confidence coming from doing, doing, coming from experience and, and it starting with courage.
Well, I don’t have courage. You know, and you think courage is this thing where, Oh, that must be for people who don’t feel fear, then they do things. They jump, they jump out of planes with parachutes and stuff. Cause they don’t feel fear. No courage is experiencing fear, but then doing the thing anyway, it’s like, well, how do I do that?
It’s like, well, step one is experience, fear. How are you doing there? How are you doing on, on completing step
Dan: [01:48:50] man. I, I don’t like experiencing fear,
Sean: [01:48:53] No, no, no. Are you experiencing fear?
Dan: [01:48:57] right now. Oh yeah.
Sean: [01:48:58] Yeah. Well, you completed step one. Congratulations. That’s the first step. I’d be worried about you if you didn’t do that. So step one of the process is experienced fear.
Okay. So far so good. Right? You’re ready for the next step. Do it anyway. That’s step two. That’s literally that’s that’s all. Courage is. So it’s like, Oh good. I’m experiencing fear. It’s like, Oh good. You know, I read this book confessions of a public speaker before I did my first speech on stage. And he talks about how, like, you know, it’s, it’s a very natural thing to be on stage in front of a ton of other beings staring at you and to get sweaty palms and butterflies in your stomach, like that is natural.
And so even if you’ve done this before, like before you walk out on a stage where everyone’s going to stare at you, your, your palms might get sweaty. It’s natural. But if you, if you don’t understand that it’s natural, you’re like, what’s wrong with me? You know, I’m just such a newb. You know, I haven’t done this before.
Like I, and you start to feel insecure. But the pro goes, I get at Palm sweating, like such a silly body, you know, like this is a part of the process. Like, here we go. Okay. Palms are sweating and knees, weak arms are heavy. No
Dan: [01:50:16] I’m just, I can’t get over
Sean: [01:50:18] vomit on his sweater already. Mom’s spaghetti. He’s nervous, Dan.
Dan: [01:50:23] what you’re doing. I see what you’re doing.
Sean: [01:50:26] But on the surface he looks calm and ready.
Dan: [01:50:33] Okay. Corey is tracking with
Sean: [01:50:34] to drop
Dan: [01:50:35] bad. He’s not, what was he dropping though? The bombs. This is the worst after show ever.