The price is right, or is it?
Hey there,
It’s Robin, from CFD Engine, how’s your week been? This week I’m taking a diversion into the business of CFD, in particular, pricing projects.
So, come on down, the price is right, or is it? Who knows? 🤯
As I mentioned before, I’m not very good at the whole “business” thing. As it turns out, there’s a list of business-y things (all beginning with P 🤷♂️) that I’m not very good at – prospecting, positioning, promotion & pricing.
Roughly translated, here’s what I hear when I think of those things:
- Prospecting – “Yeah, but I don’t want to bother anyone”
- Positioning – “Yeah, but I don’t want to miss out on any projects”
- Promotion – “Yeah, but my stuff’s not that interesting “
- Pricing – “Yeah, I’m sure we can do something for that price”
I might do an email on each one 🤔 But in this email, I wanted to share a few thoughts on pricing, in case it’s something you’ve been thinking about too.
Projects not Hours
Q: “What’s your hourly rate?”
A: “I don’t know, I don’t sell hours. But, I can help you with your new aero pack, let’s start there.”
Not a real conversation, but you get the idea. Being billed out by the hour, whilst being paid a salary, always felt a bit off to me. I get why it’s the norm, but I think we can do better.
I really like the concept of value pricing – in essence, your quote should be based on the value that it delivers to your client, not how long it might take you (check out anything by Jonathan Stark to dig deeper).
I don’t think I’ve ever actually managed to value-price a project. I always quote fixed prices, but value-pricing involves more than just that. You need to develop (& communicate) an understanding of the value you’re providing to the client. That involves asking some tricky questions and sticking your nose into areas that most other CFD people wouldn’t – that’s the bit I’m not great at.
I’m convinced that I could do it (or get close to it) for most of my projects, and that it would increase my per-project revenue. But my scarcity mindset, and too little deal flow, combine to stop me giving it a fair go (that ties in to the prospecting & positioning bits – see how they all play into each other?).
What’s the market rate?
All that said, I think hourly/day rates remain the default in our space. I ditched day rates such a long time ago that I’ve no idea what current “market rates” are. I still find myself, mentally translating my project quotes into days via my last daily rate. It’s 10+ years out of date, so I hope it’s gone up a bit since then 🤞 I have no idea why I do it, but it could have something to do with the next one…
What would I pay?
I spend far too much time thinking about whether I’d pay my fee for that project/service. I’m definitely not my ideal client, but I regularly catch myself thinking “Would I pay that, for that? The answer is usually “No” and then I slim the quote down. I need to break this habit 😶
Prices on the website
I think it helps to have (at least) an indication of a price on your website. Mine are a little arbitrary & they need revising (upwards) but they’re there. If a prospect sees them and then contacts me about a project, at least we both know which ballpark we’re playing in.
No discounts
This is one I’m actually OK at. Once I’ve issued a quote then I don’t discount it without reducing the scope of work. This one, plus asking for a good proportion of the bill upfront, has been surprisingly easy to stick to.
Your money back
I usually offer a time-based, money-back guarantee & I make sure to promote it to the client. If you’re not happy after 30-days, then let me know & I’ll give you your money back – no questions.
Have you got this?
I’m not great at this stuff, hopefully you are. If not, don’t worry, there are plenty of us trying to figure it out. After all, “the CFD is the easy bit”.
Do you have any pricing stories you can share? I’m keen to hear about your experience with this, potentially tricky subject. What have you’ve discovered? Drop me a note – we’re all learning together.
Until next week, CFD safely
