September 8, 2023
Kris: Hello and welcome to the Design and Prosper podcast. You’re listening to episode 95 and this is a Q& A quickie where we answer a designer question about pricing.
[Intro Music]
Don: Hey, hello.
Kris: Hello welcome.
Don: welcome in. So today’s question is from a beautiful designer who would love to know about hourly pricing.
Kris: Yes. So here it is. Hi, Kris and Don, I have a question regarding project pricing for different sized clients, small mid-sized and large should my hourly pricing change depending on the size of my client’s business. Great question
Don: such a good question. We love it. Yeah, absolutely. The old hourly pricing changing for the client’s needs and demands. You know, I think we’ve all been there. We’ve all made assumptions on how much a client can afford. And we’ve tried to, you know, bend ourselves inside out like a pretzel to help to meet them where they’re at.
But we are here today to tell you. Do not price your services based on anybody else’s business but your own. That’s it. Full stop. End of story. What’s your business model? Your business. Your way. Your pricing.
Kris: your pricing. Yeah. Because otherwise you are really setting yourself up for failure essentially, because you’ll be ebbing and flowing to every client and goodness knows designers we tend to make assumptions about clients that might not even be true.
You know, we might be thinking, oh, they don’t have any money.
Don: Yeah.
Kris: You don’t know what funds they’ve got access to.
Don: Yeah. That’s right. They might be a startup. So you, you are assuming because they’re starting up, they don’t have a lot of money, but they might have a grant. They might have somebody who’s invested in the business.
You just don’t know. They might have a really, really healthy bank account and their kickoff balance is, is really, really healthy. So we, we encourage you not to make any assumptions about what a client can and cannot afford. And we really encourage you to stay strong to your business model, to your business, your way.
So that’s a whole other conversation. That’s a whole other podcast, working out your business model, working out what Offerings you have, working out, all of that type of value that you’ve delivered to your clients. But when you do land there, and you are clear, then we encourage you to stay in your lane.
Stick with that beautiful value based pricing, as opposed to hourly based pricing.
Kris: Yes, so whenever you say yes to something, you’re saying no to something else, right, and vice versa.
So if you’re saying, yes, I’ll do that for 50 per hour for that client, you’re essentially shutting the door to being able to do work at, say, 150 per hour for another client. So you need to look at the big picture of your overall business model, and we need to work that out. Like, what does my hourly rate need to be in order to live the life that I want and to have the income that I need to support my life and my family or whoever is a part of your life.
So we can’t, we can’t just be going, okay. Big company need to charge them a lot. Smaller company need to charge them less, but there’s other ways we can do it and Donna touched on value based pricing, which is really important to consider in this picture and in this equation, so if you haven’t downloaded our free pricing guide. We talk about how we structure pricing a bit in that. So, we have actual examples in that. But what we recommend is that you have your hourly rate behind the scenes.
We never share that with the client. They don’t need to know your hourly rate. It’s none of their business. They don’t need to know the hourly rate.
Don: yeah
Kris: It’s none of their business. They don’t need to know the ins and outs and the structure behind your business model. It’s
Don: that’s what Kris was speaking about just a little bit earlier when she was saying charging one client 15 an hour and another, blocking off the ability to charge another 1. 50 an hour. That’s all behind the scenes there that we’re talking about.
Not, we’re not ever telling or sharing that price. It’s really, really important that, The foundations of your pricing model are built from understanding how many hours it’s going to take you. So you need to know that intel, but your client doesn’t need to know that. So rather than give them an hourly based, it’s value based, project based.
So our pricing guide goes into all of that. And we talk about the transformation that you’re offering. So do yourself a favor. If you don’t have that, make sure you download it. We’ll have the link in our show notes for you, like Kris said. So. Grab that. We go into a lot of detail with that.
Kris: So essentially, you need to have your base price based on hours, like Don said, because otherwise it’s really hard to measure your success in your business, if you don’t really have an understanding of how long things take you. But then we add on a percentage. So the transformation factor, the complexity factor.
That’s where your profit is, right? That’s the business profit. And if you’ve got a very large client, they’re most likely going to need a higher complexity factor. Possibly even a higher transformation factor because they’re, they’re a bigger client. They’ve got more moving pieces. It’s going to be more complicated.
You might have to deal with a marketing manager who’s then dealing with the director
Don: Or a whole board, haha, that’s complex. That’s complex.
Kris: So you need to have that in there. And, Yeah, just never, there is never a need to reveal your hourly rate to clients, and there’s certainly other ways that you can provide great value to clients with a smaller budget.
Don: Absolutely. So we have a couple of podcasts that we’ve done in the past that take a deep dive into just that topic. So what to do when clients can’t afford you, listen to episode 61 and then also episode 88, how to use formula based design to maximize profits.
So they’re both ways of beautifully meeting a client where they are at with their budget without compromising. what you do. So we’re always wanting to make sure that what we do and deliver, we are being paid appropriately for.
Kris: Yeah, some of our favourite clients initially had very low budgets, but we still wanted to work with them, and then we had the privilege of seeing them grow, and then their budgets increased.
Don: That’s it. That’s the magic cycle of a really strong brand, right? So we had clients come to us that couldn’t afford us and we used formula based pricing. And like I said, Listen to podcast number 88, we go into detail about it.
But then because of the power of the transformation you offer, their business grows, their budgets grow, then they can spend more money with you, your business grows, et cetera. It’s this beautiful, add on effect that happens when we’re growing. When they are growing and we’re doing our job to help them grow, we inevitably grow as well.
So, there are ways you can really get behind a client who, who doesn’t have a really big budget without compromising the integrity of your business model.
Kris: Yeah. So we just have to remember it is your business, your way, right? It has to make sense and it has to make sense for you and what your goals are. We can’t be all swept up in our clients because then they are essentially running our businesses. We can’t have that. You need to be in control and you need to be very clear on this stuff as well.
We’re not just saying this stuff is easy. You do need to figure all this out behind the scenes. We do all this in the academy with our students and also with our one to one coaching clients as well. There is a lot of behind the scenes that needs to go into your pricing
Don: That foundational work. Yeah. That you, that you do to really understand the value that you offer. And it’s probably a good point now to note that, beautiful designer, we’ve been answering your question. And we, you will notice that we have rarely used hourly pricing to change for the client.
We’re talking about the value. We really want that one to land for you so that, that little tiny paradigm shift of, of knowing that A, I don’t have to share my hourly rates with my client. That’s a game changer.
Kris: not just a rate.
Don: I’m not just a rate. No. There’s transformation that happens. There’s value that happens. And what, what we’re talking about right now, that foundational work that crystallizes in your business.
Once you do the work and that, that Intel crystallizes, you will have no trouble, no trouble whatsoever offering up what you do at a value based price to any and all clients. And they will either be ready to pay for it, or they won’t be. And if they’re not… And you can’t meet them in another way, such as episode 61 or episode 88, again, check those out, then maybe they’re not for you. Maybe they’re not your ideal client, and that’s okay too.
Kris: Maybe they’re not the value you offer, not the price. And honestly, people don’t buy based on price.
They buy based on the perception of the value that they’re going to get. Are they gonna get value? Is there something in this for me? Am I going to grow? And we go into this also in a free training. So make sure you go and watch that.
Don: Yes,
Kris: Go sign up for that. just Go to designandprosper.co/premiumpricing. That training is gold. It’s free. Go and go and watch it. Go and watch it. Stop what you’re doing. Go and watch it. Because we’re at the end of the podcast so you can do that now. Just go, go and listen to that. Because it will help you to understand the psychology behind why people purchase, why people will want to pay higher prices.
Don: And remember that expensive or cheap is subjective. So as long as you portray the value and it’s evident, that transformation, that value is communicated, then the value will be evident and people will be happy to pay for it. It’s that simple.
Kris: Okay. So we also mentioned our pricing guide earlier. So if you’re thinking, what is this pricing guide? You can grab that as well. Just head to designandprosper.co/free. And we’ve got loads of examples of pricing for designers. And the ideas, some of the ideas that we’ve mentioned in this podcast. So go and get that one as well.
Don: So remember beautiful designer, your business, your way. And by ebbing and swaying to meet a business where they are at, whether they’re larger or small business means that you are allowing that business to imprint on you.
Kris: Yeah, you’re gonna compromise your own business.
Don: Yeah, yeah. So your business, your way.
Kris: Okay, so for everybody else listening, please submit your questions via our website.
We love, love love to hear them and we’d love to feature them in another Q& A episode coming up. So head to designandprosper. co forward slash podcast and you can find a where you can submit your questions there and you can also ask us in a DM via Instagram as well. That’s totally fine.
Don: Reach out. Reach out. Yeah. Let us know. We’re just loving these quickies. They’re so much fun. So please keep them coming.
Kris: Yay. Okay. Have a beautiful rest of your week, everybody, and we’ll see you soon.
Don: Reach out. Let us know. We’re just loving these quickies. They’re so much fun. So please keep them coming.
See ya. Bye.
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