On Pricing Strategically

This is a tremendous article on Pricing Strategy for Creatives (written by the Chief Innovation Officer of an accountancy firm) that is spot-on for everyone struggling with pricing their services (including lawyers).  Please read it.

Here are some excerpts on becoming strategic about pricing:

1. Price by the service, not by the hour. Though very normal for the creative professions, one of the most non-strategic things you can do is to charge by the hour. Why do you charge by the hour? You may have read about charging by the hour in a book, seen your previous firm do it, or heard a friend say that’s how you were supposed to do it. 

2. Slow down your sales process. Slow down how, when, and who you take on as clients. You need time to determine a client’s needs before you price their projects. You must know what outcomes they desire. Diving into a project with a minimalist contract that speaks to your hourly rate will not let you know when your client is truly ecstatic about your work. And the only reason to serve clients is to bring great value to them and make them extremely happy!

3. Inject value into your client’s experience with your service. You simply have to charge more. That is a totally strategic move, and one you can’t do unless you have the guts to do it. But you can’t charge more for crap. It’s a little known secret that you can charge not only for your creative work, but for the client experience around the work you deliver. In essence, you can price things that have nothing to do with design, but have everything to do with the experience your client encountered throughout the process of engaging with you on their project.

There’s more in the article about establishing a better client intake process and charging what you’re worth.  My favorite part, though, the author’s discussion on how to have the “value vs. price” conversation with your potential client:

For example, you can ask a client “what is the greatest outcome you can imagine from my work with your company?” Maybe they’ll say “I want your work to be so effective that we sell 15 to 20 percent more products compared to this same time last year.” Now you can attach your price to their outcomes. So you might say, “My base price is $50,000, but if you sell between 15 and 20 percent more products than this time last year, then I will receive a bonus payment of 5 percent on your additional sales.” This links what you get paid directly to outcomes. And the clients won’t mind paying if you helped them sell more stuff. Everybody’s happy!

A great read.