Value-Based Pricing: Breaking the Time Barrier [en]

[fr] En tant qu'indépendant, il faut absolument s'éloigner d'un modèle où l'on facture pour son temps -- et facturer en fonction de la valuer qu'apporte notre travail au client. Cela implique une toute autre approche de la relation client et du travail de l'indépendant, très bien expliquée dans le ebook Breaking The Time Barrier. Une heure de lecture en Anglais, un peu plus si vous êtes moins à l'aise. Mais elle va vous faire gagner de l'argent.

Today I read Breaking the Time Barrier. It’s a quick read, an hour or so if you take your time. If you’re a freelancer, you should read it. If you have an hourly rate and are selling your time, you should read it even more. Thanks a lot to Claude for sharing this e-book on the Going Solo Discuss group.

I was first introduced to the concept of value-based pricing by Martin Roell on the occasion of his introductory workshop on consulting at Lift’07. It made perfect sense: if your expertise can solve a client’s problem in 3 minutes, should you really be paid only for three minutes of your time?

As I was explaining to a prospective client of mine Monday morning, when you spend half a day doing an exploratory workshop with me (to try and figure out what the f*** to do with social media, if anything), you’re not paying for four hours of my time. You’re paying to have answers. You’re paying to know what to do. Why would I charge you less if I can help you get there in just four hours than if I dragged you along for two whole weeks?

Since way back when, I’ve tried as much as possible to price my services based on their value to the client, and not based on how long it takes me. Time-based fees make my skin crawl: the client wants to keep the number of hours down, the consultant wants them to go up. It’s a really stupid system. It also implicitly encourages an “employee/employer” relationship, with the client possibly breathing down your neck to make sure you’re making good use of this time of yours he’s buying.

After reading Breaking the Time Barrier, I’ve understood one of my missing links: not putting a number on the value my client will get out of my work — which is a necessary element to pricing my service as an investment.

I’m also always a bit torn about my exploratory workshops: I charge for them separately, because too many times I ended up doing a workshop, writing up proposals, and end up with the client walking away. I realize now that on some of the occasions my proposals were not adequate because I had not understood the monetary value what my client was hoping to get out of the investment they would be making with me. One of my issues is also that a lot of the value I bring is advice, and that is sometimes all my clients need from me. Sometimes all they needed was that initial workshop. I still haven’t really decided how to deal with this, but I realize I need to think about it.

I also find it hard to stand firm sometimes with clients who insist on counting in hours. Business is so formatted to function like this that even when you tell people that you have no hourly rate, also because all your hours are not worth the same, and how many hours you spend on something is your problem and not theirs, and that what is important on their side is the result and value they are going to get, the conversation still ends up drifting back to “ok, sure, but how much will you charge for a day a month?”

I’m also having trouble applying this model to training. Training typically is something with a day rate. How do I provide value-based training? Focus on competencies and outcomes — but then, there is the unknown: how well the student learns. It does not take a fixed effort to teach something to somebody. Some people learn fast, and with others… you can start again from the beginning next month.

So there we are… my questions-in-the-guise-of-musings to Karen in the story.

Do you still have a day/hourly rate? Do you apply value-based pricing for your business, or part of it? Do you have any answers for the points I still struggle with after all these years?

3rd #back2blog challenge (9/10), with: Brigitte Djajasasmita (@bibiweb), Baudouin Van Humbeeck (@somebaudy), Mlle Cassis (@mlle_cassis), Luca Palli (@lpalli), Yann Kerveno (@justaboutvelo), Annemarie Fuschetto (@libellula_free), Ewan Spence (@ewan), Kantu (@kantutita), Jean-François Genoud (@jfgpro), Michelle Carrupt (@cmic), Sally O’Brien (@swissingaround), Adam Tinworth (@adders), Mathieu Laferrière (@mlaferriere), Graham Holliday (@noodlepie), Denis Dogvopoliy (@dennydov), Christine Cavalier (@purplecar), Emmanuel Clément (@emmanuelc), Xavier Bertschy (@xavier83). Follow #back2blog.

Writing: Source of Income or Marketing Budget? [en]

[fr] Ecrire pour gagner de l'argent (en tous cas en tant qu'indépendant) ça ne rapporte pas des masses. Par contre, écrire est un formidable moyen de promouvoir ce qu'on fait (indirectement). Je propose donc de considérer l'écriture comme "budget marketing" plutôt que "source de revenu" (si on arrive à gagner de l'argent, tant mieux... mais ce n'est pas le but premier!)

A couple of days ago I was talking to a friend, who amongst various activities she juggles as a freelancer, is a journalist. Lately, she’s been less satisfied by her journalistic work, which ends up not paying much, and was wondering whether it really made sense to keep on writing. But actually, her work as a journalist is what gives her contacts and leads for her other activities: so it makes sense for her to keep on being a journalist — but not for the money, as a marketing investment.

Come to think of it, I’ve only very rarely earned money by doing actual writing. I did an article for a local paper once, but honestly, the amount I was paid for the work I put in just made no sense. So, yes, as a marketing strategy, it’s interesting, but not for actually putting food on the table.

Even the work I did for Fleur de Pains, though decently paid, was way more work than expected and ended up being not that much money for the energy it took. Consulting, speaking and training are clearly better sources of income, or managing “my type” of projects (blog editing, coworking space, or conference blogger accreditations for example).

Most of what I’ve read over the last six months about writing fiction also points in that direction: writing for a living is insanely hard work and will not make you rich. We’re blinded by the black swans out there named J. K. Rowling and other successful writers. Most people who write for a living don’t become insanely rich, and most of those who try to make a living out of writing fail.

So, where does that leave us/me? I love writing, and I’m not too bad at it. Honestly, writing is its own reward, as far as I’m concerned. That’s why I’ve kept this blog going for the last 10 years (by the way: take a moment now to let me know what your favourite articles from CTTS are — the blogversary is less than 48 hours away!). And honestly, I think I’ll never stop writing. But I don’t think it makes sense for me to try to actually earn a living doing it. Which doesn’t mean I’m closing the door to earning *some* money writing — but if I do, it’ll be a happy *extra*.

So, in times like now where I’m giving quite a bit of thought to all I do for free and which ends up bringing me business, and also (given right now business is going pretty well) cutting back a little (not too much though!) on what does not earn me money directly, I am realising that I need to make it my priority to have enough time to write.

You know these blogging crises I go through regularly? “OMG I’m not blogging much I need to write more?” Well, here we are. If paid work keeps me from blogging, so be it — it means I’m earning lots of money right then, and I can live with that for a while. But if unpaid “marketing budget” stuff keeps me from blogging, something is wrong.

So this is what my hierarchy of priorities could look like:

paid work > blogging > other writing (“for others”, or requested by others) > other marketing/networking/promotional activities

What about you? Where does writing fit in the “stuff you do”?