Value pricing is client-focused pricing

For agencies and freelancers, proposals are at the nexus of communicating the value of your work. With the care of a love letter, you articulate your grasp of what the client wants out of the deal and how you plan to uniquely deliver it. And wedged in there is a bit about what they will pay you for your time and/or the deliverables. You put a ton of thinking about what needs to be delivered and how much time it will take. Then you hope for your own Navi to discern what the client is willing to pay and how your price compares to the other agencies on the bid list. Does that sound familiar?

In value pricing, the process is not the benefit

I’ve found that is the wrong approach. If we draw a line between our time, process or even the deliverables and the price, we’ve missed out on 90% of the value in the project. Wat? Yes. None of us really care about the process or the time that went into making a product, unless it is a direct benefit. What if Apple said, we’ve got this magical new product and it will cost you $$$, worth every penny because of all the equipment we had to buy, the engineers we had to hire, and the aluminum we had to procure. Since they understand value pricing, they mercifully spare those details and leave me to enjoy the benefit.

 

Product companies don’t care how many hours it takes you, they just want their product shipped.
— Anthony Armendiraz of Funsize

Similarly, there is no value to your client in how much time or effort it takes you to make a thing or many screens you design or whether there was extra work to make the site responsive.  The client hires you to solve a problem that improves their situation. Think how much more powerful your proposal becomes when changed from “Pay me $ because it will take me this much time, use this process, and produce these things” to “I will solve this problem that means $$$ to you, and it will only cost you $.”

Where do I sign?

You’ve just established that the price is a fraction of the value the client will get in return. That's a very different conversation. If you frame the value of your work as a direct result of your input, time, and effort, then don’t be shocked when the client questions if their money is truly well-spent. But if you frame it in terms the positive result your work helps achieve for the client, your fee becomes a small price to pay for such an obvious benefit.  In value pricing, your fee, while still a part of the proposal, is pushed farther towards the peripheral of the discussion.

And there you have the start to better pricing: Set according the value the client perceives in the result you provide.