You're probably not ready for value pricing

The shift from time, effort, and deliverable pricing to value pricing can represent a sea change for you practice. Like with anything worth having, building the principle of a value pricing into your culture will bring the painful shedding of old habits. Not to mention scary. So yeah, you're probably not ready. But that's ok.

We all know what can happen when we take on the fight too soon.  So prepare for all your old models to be either thrown out or retooled. You can't use the benchmarks of other agency's fees. You absolutely cannot charge by the hour or even mention time in relation to price. It will test your confidence in your value like never before. And with so few in the industry that take this approach, you won't have a lot of people to turn to for advice.

It can be a lonely road to walk.

But the prize is the ability to incrementally increase your effort while exponentially increasing your income. Which, let's face it, would be pretty awesome. And I'm here for you. So keep the faith commit to learning a better way to price. Let me offer some ways I think you can prepare yourself.

...the prize is the ability to incrementally increase your effort while exponentially increasing your income.

Do the work

There's no getting around it: proposals in any form are serious work. However, for value pricing, the true value to the client (not the amount of work for you), requires even more investment in the pre-bid discovery process than before. It's an entirely new, lengthy, and often uncomfortable approach to avoid the easy route of focusing on the time it will take you.  But I think you'll find that the investment reaps a return far greater than the time involved.

Take the risk

You have to be willing to hear "no" for a bunch of new reasons. You are too expensive, I can't agree to these conditions, or we only hire hourly rate vendors. But the biggest enemy to overcome is your own excuses. Excuses like fear of the out-of-control-un-billable-time-scope-creep monster. While the potential for failures is always there, the worst-possible-scenario part of your brain makes them loom like your own personal financial industry collapse. You aren't writing mortgage loans here. 

It’s one thing to state a belief and quite another to defend it when a significant amount of money is on the line.
— Tim Williams from Positioning for Professionals


Leave the money

We all have our values. And then there's our values in front of a pile of cash. As Tim Williams says, "It's one thing to state a belief and quite another to defend it when a significant amount of money is on the line." The first time a client offers you two months salary in exchange for hourly billing...fortitude, where art thou? But with our money goggles on, it's hard to see the next client just rounding the corner, ready to pay even more and demand less. Or spot our reputation ready to take a swing on the hangman's rope if we take the deal.

Embrace the uncomfortable

The trouble with fighting the status quo is that it put us in awkward situations. On the list of commonly asked questions, "What's your hourly rate?" (which you won't have) ranks near the top. Clients also might not like the probing questions you ask or that you stand by your standards. Peers will ask why you go to so much trouble. Your mom will wonder how you pay the mortgage. This is a worthy cause. Learn to love it.

So I'm saying, count up the cost before you take on the challenge. But I can tell you from the other side, it's worth it.