Art Of Value

Discover Value | Create Options | Start Pricing

WordPress News Is Not A Commodity with Brian Krogsgard – 113

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Brian Krogsgard is a WordPress developer from Birmingham, AL. He is the founder and editor of Post Status, a WordPress newsletter, and the host of Post Status Draft, a podcast for WordPress developers. He started working with WordPress in 2010, after graduating from Auburn University with a degree in mechanical engineering.

Starting As a WordPress Developer

What is the most important thing you can share about pricing?

Pricing is not “one size fits all.” It varies depending on the customer,  context, and degree of risk. The objective should be to maximize value for the customer and profit, not revenue, for the business.

What was your journey to becoming a freelancer?

His first development position was at a small agency, helping clients transition from a proprietary CMS to WordPress. At the next agency, Brian was the operations manager. He was responsible for determining scope, setting prices and presenting proposals to customers.

He started pricing websites by the number of pages or functional modules. Over time, he learned to price by the number of leads and average revenue per lead that the website would create for the customer.

What is the difference between developing websites and construction projects?

The progress of a construction project is very visible to the client. However, a website is not something a client can drive by and see. Regular communication is necessary to convey progress to the client.

Did the agencies where you worked compete through price or specialization?

The first agency was a full-service design shop, mainly in the state of Alabama. Their strongest competitive advantage was personal relationships, building trust with the customer.

The second agency was a boutique firm, focusing on high-end WordPress sites. Customers were attracted to their expertise even when the price was higher than the competition.

Making the Transition to Publisher

What did you learn from writing the article How much should a custom WordPress website cost?

The article was written in 3 hours one night from his frustration writing customer proposals. The feedback to the article helped Brian build a framework of the most common factors when setting a price. The article was viewed over 50,000 times in the first few weeks alone. The short answer to the question is, “It depends.”

What was your journey from free news to paid memberships with Post Status?

Brian learned web development by writing about WordPress. He started PostStatus in 2013, after writing WordPress news for other sites. Then in 2015, he began the transition to a paid membership site for $99 per year. The site has grown to 700+ paid members.

What did you learn about pricing membership sites?

There are three ways to buy PostStatus. First, a dozen companies are sponsors because of Brian's reputation in the WordPress community. Second, individuals can pay either $99 or $365 annually. $99 is the sweet spot, an impulse buy. $365 is a patron level, supporting the artist.

What is one of your best stories about creating value for a customer?

Each year, Brian chooses a non-profit to which he contributes his consulting services. It is an opportunity to keep his skills sharp and help a cause in which he believes.

Contact Brian Krogsgard

Designing Value for Your Online Course with Janelle Allen – 102

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Janelle Allen is a learning designer of online courses at Zen Courses and the host of the Zen Courses Show. In this episode, we discuss how to create significant value for your course. In the first segment, we explore the most important factor, learner success. During the next segment, she explains how to determine what success is for the learner. Then in the last segment, we review the most successful pricing strategy for online courses.

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The Learner-Focused Approach

What is the most important thing you can share about pricing?

Pricing is based on contextual data. The more you know about your audience and why they buy from you, the easier it is to create options and set a price.

What is a learning or instructional designer?

A professional who studies how adults learn and then applies learning theory and principles to education mediums.

What is the value of working with a learning designer?

You create your course with a focus on learner success rather than content marketing. Everything starts with the goal for the learner. What tools do they need to be successful? How do they prefer to engage with the material?

Getting to Know Your Learner

How do you take a learner-focused approach when creating an online course?

  • Ask the learner what they should be able to do after completing the course. Once you know the answer, work backward to design the material to achieve the result.
  • Next, focus on the learner journey. Where will the learner start? What obstacles will the learner encounter during the course? How can you encourage the learner to complete it?

What is the most common mistake when creating an online course?

Think about your results first–your revenue, your profit–instead of thinking about the goal of the learner. Focus on the educational outcome and then create the sales and marketing strategy.

How can you get to know your learner better?

  1. Create an email list with regular content so you learner can interact with you.
  2. Survey your email list to gather information about their needs and wants.
  3. Conduct short Skype interviews with learners to get a deeper perspective.

What is the relationship between consulting and creating an online course?

Consulting allows you to get to know your customers intimately. You can understand opportunities, problems, and challenges from their point of view.

Pricing Your Online Course

What is the most important metric to measure the success of your students?

  1. What is the desired outcome for the learner to be able to achieve?
  2. What are the objectives necessary to reach the outcome?
  3. What activities do they need to complete those objectives?

How do you approach pricing an online course?

Tiered pricing is the key strategy. Offer your customers different value at different prices. Although three is the best number of options, it is helpful to start with two options and learn what your audience wants. Pricing is an iterative process.

What is a learning platform you like for creating online courses?

Thinkific provides great features for creating activities to measure and encourage learner success.

What is one of your best stories about creating value for a customer?

Janelle helped Pearson Education create a biology course for a nursing program. She designed a new learning model that increased student success by 25%.

About Janelle Allen

Narrative Is the Medium for Value with Chris Lema – 101

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Chris Lema is a software product strategist and daily blogger at ChrisLema.com. In this episode, we discuss value pricing in the enterprise market and creating membership sites. During the first segment, we explore selling software to large customers through story and value. In the second segment, Chris explains why a subscription service is actually a membership site and how to maximize revenue with pricing.

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Selling to the Enterprise

What is the most important thing you can share about pricing?

Never put a price in front of a customer until you understand what is motivating them. The customer's perception of value is different than yours. You need to understand their back story.

Is selling software to the enterprise different than to small-medium business?

The length of the sales cycle is extended for the enterprise. There are more stakeholders. It takes longer to understand the complexity of the back story. Consequently, the dynamics of pricing are also different.

How do you handle a value conversation in the enterprise?

  1. When a customer asks for something, have a value conversation to understand why they need it.
  2. Next, create options to give the customer choices with various prices, timeframes, and outcomes.
  3. Then, develop a narrative from the perspective of the stakeholders and frame your product/service as an accelerator.

How is selling a product different from selling a service?

For Chris, selling a product is easier because you can create one narrative for each market segment instead for each customer. In the enterprise, bundling customization (services) with a product is a strategic advantage.

Pricing for Membership Sites

What are some pricing models for membership sites?

The most common is a monthly subscription. However, the average monthly revenue is $17 and the subscription term is 4-6 months. A yearly subscription can create a more sustainable business. Another model is a lower membership fee and higher prices for premium content.

What are some stand-out membership sites?

  • MatterMark – Provides research data to salespeople for $500 per month.
  • Subscription Insider – Provides research data for membership sites for $60 per month.
  • ConvertKit or Drip – Email marketing automation starting under $100 per month.

Why is a subscription service really a membership site?

A subscription is a monthly financial transaction. Membership is being a part of something. The question is what does being a member mean? What is the narrative (or value) to which you belong?

What is one of your best stories about creating value for a customer?

Chris helped Roar create version 1.0 of their product using existing software. The company was able to prove there was a viable market for $20K. Later the company was sold for 7-figures.

About Chris Lema

The Mental Health of the Entrepreneur with Cory Miller – 091

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Mental health is a tabu subject. And that is exactly why Cory Miller is sharing his story. He went through a divorce, and one of the effects was depression. It affected his ability to lead his team and make decisions in his business. Fortunately, he had an attorney who recognized the symptoms and suggested he see a counselor. Now, on the other side personal tragedy, Cory is telling entrepreneurs to pay attention to their mental health. He has done what few people would ever do. He was interviewed for Inc. magazine about his experience and is speaking openly at WordCamps across the country about the danger of poor mental health to your business and family.

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Get to Know Your Customer

  • What is the most important thing you can share about pricing?
    • Pricing is a part of a larger negotiation between the buyer and seller.
    • When you offer significant value, price does not matter; it is just a formality to pay it.
    • Price is the start of a negotiation.
    • It is bigger than a negotiation over a number.
    • It is a negotiation of value between buyer and seller.
  • What is the foremost pricing lesson you have learned at iThemes?
    • Know your customer to the core.
    • Provide exceptional value for the community to make their lives awesome.
    • Think of the core thing that you are trying to solve.
    • iThemes tries to save money, prevent loss of data and offer peace of mind.
    • What are the customers‘ obstacles, and challenges?
    • What is the customer's journey?
    • What obstacles that arise could our products solve?
    • Those answers direct product development, the sales page, and technical support.

[clickToTweet tweet=”When you offer significant value, price does not matter; it is just a formality to pay it.” quote=”When you offer significant value, price does not matter; it is just a formality to pay it.”]

Understand Value Like the Customer

  • What is the value conversation for a risk management product like backup or security?
    • BackupBuddy was created because a dedicated server crashed, without a backup.
      • Cory personally lost photos and blog content that he can never get back.
      • There is no number that he could assign to that loss.
      • He asks his customers, how much do you value your online work: website, e-commerce data, blog posts, comments?
    • iThemes Security was created because one of his websites was getting nailed with spam and bad login attempts.
      • Cory did not even understand how bad his site was being attacked.
    • These products are like insurance.
    • Empathize with the customer's journey.
    • It helps if you have your personal stories to relate.
  • What is the correct balance between gathering and implementing feedback?
    • The vocal minority tells you what is critical and what they want.
    • The majority is silent.
    • Customer empathy and understanding their journey is the key.
    • A translator between the customer and the developer is important to avoid disconnects.
    • You do not want the customer to talk directly to the developer becasue they speak different languages.
    • The technician and the customer perceive value in different ways.
  • What is the advantage of having a “customer advocate” on your team?
    • You have to step your game up to know and serve your customers better than the competition.
    • You want the customer to feel an empty void if you are to leave.
    • He is conducting his own iPhone vs. Android comparison to make sure he understands his customer's perception of value.
    • Get as close to the customer's experience as possible.
    • Understand whatever affects your customer and then think through the future and lead them.
    • iTheme's purpose is to take customers from transactional to transformational.
    • They want to go from making a profit to transforming lives, by making sure their customers are in the best place possible.

[clickToTweet tweet=”When employees know their leader is maintaining his health and happiness, they are more confident.” quote=”When employees know their leader is maintaining his health and happiness, they are more confident.”]

Your Mental Health Is Important

  • Why is mental health important to an entrepreneur?
    • Cory was interviewed for an article in Inc. magazine, Why This Entrepreneur Is Talking to the Tech World About Mental Health.
    • He is a voracious reader and shares articles with team members to increase their quality of life.
    • Entrepreneurism is a tough sport; most family and friends do not understand.
    • He shared his story publicly, including his mental health and divorce, and most people had no idea.
    • He wanted others to understand that they are not alone.
    • He was helped greatly by some experiences, and if he did not share them, it would be a tragedy.
    • The key is empathizing with your fellow human being; just care about people.
    • He chooses to use his time, talent and treasure to serve other human beings by making their lives awesome.
    • He was divorced and suffered low-grade depression.
    • The statistics for entrepreneurs shows he is not alone.
    • His attorney suggested he go to see a counselor.
    • His biggest fear was feeling vulnerable; he uses a digital journal to help.
    • Building intricate, healthy, loving, reciprocal relationships around you is important.
    • Four times a year, he calls his counselor to get a professional opinion, where he can unload his baggage and leave it at the door.
    • He sets time alone with his family and team to pour into each others' lives.
    • It makes you happier and healthier when you decide what you will and will not allow into your life.
  • What is the impact of good and poor mental health in your business?
    • At one point, his team was concerned.
    • He realized he had a responsibility to the people in the families supported by the business.
    • He had tried to skate by on his ego and pride, but he has committed never to try to do it alone again.
    • Healthy relationships and a professional counselor have made a big difference.
    • Being mentally healthy as the leader of the company makes his team better.
    • When they know their leader is working to maintain his own health and happiness, they are more confident in what the business is doing.
    • You have to be responsible for your happiness.
    • That responsibility applies to your team members too – you cannot carry them.
    • Six Pillars of Self-Esteem is a great book that he wished he had read as a child.
    • It helped him take responsibility of just being himself.
    • “Show up filled up” (Kary Oberbrunner) to take care of yourself, your family, your team and your customers.
    • Your health and happiness have to come first, or you are no good for your spouse, your kids, your team, etc.
    • Your customers and team, deep down, can see that things are not fully right.
  • What is one of the best books you have read about mental health?
    • He bought The Happiness Advantage for his team.
    • Share around your dinner table with your family 3 things that you are thankful for every night.
    • His favorite book is Six Pillars of Self-Esteem, about leading cautiously and accepting your feelings.
    • He has recommended reading on his site.
    • Books are a very cheap way to gain amazing wisdom.
    • By putting them on your Kindle, you can take them with you anywhere.
    • He has over 300 books on his iPhone so he can carry the wisdom with him.
  • What is one of your best stories about creating value for a customer?
    • Three years ago, he was at a WordCamp in New York City meeting with customers.
    • His wife asked him to share a story about how a customer's life was changed.
    • You can treasure the stories about how you are a part of a life transformation.

About Cory Miller

Cory Miller founded iThemes in 2008. iThemes was one of the first commercial companies in the WordPress space. Its mission is to make people's lives awesome. They have a core suite of products including BackupBuddy, iThemes Security, and Exchange. Before founding iThemes, Cory was the communication director of a church with a staff of zero.

Creating Proposals That Win Business with Curtis McHale – 087

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The traditional view of the proposal is that the professional must wow the customer with his expertise. A contrary view is the proposal is a collaboration between the professional and the customer. A collaboration that explores the value they can create, the value they should create, and the most valuable way to do it. WordPress developer and business coach, Curtis McHale, has achieved a high closing rate with his proposals by focusing on the results for the customer. His entire sales process, from the first email to the proposal presentation, is an inquiry into why the customer needs what he can provide. In this episode, Curtis explains what a good proposal is, and is not, and how focus on what really matters to the customer.

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A Proposal Is…

  • What is the most important thing you can share about pricing?
    • Find the value for the customer and then relate the price to that value.
    • Not finding the value is the worst mistake people make with proposals.
    • If you do not discover the value and tie it to your price, you will guess whether it is a good price for the customer.
    • Software developers tend to jump into the technical requirement too early.
    • Going slower allows you to build trust over time so you can learn the real value of the project.
    • He does not usually accept “rush” customers.
  • What is a proposal?
    • As Alan Weiss defines it, a proposal is a summary of the agreements that you have already made in your conversations.
    • As you talk to prospects, you can get to the real value by asking a series of why questions.
    • Ask why five times.
    • The customer is not an expert in your profession.
    • Slowing down helps to establish you as an expert.
    • As Tim Williams said, it is part logic and part magic. The customer will pay for the magic.

[clickToTweet tweet=”Not finding the value is the worst mistake with a proposal. #pricing #software #sales” quote=”Not finding the value is the worst mistake with a proposal.”]

Components of a Proposal

  • What should you exclude from a proposal?
    • A proposal is not a summary of every task you are going to do in a project.
    • You do not want to appear tactical, rather than strategic.
    • It is not to establish credibility or to win work over someone else.
    • For the scope, Curtis and the customer write a Google Doc without prices or timing.
    • The objectives are different from the scope/task list; objectives define the project's success.
    • By making it a collaborative effort with the customer, it creates an opportunity to identify problems and create more value, and thus improve your bottom line.
    • Not taking the time to build the relationship will create a desire to put your company's history in the proposal, which is a mistake.
  • What are the 6 key elements of a proposal?
    1. Define the current problem.
    2. List the objectives– high level focusing on the desired outcome.
    3. Gauging success statement.
    4. Three options, with option 1 fulfilling all the requirements of the project.
    5. Timeline, based on the options.
    6. Accountabilities for the customer and the provider.
  • Defining the elements:
    • Objectives are about the bright future, e.g., “to get more sales by driving more traffic” – like a sales letter to a specific customer.
    • Gauging success through metrics demonstrates that you are not just dreaming.
    • You can usually pull that information from your notes.
    • Gauging success needs to be something you can control; e.g., “we will be ready for responsive on mobile devices.”
    • Require action of your customer to help them succeed, when necessary.
    • To push through the fear of making requirements, take the time to think and say what is most accurate.
    • Do not forget the customer is paying you for your expertise.
    • Experience will teach you how to be confident in your expertise.
    • Putting the customer's bad idea in a proposal is the equivalent of malpractice.
  • What is a common reason a customer says “No” to a proposal?
    • You do not find their true budget.
    • Not making time to build the relationship with the customer.
    • In rare situations, something else takes precedence (and should), like a death in the family.
    • You realize that you did not talk to the real decision makers.

[clickToTweet tweet=”Putting a customer's bad idea in a proposal is malpractice. #value #pricing #sales” quote=”Putting a customer's bad idea in a proposal is malpractice.”]

Retainers and Requests for Proposal (RFPs)

  • What is a retainer?
    • A retainer is essentially an access agreement.
    • A fixed price is paid for access to professional to help with problems.
    • The rate varies depending on the need for the access.
    • Having access to the knowledge and experience creates value.
    • Individual access should be your most expensive offering.
  • Why is an RFP a waste of time?
    • There is typically a preferred provider.
    • If you do no know it is you, then it is not.
    • It is created by a committee and lays out everything for you.
    • Curtis declines RFPs and occasionally gets business because he is contrarian.
    • Usually, you will interact a committee in a large organization.
    • To establish creditability, you need to be intentional with your positioning (speaking to the right audiences, write guest posts for the top 5 sites in the industry, create a short white paper).
  • Why is it important to talk directly with the buyer?
    • Most often with RFPs, you are only speaking with the tactical person.
    • You want to speak with the person who, if he says yes, the project will happen.
    • Slow down, take time, and ask strategic questions to ensure that you are speaking with the right person.
    • No one can represent you better than you.
    • The decision maker will get the best information by directly talking to you.
    • 50% of projects fail in the software industry; 2/3rd are over time and budget.
    • Part of being a professional is not being part of the statistics.
    • The expert should have processes that are required to prevent failure.
    • Look for customers who want quality over a hard end date.
    • Sometimes, doing the right thing can be frustrating.
  • What is one of your best stories about creating value for a customer?
    • A nonprofit has been able to hire its first full-time employee, rather than just people who are volunteering, due to his work.
    • He will reap a reward from the long-run performance.
    • He has a lot of skin in the game and believes in what they are doing.

About Curtis McHale

Curtis McHale is an entrepreneur with 10 years experience and wins 90% of his proposals. He is a WordPress developer, specializing in membership sites. He is the author of two books, including his latest, Writing Proposals that Win Work. He is also a contributing writer to the Huffington Post, LifeHack.org, and Addicted2Success.

To enter to win a copy of Curtis' book, answer this question in the comments: What is the one thing that has helped you be more successful with your proposals?

Software Development Is A Profession with Tom McFarlin – 076

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Tom McFarlin is the founder of Pressware, which develops web apps with WordPress. He is also an open source software developer and an editor for Touch Code, an online technology magazine. Tom has been appointed a Microsoft Most Valued Professional 4 years in a row. He has a computer science degree from Georgia Tech.

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Solving Customer Problems

  • What is the most important thing you can share about pricing?
    • Start by looking at what you need to live, thinking forward into retirement.
    • Over time, you want to scale upward, just like you would in a traditional career path.
    • When you are self-employed, you do not have an annual review.
    • You want your pricing to be commensurate with your skill set and experience.
    • Base your pricing on:
      • Planning for the future while you are growing
      • The skill set you have developed
      • The experience you bring to your customer
    • By communicating value (high or low), your price attracts a certain type of customer. Do you want this type of customer?
    • You want the customer to see you as an investment rather than a cost.
  • How does a software developer create value for a customer?
    • Developers solve problems.
    • If you are just building things to scratch an itch, you are are a hobbyist.
    • Nobody wakes up and says: I want to pay someone to develop software today.
    • Developers need to work on solutions that matter because 50% of projects fail and 67% are over time and budget.
    • Several factors contribute to the failure rate.
    • The government said, “We will take care of healthcare.” Then the website did not work, perpetuating the industry stereotype.
  • What is can a developer do to create more value for a customer?
    • Create tighter/smaller feedback loops to deliver projects on time.
    • Do not assume you understand the requirements for a project when you see them in writing.
    • The customer terminology might be very different from what you assume.
    • You need to work with the customer to see it from their perspective.
    • You should work iteratively on a feature/requirement, asking the customer to verify it works as expected.
    • If you wait until the end of the project, you will have a large number of things to refine.
    • Make sure you are building what the customer wants in a timely fashion.
    • You have to develop the solution with the user's eyes, not the developer's eyes.
    • It is the developer's responsibility to say when you should not do what the customer wants.

Standards Create More Value

  • What is the value of coding standards for the developer and the customer?
    • Your source code is written in a predictable fashion.
    • It will look like a single developer wrote the code, regardless of the programmer.
    • There is less of a learning curve for the developer because it sets an expectation.
    • For the customer, coding standards save time and money.
    • When bringing in a new developer, he will be able to pick up the code more quickly.
    • Feature requests and bugs can be more quickly addressed, eliminating maintenance costs.
    • Ed Kless teaches the IT Smile Curve, where the ends of the curve (the problem to solve and ongoing support) are the most valuable.
    • Domain-driven design by Eric Evans looks at the problem from the user's perspective, rather than just writing code.
    • You usually find something that is simpler, once you begin solving the problem.
    • Software developers need to get better at asking questions to uncover to the simplest solution.
    • To improve software development, developers need margin to make mistakes and allow the customer to make mistakes.
    • Educating the customer on the process is part of the developer's responsibility.
  • Should a developer provide a free estimate for a software project?
    • Your experience will make you comfortable charging for estimates.
    • If you analyze the solution before being paid, the customer has no skin in the game.
    • If you charge for the estimate, the customer has skin in the game to choose you as a partner.
    • You are setting a precedent for the type of business you want.
    • If you give away estimates, you are devaluing the analysis in the customer's eyes.
    • If you provide a free estimate, the customer can take your proposal to someone else, which is an integrity issue.

Value in the WordPress Economy

  • What do you think about pricing in the WordPress ecosystem?
    • It is a race to the bottom right now.
    • Many of the products are cheap – both financially and technically.
    • Because of open source and the plug-and-play nature, you can call yourself a developer and charge $25/hour, devaluing what real developers do.
    • Good examples of sustainable businesses doing open source work:
    • Gravity Forms would risk a public outcry if the price were to increase.
    • The easiest way to increase a price is to add value, like with Hulu‘s non-commercial option.
  • What is the relationship between the WordPress Bill of Rights and the WordPress economy?
    • WordPress is General Public License (GPL), which provides a handful of benefits to the community, where a user:
      • Can run the program for any purpose
      • Can change how it works
      • Can redistribute it
      • Can modify and distribute it to others
    • Some try to obfuscate their source code, which raises an ethical question.
    • From a positive standpoint, there is a wide variety of libraries and tools to help build solutions.
    • You can explore APIs–figure out how they work and tie into them.
    • You stand on the shoulders of giants since you can see the source code.
    • You can create a sustainable business because customers want access to support.
  • What is one of your best stories about creating value for a customer?
    • The educational content that Tom has provided through source code, blog posts, screencasting, and speaking have created the most value.
    • He has had contacts from all over the world who request consulting, because of his desire to educate.
    • A thank-you email from a fan is valuable to him.

About Tom McFarlin

Creating and Pricing A WordPress Plugin with Jason Coleman – 075

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Jason Coleman is the founder of Stranger Studios and the creator of Paid Memberships Pro, a membership plugin for WordPress. He is the co-author of Building Web Apps with WordPress. Jason enjoys playing Minecraft and Super Mario Maker with his kids.

Kary Oberunner‘s podcast with Kirk is here: How to tell your friends their Digital Fly© is down (Episode 51)

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Transitioning from Services to Products

  • What is the most important thing you can share about pricing?
    • There is not one magic formula to price something.
    • Find as many methods of pricing as you can and use all of them.
    • Take what you learn to come up with a price.
    • If you are using different methods, you will notice that certain prices become a sweet spot.
    • You will learn about your market, your customer and the prices that do not work by using the various methods.
    • Do not get discouraged by competitors' prices, but rather learn how to educate your customers on the value to justify your price.
  • How did you get started developing websites for WordPress?
    • He has been making websites in high school.
    • After college, he worked at Accenture and then left to do freelance development with his wife.
    • They started making blog sites with WordPress.
    • In 2010, they started using WordPress for site development, pushing it to its limits.
    • They used a custom plugin they built for 5-7 e-commerce customers in 2011.
    •  They had a couple of customers who needed membership functionality, and they built Paid Memberships Pro as open-source from the ground up.
  • How did you make the switch from consulting to selling a product?
    • After creating the product, they started attracting membership-based consulting customers and established a niche.
    • Over time, they went from WordPress developers to membership site developers.
    • The switch helped their consulting business by attracting leads through the plugin.
    • They were able to charge a higher premium based on their expertise in the membership niche.
  • Is “repeatable” work more valuable than custom work?
    • Focus on a niche and try to do a repeatable engagement.
    • If you are doing the same kind of work, you get faster at it.
    • If you charge a fixed price, your effective rate goes up.
    • Your customers become more confident in signing up with you.
    • Products can include a consultation call.
    • During that consultation, you can qualify customers for future work.
    • He thinks of it as simplifying his business to allow him to do more of what he wants to do.

Selling Service As a Product

  • What are the advantages of selling service as a product?
    • “Do It For Me” was a product that included them installing the plugin for customers.
    • It was priced almost at a loss so they could become educated on use-cases from customers.
    • If you upsell consultant work to those customers, you guarantee that it is someone who can pay you.
    • The “product” lets you work on small, low-risk projects to feel out the customer.
  • What was the result of your recent price change for Paid Memberships Pro?
    • Before July 2015, they had one paid level, at $97/year, providing access to the support forums and advanced tutorials on the website; otherwise, the plugin was available for free.
    • In July, they added a second tier at $197/year, providing automatic updates for add-ons to integrate.
    • They knew the $97/year price was low; the higher price has worked.
    • They were going after market share and didn't want to hinder its initial growth.
    • By adding the higher level with additional value, they are selling more and getting a higher average revenue on sales, without any pushback from customers.
    • By introducing the higher price level, they were able to capture $100 more from most customers.
  • What are some pricing experiments you have planned in the future?
    • The one-week sale drove more people to purchase the product.
    • Jason learned there was room to increase prices when adding more value.
    • Time and materials analysis showed that it costs more than $47 to service a member, so having more paying customers is not the best thing for the business.
    • The current experiment will determine if a price increase to $297 will change who buys.
    • The reason stores show the original price vs. the sales price is to set the benchmark for value.
    • The current experiment will determine the conversion rate for different pricing while charging the customers the same amount.

Pricing for Membership Sites

  • What is the pricing add-on you are creating for Paid Memberships Pro?
    • Jason created an add-on to run A/B pricing tests.
    • You can set up an experiment to determine which price converts better.
    • That information is stored in the order to compare the experiments.
    • A customer is testing different landing pages to do A/B tests to see which converts better.
  • What have you learned about pricing membership sites from your customers?
    • In a lot of cases, simpler is better.
    • You can get creative about how to price the memberships, using the plugin.
    • He discovered that if things were difficult to code, they would be hard to explain to the end customer.
    • If you limit the number of options, it is better.
    • There is a psychology to drive people to one membership level by positioning three levels of value.
    • More than three options paralyzes people.
    • Episode #64 also discusses how to simplify options.
  • What is one of your best stories about creating value for a customer?
    • A lobbying organization for a branch of the military had an application process for membership.
    • The paper application was replaced by an online application.
    • Immediately after implementing it, their enrollment increased three times.
    • As an advocacy group, they not only got more people involved, they also increased revenue.
    • They were able to find more services for their members and were able to stay true to their mission.

About Jason Coleman

The Story of My Pricing Journey with Carrie Dils – 054

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Carrie Dils is a WordPress developer and business consultant, a recommended Genesis developer by StudioPress, and an author of WordPress training courses at Lynda.com. Personally, she is a lover of rescue dogs and a craft beer connoisseur.

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Getting Started in Web Development

  • What is the most important thing you can share about pricing?
    • Every time she has raised her rates, she has increased the quality of her customers.
    • By charging higher rates, she attracts a different kind of customer – one who values her as a consultant, not just a technologist.
    • People who are at lower price points tend to not value the business side.
    • They are not looking for a business solution; they are looking for the lowest price to execute a specific task.
  • Can an NDA have a negative impact on the customer relationship?
    • An NDA can start off with an adversarial relationship with the customer.
    • Requiring an NDA demonstrates a lack of trust.
    • You cannot create high value if there is not trust.
    • The spirit behind asking for an upfront NDA is the equivalent to asking for a prenup before you go on a first date.
  • How did you get started as a web developer?
    • After college, she only knew graphic design and a little HTML.
    • She was a freelancer and worked on banner ads for KLTY in the late 90s.
    • Carrie did not like cubicles and left the corporate world behind, thinking she would start her own coffee shop.
    • She learned she did not want to open a coffee shop after working as a barista at Starbucks.
    • From there, she started freelancing as a web developer.

Pricing for the Web Developer

  • How did you price projects when you were getting started?
    • Initially, she was at a loss for how to charge.
    • She threw a number out there – $50/hour.
    • If no one tells you that you are too expensive, then you are not charging enough.
    • She pushed her hourly rate upward until people said she was too expensive.
    • The frustration of running out of time inspired her to search for another possibility rather than billing by the hour.
    • She moved to a flat-fee quote.
    • She is dipping her toes into the area of value pricing.
  • What were the advantages and disadvantages of quoting a fixed price?
    • “Scope” can be a scary word.
    • If you guess what a project will take and quote based on that, without digging into the scope, you can lose.
    • When you scope a project up front (discovery, road mapping, needs analysis), your customer can invest at a lower dollar amount.
    • At the end, the customer gets a document of what the core issues are and what the goals/outcomes need to be.
    • The document is educational and enlightening to the customer.
    • There is a comfort factor by starting that way so that the customer trusts you.
  • What is the difference between recommending a solution vs. technology?
    • If you are talking about what to develop, they will tend to go toward technology.
    • If you are talking about why, they will tend to go toward a solution.
    • Curtis McCale shared his initial prospect email with Carrie, that has three simple questions:
      • Why now?
      • What does success look like?
      • What is your budget?
    • Those three questions allow your customer to think more critically about his project.
    • From a comfort standpoint, it is a benefit to your customer to believe that they are not locked into the entire process with the consultant.
    • Due to purchasing requirements, the customer has to send out an RFP and can use your road mapping document to do so.
    • The IT Smile Curve by Ed Kless demonstrates that road mapping and delivery are where the value of a project is.
  • Where are you succeeding in your value pricing journey?
    • She is doing a good job with consulting:
      • Asking good questions.
      • Engaging in great conversations.
    • She is struggling with connecting the dots between the value from the consulting and the price being charged for the product.
    • She has pushed her numbers on the fixed price, but she is not basing her price on what value the project delivers.
    • She sees her journey as an evolution and appreciates that it does not have to be all-or-nothing.
    • Curtis used a weekly billing rate for a while and Carrie tried it out. It caused unnecessary anxiety for the customer.
    • You have to try things out, experiment and see what works.
    • Ed Gandia was also value pricing and did not realize it.
    • The History of the Billable Hour is an eye-opening episode, to realize from where the practice came.

Adding Value Through Accessibility

  • How did you land your training gig with Lynda.com?
    • When she left Starbucks, her dad bought her a subscription to Lynda.com for her birthday.
    • She learned WordPress from Morten Rand-Hendriksen.
    • In 2013, she was at WordCamp (community event for WordPress “nerds”) and met Morten.
    • Several months later, Morten recommended her to Lynda.com.
  • What is the value of accessibility to a website owner?
    • Web accessibility is the idea that your content is accessible to anyone, regardless of the device being used to access the content.
    • You enable more people to consume your content and provide a greater opportunity to reach the customer.
    • Some people believe that web content should be more accessible because it is the right thing to do.
    • However, the business case for web accessibility is that you have a more cutting-edge website.
    • A website that looks good on a mobile device is given priority over sites that are not on Google.
    • US government sites, as well as other countries, require accessibility.
    • For example, inserting the image ALT tag for screen readers provides an alternate description of the image.
    • Podcasts without transcripts prohibit the deaf from getting your content.
    • The business benefit is that Google likes transcriptions.
  • What is one of your best stories about creating value for a customer?
    • Carrie enjoys maximizing impact by doing something that can be used repetitively to be helpful, like her episodes on Lynda.com.
    • They continue to deliver value to people's lives, despite being a one-time investment on her part.
    • The lasting value has been personally fulfilling to Carrie.

About Carrie Dils

The Real Goal of Value Pricing with Ben Furfie – 049

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Ben Furfie is a web designer who specializes in front-end development. Business wise, he focuses on lead generation for small to medium size businesses. Technology wise, he uses WordPress and the Genesis framework. He started out as a writer and then began to pick up the technology while working on magazine projects. He recently spoke at WordCamp in London on value pricing.

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First Exposure to Value Pricing

  • What is the most important thing you can share about pricing?
    • There has been an explosion of people becoming interested in value pricing, especially in the WordPress space.
    • They are misinterpreting the purpose of value pricing as a way to increase their prices.
    • The real purpose of value pricing is that it enables you to match your price with what the customer can afford and where they see the value of the investment.
    • In the first 3-6 months, there is a significant jump in what you charge.
  • What was your first exposure to value pricing?
    • His sales director was taking a value price approach, but he did not realize it initially.
    • He did not understand it as “value pricing”, just as a good way to price services.
    • He realized what it was called in August 2014 when he listened to the Art of Value Show per a recommendation from Carrie Dils.
    • He knew the concepts and not to use hourly billing, but he was not using real value pricing concepts.
    • He started with project-based fixed pricing.
  • Why did you decide to implement value pricing?
    • He recognized it as the model his former boss had been using.
    • That company had won a large project on the basis of a value-based presentation.
    • The key point of the proposal was to reduce the cost of visas, staff, accommodations, and food.
    • They replaced onsite IT staff with remote management with the same benefits.
    • It improved the quality and reduced costs.

The Rewards of Value Pricing

  • What have been some of the rewards from value pricing?
    • The first customer he value-priced wanted a new website.
    • He quoted the site and the customer another provider whose price was half of Ben's.
    • The customer called back after their website was hacked.
    • He learned about their pain points and why they wanted the site to get an idea of the value.
    • He tripled his initial price, and the customer accepted it because the customer saw the website as a way to create leads instead of a cost.
    • He explained that it was not the price, but a percentage of the return they were expected to receive.
    • To get results, they needed to invest.
  • What has been the range of customer reactions to value pricing?
    • He has won deals he did not think he would.
    • He has left money on the table.
    • He has lost deals when the price was more than the competition.
    • Value pricing should be bound by the value of the results.
    • When he reduced the price to try to win a deal, he still did not win the project.
    • He learned from the mistake by analyzing aftward, discussed with his girlfriend and colleagues and realized the price was out of sync with the competition, despite proving the value.
  • What are some of the factors you consider when setting a price?
    • Ask to who else are they are speaking.
    • Some will answer; others will not.
    • If you can understand your competitors, it will help with the pricing.
    • If he learns there are RFPs being put out, he will not submit a bid.
    • Make sure you are talking to the decision makers and know who has sign-off on the project.
    • Going through a purchasing department can kill a project. Ben prefers to work with small to medium size businesses to lower the bureaucracy.
    • Look out for red or orange flags.
    • If the customer describes himself as a DIYer, it is an orange flag.
    • How much pain is this customer going to create? Prices are usually higher for high-maintenance customers.
    • Do they have content? If not, it is a red flag, and they need to talk about how to make that happen. It could increase the price.

Discovering the Customer's Value

  • What are some of the value questions you like to ask a customer?
    • His magic question is why.
      • Why now?
      • Why did you not do it six months ago?
      • Why are you not doing it six months from now?
      • Why are they looking to do the project at all?
    • Any permeation of the question “why” that gives you greater understanding of the value they are seeking.
    • You can even ask, “Why me?”
    • The more information you have, the more you will understand the value.
    • Look for easy wins.
    • How are you planning to measure the value you are capturing from the project?
    • If the customer is willing to have the conversation, it is more likely you can help them.
  • How do you respond when a customer resists a value conversation?
    • He channels Curtis McHale.
    • If the customer is not willing to have these conversations with you, then it probably is not a good fit.
    • The power of “no” is real.
    • Find out budget and timing if possible.
    • With more information, you can recommend a better alternative to do their project.
    • Decide if the customer is someone you can turn around or not.
  • What are some of the questions you have heard about value pricing?
    • Does it work?
    • Do I believe my lies?
    • A lot of people believe they do not create value.
  • What is one of your best stories about creating value for a customer?
    • With a previous customer, there were some major changes in the way the industry worked.
    • They have been able to capture more and better leads from the history of the searches.
    • They have been able to stabilize the company and have kept two people employed in an industry where they cannot grow.

About Ben Furfie

Why to Productize Your Consulting with Brian Casel – 040

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Brian Casel specializes in launching and bootstrapping businesses. He is the author of Productize, a course to help freelancers turn their custom services into products. He also runs Restaurant Engine, a combination of SaaS and productized service for the restaurant industry.

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What Is Productized Consulting?

  • What is the most important thing you can share about pricing?
    • Pricing is more art than science.
    • How does the customer view pricing in terms of the value received?
    • Do customer support as often as possible to understand your customers better.
    • What is the return on investment?
    • How will this service make the customer more money or save time?
    • Set the price as a fraction of the return.
  • What is productized consulting?
    • From the customer perspective, it is a specialized done-for-you solution that is packaged at a set scope and price.
    • From the professional perspective, it runs systematically and can grow without your involvement.
  • What is the difference between custom work and productized consulting?
    • Custom work starts with a discovery meeting and then a proposal with detailed specs, timing, and price.
    • Every time you meet with a new custom customer, you have to redefine your value proposition.
    • With productized consulting, you offer the same outcome to everyone and find customers that fit your model.
    • Productized consulting can be used as an anchor point to customize add-ons.
    • You can offer a productized service to go with your product.
    • Depending on your end goal, you can decide how much you want to be involved with productized consulting.
    • A freelancer sells time for money; an owner creates an asset that grows in value over time.
  • What is the difference between productized consulting and a SaaS application?
    • SaaS is typically software – an application to which you subscribe.
    • Productized consulting scales up by having personal done-for-you services.
    • The services are highly standardized.
    • Through processes and systems, anyone can work in your business and replicate the steps.

Leveraging Processes and Systems

  • What was the epiphany you had regarding processes and systems?
    • Brian wrote a post on the mistakes he made building Restaurant Engine: Lessons Learned Building a Productized Service.
    • All mistakes shared the same theme of “do it yourself” with easy sign-up and no customer support.
    • Once he discovered that customers were not staying due to startup issues, he included setup with the product.
    • He embraced the idea of writing procedures, bringing in a team and refining the procedures over time.
  • How do you create processes and systems effectively?
    • It will take more time to document the process, but you need to invest the time in order to delegate: How to Delegate When You're Creative.
    • If you delegate the processes, you are freeing yourself to work on the big picture ideas and strategies.
  • What is the first step to create a productized consulting offering?
    • Recognize the way you do things.
    • Try to identify patterns to make the work more predictable.
    • Determine what the framework is, your way of doing it, and then streamline into a process.
    • As a freelancer, what is the one problem/solution that you can solve in a meaningful way?
    • Focus on that one problem/one solution to identify your ideal customer.
    • Focusing on a niche industry is not necessary; you can focus on a niche problem or solution instead.

Lessons from Restaurant Engine

  • Where did you get the inspiration to start Restaurant Engine?
    • Restaurants are known for having bad websites with a poor user experience.
    • The real inspiration came from the idea of building a hosted WordPress solution.
    • Consulting fees are often too expensive for small restaurants to afford.
    • He niched down to an industry like restaurants where everyone has the same set of requirements.
    • He focused on the niche that best fit the business model and type of website needed.
    • He took what he learned and applied it to an industry that was underserved.
  • What is the most important lesson you have learned from Restaurant Engine?
    • Be open to embracing change and modifying things to make it work.
    • Expect to do a lot of things wrong.
    • Do a couple of things that you know you can knock out of the park and adapt the others.
    • You need to take the skills you learn from your research and modify them to your situation.
  • How can someone price a productized consulting offering?
    • It depends on several factors:
      • The product
      • The customer
      • The value proposition
    • Price the offering as a small percentage of the ROI.
    • The closer you get to impacting the revenue of the customer, the better.
  • What is the best value you have ever created for a customer?
    • In his weekly newsletter, he asks customers where they want to be in 12 months and what is their biggest challenge?
    • The responses he gets are inspirational.

About Brian Casel