Chris Blunt is a software developer from the United Kingdom and a member of the Art of Value Society. In this episode, we discuss his transition from hourly billing to value pricing. In segment one, we explore his motivation to move from hourly rates to pricing on value. During the second segment, Chris explains how he transitioned from a vendor to partner with his customers. In the last segment, Chris describes his early success with value pricing.
Escape from Tracking Time
What is the most important thing you can share about pricing?
When you are pricing the value to the customer, there is no magic formula you can apply. The price you determine is based on everything you have done to understand what the customer needs.
What was your inspiration to implement value pricing?
What has been the best advantage of switching to value pricing?
It is easier to present a proposal to a customer. Chris is more at ease during the presentation than he was with hourly billing. Writing a proposal has become easier. It is shorter and focuses on the outcome rather than the technical requirements.
What was the most significant challenge you had to overcome to switch to value pricing?
The internal fear of quoting the wrong price. You have to take a risk and start. The more you set a price based on value, the better you become.
Partnering with the Customer
How do you approach the value conversation with the customer?
Chris has learned to take a step back and focus on why they want to achieve the result rather than the technical side. What is the reason you want to complete this project? It helps the customer clarify their needs.
What is one of your favorite ways to create options for a customer?
Offering the customer three options. Creating options is one of the easiest changes to make when switching to value pricing. It changes the way to approach writing a proposal.
Why did you choose to share your switching experience with a public blog?
It was a way to hold himself accountable as he made the switch. After considering value pricing for several months, he wanted extra motivation to price the customer per the value rather than hourly billing. He also wanted to encourage others to make the same change.
Value Pricing Your First Project
Can you describe the first project you wrote about on your value pricing blog?
He offered an existing customer three options for a one-week project. He offered one price for project A, a second price for project B, and a cumulative price for project A and B together. The customer was extremely happy they did not receive a “surprise” bill for extra hours.
Can you describe another project you wrote about involving a service plan?
The service plan is a new strategy Chris is using with most customers. It was not based on the number of hours per month. It was based on the scope of access to Chris and the scope of the maintenance. Chris included monitoring performance of the software as part of the service plan.
What is one of your best stories about creating value for a customer?
Chris had a testimonial from one of his first customers. “In just a few hours, Plymouth Software saved us thousands of pounds in time and resources.”