Tim Dietrich is a mobile application consultant and the developer evangelist for Airtable. He was formerly a database consultant in the FileMaker space, creating several open source projects for the community. He majored in computer science at Towson University. Tim's first appearance on the Art of Value was episode #28, A Contrary View to Value Pricing.
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It Is Not Too Late
- What is the most important thing you can share about pricing?
- It is never too late to change your mind and give value pricing a shot.
- Tim started using value pricing over the summer, and it is working for him.
- He decided to go all-in with value pricing.
- What are the positive changes from switching to value pricing?
- Recording episode #28 in October 2014 got Tim thinking.
- Tim had a nagging feeling about value pricing that was similar to how Kirk felt after the panel discussion at DevCon.
- Tim thought he might work up to it.
- He started to charge differently, based on a light-bulb moment from his conversation with Kirk about charging for the requirements phase of the development process.
- He published prices on his site as package deals, but that was a way of saying, “this is my hourly rate,” which felt horrible.
- In the spring, he pulled the plug on database development and moved to mobile development.
- This time around, he wanted to do things right.
- He went through Paul Jarvis' Creative Class, which is like a boot camp for freelancers.
- At that point, Tim realized that the new line of business gave him an opportunity to give value pricing another try.
- He had three defining moments:
- The interview with Susan Fennema in August, A Live After Action Review, was like seeing behind the scenes of MightyData, and it clicked for him.
- Double Your Freelancing Conference with Brennan Dunn included a presentation by Jonathan Stark, which made Tim realize that he needed to do it.
- He realized that his best month ever almost killed him due to the number of hours he worked while balancing his other customers and family.
- That whole year was good because he was mixing hourly billing with fixed bid work and, without realizing it, he was doing projects based on value.
- He would stop and think what it was worth to the customer and bid it that way.
- The results were phenomenal, but he did not realize he could maintain it exclusively.
- His long-time customers have noticed that he is happier.
- Value pricing changed the way he worked significantly.
- He loves what he does now and is anxious to get to work.
The Switch to Value Pricing
- What did you have to overcome to make the switch?
- He had a fresh start, so it was easier.
- It required a leap of faith.
- It can be a challenge to serve your previous customers by the hour while you start to value price with new ones.
- Over the next few months, he is going to convert some of those older customers.
- Those conversion customers:
- Make the switch and like it.
- Do not make the switch, and you can refer them.
- Try to make the switch, but ultimately stall and want to revert.
- The relationship-challenged customers usually fall into the latter categories.
- Value pricing helps you weed out the bad customers.
- Tim learned to say no, which has had a major impact on what he does.
- When you are saying no to one thing, you are saying yes to another.
- Fear is a healthy indicator that you are stretching and growing.
- Dave Ramsey does a great video on saying “no.”
- When you hear the alarm bells ringing and still say yes, you regret it when a better opportunity comes along.
- By saying no, you get better at what you want to say yes to.
- Philip Morgan's book, The Positioning Manual for Technical Firms, has helped Tim with his positioning.
- Describing your avatar can help you with your positioning by refining who you want to work with.
- You can pre-qualify your customers if your site is written better for your well-defined customer.
- Having a financial runway helps a lot.
- Marketing can be a challenge because Tim is an introvert, but when he is providing value, it never feels awkward.
- Once you start focusing on value, it permeates everything and becomes a lifestyle.
- What are the unexpected benefits from value pricing?
- Personally and professionally, everything clicks because he is doing what he loves.
- He no longer feels like he has to have the meter running.
- He can pick up his son from school without feeling he is losing revenue.
- The proposals are easier now as they do not have to be complicated.
- The projects he is working on are better.
- He has fewer customers, but the relationships are significantly better.
- His customers are more loyal.
- Scope creep was a fear, but it just does not happen.
- Creating a wish list can help you manage change by not saying no, but saying not now.
- When the customer comes and asks for something unexpected, Tim does not feel like he is watching the clock.
- The quality of work being completed is much better than before because he is not running out of time.
- He is much more relaxed.
- He is doing work he truly loves.
Creating Your Best Work
- Why is hourly billing unethical?
- Tim is a hold out on the idea that hourly billing is unethical because he wants to have faith that people will not abuse it.
- Ed Kless and Jonathan Stark both say that it is unethical.
- The History of the Billable Hour addresses the question of ethics.
- It creates a conflict of interest with the customer.
- It is in the customer's best interest to have fewer hours with a lower price.
- It is in the provider's best interested to have more hours with a higher price.
- In The Firm, the lawyers were caught because they were padding their hours.
- It is virtually impossible to track accurately your hours, whether you have good intentions or not.
- As an employee at a consulting firm, Tim remembers the pressure he was under to bill a certain number of hours and submit them on time.
- In his hourly-billing work, delivered lower quality work because the hours were limited.
- Since your margins are higher with value pricing, you have the leeway to do better work for your customer.
- To make something better, you do not have to negotiate more time to make it happen.
- How do you approach a value conversation with a customer?
- In finding out what your customer's goals are, you can start to discern the value they are going to get out of it.
- You can also say no to a project that is not going to add any value to the business.
- To price, Tim looks at it from the point of value from what the customer will get out of it and what he will get out of it.
- What is one of your best stories about creating value for a customer?
- For a recent iOS project, he implemented a map to help first responders, especially firefighters.
- The map was not part of the scope but was just obvious that it should be.
- The customer loved it, and he could not have done it if he had been billing by the hour.
About Tim Dietrich
- Website: timdietrich.me
- Twitter: @tdietrich
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