264: Value-Based Pricing (Part 1 of 3): Make More Money While Doing Your Best Work
By Sean McCabe and Ben Toalson
You want to do good work. You want to be paid well. You want to work with great clients. There's only one thing stopping you: your broken pricing model. The way you're pricing right now is holding you back. Everything is based on arbitrary numbers. Hourly rates and flat rates both have the same issue: they have to be based on arbitrary numbers at some level. What's wrong with that? The problem is that your goal and your client's goal are not aligned. With hourly, you're trying to work as much as possible so you get paid more. Your client wants you to work as quickly as possible so they can pay you less. With flat rates, you're trying to get the job done as quickly as possible because there's no other way to increase your earnings. But where does that flat rate come from? It can only be arbitrary. When your pricing is based on arbitrary numbers, you can never be certain if your price is fair. It could be unfair to the client (you may be overcharging), or it could be unfair to you (and you should have been compensated more). Enter Value-Based Pricing. For two years now, Justin Michael and I have been working on a course called Value-Based Pricing. This curriculum teaches you how to price on value. It is the only method of pricing that is not based on arbitrary numbers. It is the only method of pricing that aligns your goals and your client's goals. With Value-Based Pricing, you are incentivized to make the client more successful, because this directly affects your compensation. In fact, the value the client receives is the only thing that affects your compensation. This is why Value-Based Pricing is win-win for everybody. Today's episode is the first of a new 3-part series on Value-Based Pricing. Justin and I have spent the past half year teaching this curriculum to a Pilot Program. In this episode, we give you the background story and overview of Value-Based Pricing, as well as talk about how to fix your broken pricing model.