If you want to get away from low-budget, small projects and you're thinking about raising your rates, there are three different pricing strategies you might be considering. In this session, we talk about hourly rates, fixed cost projects, and value-based pricing. Ultimately, as you move away from smaller freelancing projects into the role of a high-value consultant you are going to want to land on value-based pricing because you can charge dramatically more and it also creates the best outcomes for both you AND your clients.
The problem is the term “value-based pricing” gets thrown around a lot and there's confusion over what it means. For example, whose value are you talking about? Your value? The client's value? Also, what's the difference between value-based pricing and fixed cost projects? We're going to unpack all of that today.
One of the things that often gets overlooked is that your value is not going to be the same to all clients. I've seen a lot of people start to go down the path of shifting to a value-based pricing structure but really all that means is they have raised their rates for all of their clients and all of their work. The truth is that some clients will value your work more than others. The key to success is getting yourself in front of the clients who value your work the highest.
Once you make this shift you will find that other problems that used to be major roadblocks begin to fade away. For example, shifting to value-based pricing makes it pretty obvious what to say on your own website. So, if you're stuck trying to figure out what to say on your website and you don't just want to list the same services that everyone else is listing, then this value-based pricing shift will give you some clarity with how you define and market your business.
Also, this shift will enable you to literally charge 5x to 10x more than before without having to work more hours. In fact, you'll probably find yourself working fewer hours because you will be cutting out a ton of time-wasting “free” work. For example:
- All the research and discovery phases for projects you don't win.
- Writing proposals that don't get accepted.
- Writing blog posts that nobody ever reads
- Posting endlessly on social media
- Wasting time meeting with unqualified clients
If you have been trying to figure out how to increase your rates without pricing yourself out of the market then this is for you. This is what “working smarter, not harder” is all about.