My name is Jonathan Stark and I’m on a mission to rid the earth of hourly billing. I hope that Ditching Hourly will help achieve this, one listener at a time 🙂
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Special guest Ron Baker and I discuss the ethical challenges of hourly billing. The Ethics of Hourly Billing with special guest Ron Baker Special guest Ron Baker and I discuss the ethical challenges of hourly billing. Today I’ve got a very special episode of Ditching Hourly for you. I'm joined by value pricing pioneer, Ron Baker to discuss the ethical challenges of hourly billing. Ron is a recovering CPA who began value pricing in 1989. He’s the author of seven best-selling books, including: Pricing on Purpose; Measure What Matters to Customers; and Implementing Value Pricing. He’s the founder of pricing think-tank VeraSage Institute and a radio talk-show host on the VoiceAmerica.com show: The Soul of Enterprise. Just to give you a taste, here are some of the killer quotes Ron shares: “A service that’s guaranteed is worth more than a service that’s not.” “Would you want to get on a plane and be charged $4/min retroactively?” “Prescription without diagnosis is malpractice.” “If we don’t think we’re worth it, how will our customers ever believe we’re worth it?” LINKS Ron Baker on Twitter Implementing Value Pricing Pricing On Purpose Verasage Institute Extraordinary Guarantees : A New Way to Build Quality Throughout Your Company & Ensure Satisfaction for Your Customers "Bugs" Burger Bug Killers, Inc. The Backwards Bicycle The Soul Of Enterprise
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Value pricing is not a license to print money. Ditching Hourly 024: Value Pricing Cuts Both Ways Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm going to dispel the misconception that value pricing is a license to print money. Value pricing cuts both ways. It is not a magic wand that you wave and suddenly poof! you get to charge more for projects. value pricing - as the name indicates - is the practice of setting a price for a project based on the value that the project delivers. In this model, the price that you set has to be lower than the perceived value in the client's mind. Otherwise, they will have received a negative ROI. Here's an example: Alice from Domino's Pizza approaches you to design and build an event micro-site for their upcoming super bowl promotion. It's a basically a fancy web page. You have a Why Conversation with Alice, and agree to an objective for the project, metrics to gauge progress toward the goal, and a rough value to the organization for the success of the project. In a situation like this, it's conceivable that value to Domino's might be in the seven figures (or, that failure would cost them seven figures). If that's the case, you could almost certainly sell the project - i.e., building a single web page - for $100k. Even if it took you 100 hours, you'd be making an effective hourly rate of $1000 Here's the counter example: Bob from Bob's Pizza approaches you to design and build a website for his single location pizza place. He wants all the usual restaurant stuff: online menu with pictures, info about the restaurant, contact info for calling in an order over the phone, location of the restaurant with a fancy interactive map, and oh by the way, online ordering that accepts all major credit cards, apple pay, google wallet and paypal. And while you're at it, could you also do one of those pizza trackers like dominos has that sends updates to the customer as their pizza is prepared and delivered? You have a Why Conversation with Bob. The objective, metrics, and value of the project are hazy ("my brother in law told me we should get a website, so I called you"). Bob has no idea how much the website might increase sales, never mind other intangibles like brand or goodwill. You push him on it and has guesses that the site might increase his sales by a few hundred bucks a month. And to be honest, Bob says, if it did much more than that, he wouldn't be able to keep up with demand because they're already crazy busy keeping up with walk-in traffic from the local college. Would Bob agree to $100k for the project? Heck no. He prolly would not even agree to $10k. The trouble is, Bob's perception of the project value is very low. If he paid more than a few thousand bucks for all that work, he'd feel like he was losing money on it. So... For the Domino's project - where the labor intensity is low, but the perceived value of the project is high - value pricing is a perfect fit. For Bob's Pizza - where the labor intensity is high, but the perceived value of the project is low - value pricing doesn't work. What do you do for Bob? Bill him hourly? NO! HE DOESN'T NEED THE WEBSITE HE DESCRIBED. You either reject the work and spend more time try to attract clients like Dominos OR prescribe something else for Bob where the labor intensity for you and the perceived value for him are not out of whack. Maybe something like a facebook page, or a simple single page landing page for the business so at least they have some basic online presence. That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening. The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Ditching Hourly 023: Converting Hourly Clients To Value Pricing Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm going to talk about how to transition your existing hourly clients over to value pricing. It's wicked hard They don't think of you the way you want them to It'd kind of like being in the friend zone Probably easier to find new clients who don't have you pigeonholed in the wrong place BUT if you love the client or whatever, and want to give it a try, here are some tactics for you Quietly lay the ground work while still billing hourly Try to gain more access to business people (e.g., founder, president, ceo, sales director) vs tech people (dev lead, dev manager, project manager, cto, even cio) Start probing for business cases behind specific requests Politely offer alternative solution when they occur to you Wait for an opportunity to quote a new chunk of work Pull your business contacts into the "scope" meeting Have a Why Conversation to get at the desired business outcomes Present a proposal with both and hourly estimate and a fixed price What you SHOULD NOT do: Don't barge into their office a say "so, we're going to do value pricing from now on!" Don't try to explain what value pricing even is How you price is none of their business But if they ask, say "based on past experience with this sort of thing" That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening. The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com The next time a client asks you to justify an entry on your timesheet, go to http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Ditching Hourly 022: How To Grow Your Business Without Hiring Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today I talk about how to grow your business without hiring junior employees or farming out work to contractors. The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Ditching Hourly 021: Value Pricing in the Enterprise with guest Jeff Scornavacca Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm joined by guest Jeff Scornavacca. Jeff is a business consultant who helps companies improve their contracting and offer development processes. He's worked with clients like Johnson & Johnson, Ocean Spray Cranberries, Reebok, and many others. Jeff has been value pricing enterprise clients for years which is what we focus on in this episode. The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Ditching Hourly 020: Is Value Pricing Immoral? Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm going to answer the question: Is value pricing immoral? The next time a client questions one of your hours entries, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Using the concepts of high-touch, low-touch, and leverage in your mix of products and services. Links Concierge medicine Offering Mix Graph Offering Mix Medical Analogy Sign off If you bill by the hour and would like to learn how to significantly increase your income, please go to http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Escape the feast/famine cycle by building a product ladder. Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm going to talk about how to escape the feast/famine cycle by building a product ladder. HOUSEKEEPING The 4 phases of engagement is something I heard first from Blair Enns of WWP in a post called "We Will Diagnose Before We Prescribe" If you bill by the hour and would like to learn how to significantly increase your income, please go to http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
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Special guest Ron Baker talks about overcoming pricing objections, managing scope creep, safely offering guarantees, and much more. Today I’ve got a very special episode of Ditching Hourly for you. I'm joined by value pricing pioneer, Ron Baker. Ron is a recovering CPA who began value pricing in 1989. He’s the author of seven best-selling books, including: Pricing on Purpose; Measure What Matters to Customers; and Implementing Value Pricing. He’s the founder of pricing think-tank VeraSage Institute and a radio talk-show host on the VoiceAmerica.com show: The Soul of Enterprise. This episode clocks in at nearly an hour - which I realize is longer than usual - but you’re going to want to listen to every single minute of it because Ron drops non-stop value bombs. Just to give you a taste, here are some of the killer quotes Ron shares: “The billable hour takes your focus away from measuring what matters to the customer.” “The billable hour delivers a lousy customer experience.” “Focusing on the tasks comes at the cost of focusing on the value.” “People don’t want to hear about the contractions, they want to see the baby!” “Value pricing is a skill like golf or tennis. The more you do it, the better you get.” “Don’t ask your client ‘What do you need?’ ask ‘What are you trying to achieve?’” “If you prescribe without diagnosis, it’s malpractice.” “A professional takes responsibility for creating an outcome, not delivering a series of tasks.” “What the client is trying to achieve determines the scope of work.” “Time spent in reconnaissance is never wasted.” “We have to get over the idea that we are pricing a series of tasks.” “Value is not a number, it’s a feeling.” “Two options encourages a price decision. Three options encourages a value decision.” “It’s a huge fallacy to think that just because you’re giving a fixed price, you’re not scoping.” “When would you rather find out your client is unhappy with your price: before you do the work or after?” Links Ron Baker on Twitter Implementing Value Pricing Pricing On Purpose Verasage Institute Seinfeld clip of indecisive carpenter TSOE #76: Lessons from the Trading Game Change Order Boat Extraordinary Guarantees by Christopher Hart
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