Stop Trading Your Time for Money with Jonathan Stark - Part 1
Download MP3If you earn your income through freelancing or consulting, you likely know your hourly rates for different tasks and projects off the top of your head. But what if that pricing model is setting you up to fail? Would you want to know if there was an alternative?
Our guest on this episode of The Friday Habit is Jonathan Stark, industry thought leader, CEO of Jonathan Stark Consulting, and cohost of The Business of Authority podcast. Jonathan is working to flip the script on the traditional hourly pricing model used in freelancing and consulting. He points out that when you price your services based on hours, you are creating an unnecessary limit on earning potential.
Instead, he advocates for a value-based pricing model that is based on the value of your service to the client. In order for this model to work, the client must have a clear vision of what they want from you and a specific outcome in mind. Defining this scope will inform your value-based pricing for this specific project and having these outcome conversations will ensure that you are able to provide the most important service: customer satisfaction. Jonathan says that this pricing model only makes sense for longer-term projects that are 6 months or longer, and that it is best to draft a proposal that breaks down the ultimate dollar amount of value to the client into 3 tiers and then determine what you could do for those price points.
When conversing with potential clients, Jonathan focuses on the questions: “Why this?”, “Why now?”, and “Why me?” If they have the answers to all of these questions and you feel like your services align with their needs, draft a proposal. Don’t be afraid to ask clarifying questions along the way and challenge their narratives if you want to understand better their requests or to define your boundaries.
While it can be intimidating to think about value-based pricing for intangible services, Jonathan says that everything is measurable, even if the measurements are subjective like Amazon reviews. When it comes down to it, the client will tell you what they are willing to pay and why. Even so, you should be willing to walk away if it is not a good fit.
Tune in next week for part 2 of our conversation!
Links:
“Breaking the Time Barrier” e-book: https://www.frameworkhomeownership.org/images/uploads/Breaking-the-Time-Barrier.pdf
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