Sent by Jonathan Stark on December 20th, 2016
In Ditching Hourly 006: The Red Balloon, I talked about the notion of both parties in a transaction profiting.
Here’s a rough summary:
Alice has a green balloon and Bob has a red one. Each likes the other color better, so they trade. Both parties are now better off, they are happier; they have BOTH profited. The same principle applies if instead of balloons, Alice had $250,000 to trade for Bob’s WordPress website development service. Does this mean that Bob’s WordPress website development service is worth $250,000 to everyone? Heck no. But if it’s worth $250k to Alice, that’s all that matters.
I recently got a question about the “paying $250k for a WordPress site” bit:
> I have a question about something I heard in episode 6: The red balloon. You mentioned that Alice would pay $250,000 for the WordPress website, because maybe she’s a billionaire, or maybe the website will let her sell $1,000,000/year. I understand that it’s an investment with a positive ROI for Alice. However, if I was in her position, my thought would be, I can get just as good a WordPress website for $100,000.
Here are a couple thoughts:
1. Bob isn’t Alice - Bob isn’t a billionaire. Bob doesn’t have a product that he could sell online and make $1MM per year. Bob can’t imagine what it’s like to be Alice or what goes through her mind when she’s making a purchasing decision. Always keep in mind that you are not your client. Their hopes, dreams, concerns, and fears are probably very different from yours (but they are just as real).
2. Alice can’t make an apples to apples comparison - A software project (like a website build) is not a pair of sneakers. Alice can’t walk into a store and buy her website. It’s not sitting on a shelf with other versions of her website that she can compare it to. She can’t try on a few different versions of her website and decide which suits her best. Clients can not make an apples to apples comparison between multiple versions of their new website because their new website doesn’t exist yet.
3. Alice is buying a service not a product - A website is the output of a long collaboration between the person buying it and the person building it. This is a relationship that could last 3 months, or it could last 3 years. Alice’s experience of working closely with Bob over a long period of time will be very different than working with Charlie. Bob respects Alice’s opinion, he works to understand her goals, he keeps her informed throughout the process. Charlie thinks Alice is an idiot, he dismisses Alice’s suggestions out of hand, he constantly lectures her about “best practices” and “technical debt”. Even if Bob’s and Charlie’s websites ended up pixel for pixel identical, which experience do you think Alice would rather have? Which would she pay more for?
Did I explain that well?