March 1, 2019

Problem first, then price

Sent by Jonathan Stark on March 2nd, 2019

One of the participants in the current session of The Pricing Seminar remarked recently that we’re over a month into the program and we haven’t talked about pricing anything yet.

This is absolutely true. Why? Because you need to know what you’re selling and who you’re selling it to before you can make a case for a given price.

The reality for most of my beginning students is that they know what they do in terms of their skills and the activities that they undertake on a daily basis, but they have virtually no idea what benefits their clients gain from application of those skills, or exactly how the client would describe the value received.

In other words, they don’t know what problem they’re solving.

For example:

Let’s say you’re really good at making websites accessible. You create a productized service where you’ll retrofit the home page of an existing site to improve accessibility. You don’t like doing sales, so you want to post a set price for this service on your website to make it really easy to sell.

But what’s the right price?

Beats me. I don’t have enough information.

I need to know who you’d be selling it to, what problem it would solve for them, and what promise you’d be making with the service.

If you want to sell this service to indy yarn dyers you’re probably not going to be able to charge as much as if you were selling it to the top 20 largest credits unions in the US.

The top 20 credit unions have much more buying power than indy yarn dyers, but - perhaps more importantly - credit unions have a much bigger problem because they are regulated by the government with regard to accessibility.

As a web accessibility expert, you’d be solving different problems for these two buyers, even though you might be undertaking the exact same activities and applying the exact same skillset.

This is what people mean when they say “price the client not the job” - or more precisely “set your price based on the size of the problem you are solving, not the amount of labor it would take you to solve the problem”

The size of the problem you are solving is a major factor in setting an acceptable price. That’s why we spend the first month of TPS talking about problems, not prices.