October 24, 2019
What can I do to convince my clients that value pricing is better for them?
Sent by Jonathan Stark on October 25th, 2019
A photographer wrote in to ask the following question about how to help his clients recognize that hourly billing is a bad idea (shared with permission):
Good morning Jonathan, Just a quick note to say thank you for your emails. I agree that hourly billing is nuts. As a portrait photographer I understand now more than ever to never charge by the hour. Yesterday, I sat across a Director of Communications at a local prep school and confidently told her that I do not bill by the hour, but rather by the project at hand. While we have worked together before and I got the meeting because she is eager to work with me again, I had to make this clear to her this time because most institutions (and their accountants) are still rationalizing their expenses for outside vendors on how many hours they worked on something rather than the results they produced. What could I or should I be doing on my website, email correspondence etc. that will carry this message through about what I do and how I do it? What would you recommend I do about continuing to educate my clients that in the end going with a project or value based option is better for them? While I get it loud and clear, I want to be sure my clients see it that way as well. I look forward to a response or perhaps you will address this in one of your forthcoming emails. Thank you
(NOTE: Name withheld because I wasn’t sure if his permission to answer this on the list extended quite that far):
I feel like there are two important parts to this question:
- What should I say to clients in a sales meeting to help them recognize that paying by the hour for professional services is bad for them?
- What should I do on my website and other marketing materials to prepare prospects to expect fixed quotes, not hourly rates?
I’ll tackle each below…
1. The Sales Meeting
What should I say to clients in a sales meeting to help them recognize that paying by the hour for professional services is bad for them?
One of the first things a prospect will ask you, will be “What’s your hourly rate?” to which you should politely reply with exactly this, no more, and no less:
“I don’t have one.”
Don’t waffle, don’t qualify, don’t jump to fill the ensuing dead air with a bunch of words.
Just wait.
If you wait long enough, the client will eventually recover from their confusion and ask some variation of:
“Well… then how do you price your work?”
And then you say:
“I’ll give you a fixed price for the entire project. That way you’ll know prior to making a purchasing decision exactly how much it’s going to cost you. Is that acceptable?”
Practice this. Out loud. Verbatim. Memorize it. Deliver it politely but with confidence.
Don’t forget the last part where you ask them if a fixed price for the project is acceptable. Good clients will then say, “That sounds great!” and you’re all set.
Bad clients will say something like, “No, a project rate won’t do. We have to have an hourly rate so we can compare you to the other vendors we are considering.”
To them you say, “Ah, I see. That’s unfortunate. Well... I guess we’re not going to be a good fit. Thank you for your for time.”
What?! Throw away the lead?
Yes, chuck ’em.
Don’t worry, you’re probably not missing out on much of an opportunity. In a situation like this, the odds are good that the person you’re talking to is not the real buyer; true buyers know how to work around rigid policies when the need arises.
2. Your Website
What should I do on my website and other marketing materials to prepare prospects to expect fixed quotes, not hourly rates?
There is a long answer to this and there is a short answer to this. I’m going to give you the short answer for now because it’s deliciously simple:
Talk about results.
Don’t focus on your beautiful photography or your elegant code or your clever copywriting. Plaster your website with quotes from clients about the business outcomes that you have provided to them.
And remember, the language of business is numbers, so try your best to have your clients quantify the results you have delivered to them using numbers. This might take a little back and forth at first but eventually you’ll become a natural at it.
Yours,
—J