Sent by Jonathan Stark on November 25th, 2019
Fellow list member Dan O replied to yesterday’s message (i.e., subject: Reverse Pricing) with a story that eloquently captures the inner challenges associated with shifting to value pricing. I hope you’ll find inspiring! (shared with permission, last name withheld by request, bold mine):
Hey Jonathan, Little story. I just watched the video from the last TPS on this topic (way behind, but you keep writing that there is no “behind” so I’ll just embrace my tardiness). And then this email came in. I’ve been, in principle, embracing the whole notion of ditching hourly pricing and moving to value pricing, but it’s amazing how strong those old habits can be. And it’s amazing--it’s a trap really--how safe (as in familiar) those conversations can feel even as you want to emancipate yourself from them, even if you recognize hourly arrangements are stunting your earning potential and business growth. It can be tempting to go back as a kind of accepted safe zone where we all operate using a vernacular that everyone recognizes. I’m in the middle right now of concluding a deal that appears to be just about done and signed. And in the course of talking about fees I was asked (given that I am also working with other clients) “How much time do you have free to work on this?” I really wanted to avoid the idea behind the question, that there is this general claim on my time, as opposed to a claim on what will be delivered. My answer felt uncomfortable and awkward--I just didn’t say it very smoothly--which was frustrating because I’m generally pretty good at communicating in those moments. I said something like, “I think the most important question is whether or not the work will get done, and the answer to that is yes. I’m committed to making sure we reach our goals here, and how much time that takes ultimately doesn’t matter.” Now, this wasn’t great since I wasn’t centering the value of the project to them, and in hindsight it sounds like I was trying to sell my commitment, and it even sounds a little defensive. I need to play with the language and phrasing for sure. It also felt hard to do. There was an emotional awkwardness. Some angsty friction. It felt like it ran against the grain of the (poor) assumptions I had mindlessly accepted. That awkwardness stems in part from distorting beliefs around personal value, and any such beliefs are instantly and ruthlessly exposed in a value-based conversation. You can’t propose to deliver the value you’ve assigned to the project and get paid accordingly if you secretly doubt whether you can deliver it. But this is good. These sort of beliefs need to be exposed. They are kryptonite to this sort of pricing. But here’s the surprise ending. After I said what I did, the person I was talking to said, “I had a former boss who said to me, ’If you’re talking about hours, you’re having the wrong conversation,’ so I’m with you on this.” Great! My first foray into this was bumpier than I would have liked, but the mystery is now gone. I did it and lived. Now it’s just polishing my presentation, not wondering if it can be done. Thanks! Regards, Dan
TBH, I think Dan’s answer was actually pretty good, but I do appreciate that it felt awkward and could have been smoother.
If you are ever put on the spot like Dan was, here’s a simple catch-all response that should get the conversation back on track:
“That’s a good question. Why do you ask?”
Their reply will reveal the real question, which you can then address. They might be worried about a deadline that hadn’t previously been discussed, or they might just be excited to get started, or they might want to know how much of a time commitment there will be for them, or a million other things.