website pricing 101: don’t be a commodity

[email protected] | WWW.SIMDEX.ORG | 414.455.6675

WEBSITE PRICING 101: DON’T BE A COMMODITY

GEOFF MYERS PRESENTS


BEFORE WE BEGIN…

THIS PRESENTATION IS AVAILABLE ONLINE:

simdex.org/pricing More Presentations by Geoff:

simdex.org/talks

Get In Touch:[email protected]

https://simdex.org/pricing

http://simdex.org/talks


BEFORE WE BEGIN…

ABOUT GEOFF MYERS▸ Co-organizer of WordCamp Waukesha 2017

▸ Co-organizer of Milwaukee WordPress Meetup

▸ Speaker at WordCamp Milwaukee 2016

▸ Founder and CEO of SimDex LLC (Est. 2004)

▸ Custom WordPress + PHP Web Application Development

▸ Digital Marketing Consulting + Strategy for Small Businesses

▸ 100+ Websites Designed, Developed, Marketed + Maintained

▸ Get In Touch: [email protected] or simdex.org or 414.455.6675



WHO IS THIS TALK FOR?

▸ Agencies

▸ Consultants

▸ Copywriters

▸ Designers

▸ Developers

▸ Entrepreneurs

▸ Freelancers

▸ Marketing and sales professionals

▸ Search engine optimizers

▸ Small business owners

▸ Any company or individual who provides unique, high value services



WHAT WE’RE GOING TO COVER TODAY…

▸ Why pricing matters

▸ Common pricing challenges

▸ Pricing goals

▸ Why the hourly rate must die

▸ Comparison of pricing models and strategies

▸ How to change the way you position and sell your services



WHY PRICING STRATEGY MATTERS

▸ Business revenue and profitability

▸ Effective hourly rate (money/time ratio)

▸ Marketing and sales performance

▸ Quality and type of clients and projects you attract

▸ Time management and efficiency

▸ Work/life balance (quality of life)



COMMON PRICING CHALLENGES

▸ Commoditization, lack of differentiation

▸ High risk, high variability projects

▸ Low effective hourly rate

▸ Low profitability

▸ Low quality clients and projects

▸ Poor work/life balance (low quality of life)

▸ Stagnating income (limited by time)



PRICING GOALS

▸ Make more money

▸ Work fewer hours

▸ Deliver more value

▸ Higher quality clients and projects

▸ Better work/life balance (quality of life)

▸ Ultimate: Passive recurring income



PRICING MODELS AND STRATEGIES

▸ Hourly, daily, weekly, monthly rates

▸ Fixed price, fixed scope projects

▸ Productized services, bundles, packages

▸ Retainers, subscriptions

▸ Value based, pay per performance

▸ Commissions, profit sharing

▸ Equity, ownership, partnerships


WHO CHARGES FOR TIME (HOUR, DAY, WEEK, OR MONTH)?

DON’T BE SHY…



HOURLY, DAILY, WEEKLY, MONTHLY RATES

▸ Trade time for money

▸ Rate * time = price



HOURLY, DAILY, WEEKLY, MONTHLY RATES

▸ PROS

▸ Simple, easy to understand

▸ Universal, industry standard

▸ CONS

▸ Encourages unfair comparisons between different providers

▸ High risk for clients

▸ Hours are very difficult to predict and estimate

▸ Incentivizes laziness and inefficiency

▸ Poor correlation with value and results

▸ Severely limits potential revenue and profitability

▸ Commoditization


WHO CHARGES BY THE PROJECT (FIXED PRICE, FIXED SCOPE)?

DON’T BE SHY…



FIXED PRICE, FIXED SCOPE PROJECTS

▸ Requires project exploration and discovery

▸ Define scope of work, milestones, and deliverables

▸ Fixed scope

▸ Fixed price basis:

▸ Budget

▸ Cost plus

▸ Experimental

▸ Market

▸ Value



FIXED PRICE, FIXED SCOPE PROJECTS

▸ PROS

▸ Lower risk for client

▸ Ensures definition and alignment of client and provider expectations

▸ Well-defined project scope of work and specific deliverables

▸ Protects well against scope creep and additional requests

▸ CONS

▸ Higher risk for provider if scope and deliverables are not well defined

▸ Less flexibility if goals or requirements change mid-project

▸ Requires more upfront investment to discover and clearly define project scope


WHO CHARGES FOR PRODUCTIZED SERVICES, BUNDLES, OR PACKAGES?

DON’T BE SHY…



PRODUCTIZED SERVICES, BUNDLES, PACKAGES

▸ Services treated like products

▸ Predefined set of services and deliverables

▸ Client selects one or more services

▸ Bundles and packages

▸ Scope is not personalized or customized for the client

▸ Usage of templates and cookie cutter elements



PRODUCTIZED SERVICES, BUNDLES, PACKAGES

▸ PROS

▸ Ensures definition and alignment of client and provider expectations

▸ Protects well against scope creep and additional requests

▸ Scope and deliverables are well defined and identical for all clients

▸ Well-defined scope of work and specific deliverables

▸ CONS

▸ Less flexibility if goals or requirements change mid-project

▸ May not provide ideal solution to client due to solution being generic

▸ Not personalized or customized for each client


WHO CHARGES RETAINERS OR SUBSCRIPTION FEES?

DON’T BE SHY…



RETAINERS, SUBSCRIPTIONS

▸ Billed per unit of time (duration)

▸ Recurring revenue (income)

▸ Retainer agreements

▸ Service level agreements (SLAs)



RETAINERS, SUBSCRIPTIONS

▸ PROS

▸ Recurring revenue, possibly passive income

▸ More predictable cash flow and profitability

▸ Longer term, more financially sustainable

▸ Less chasing after new one-time client projects

▸ CONS

▸ Requires constant, ongoing delivery and proof of value, results, and ROI to client

▸ Generally more difficult to persuade and sell ongoing expense to client


WHO CHARGES FOR VALUE, RESULTS, OR PERFORMANCE?

DON’T BE SHY…



VALUE BASED, PAY PER PERFORMANCE

▸ Financial reward is dependent on reaching goals, milestones, and measurable KPIs

▸ Effective price is fluid and dynamic (not fixed)

▸ Client only pays when desired goals or results are achieved



VALUE BASED, PAY PER PERFORMANCE

▸ PROS

▸ Revenue and profit connected to specific outcome or result of project or deliverables

▸ Low risk for client

▸ Aligns incentives and expectations of client and provider

▸ CONS

▸ Potentially higher risk for provider depending on strategy and execution

▸ Potentially higher revenue and profitability for provider

▸ Difficult to define and calculate value and accurately measure performance


WHO CHARGES FOR % COMMISSION OR % PROFIT?

DON’T BE SHY…



COMMISSIONS / PROFIT SHARING AND EQUITY / PARTNERSHIPS

▸ Commissions or profit sharing:

▸ Provider receives percentage of sales, revenue, or profits for predetermined length of time

▸ Equity, ownership, or partnerships:

▸ Provider owns shares or percentage of client’s company

▸ Collective ownership, management, and control



COMMISSIONS / PROFIT SHARING AND EQUITY / PARTNERSHIPS

▸ PROS

▸ Aligns incentives and expectations of client and provider due to common goal

▸ Potentially higher return for both client and provider

▸ CONS

▸ Potentially higher risk for both client and provider

▸ Requires a very strong, trusting relationship

▸ Difficult to find, negotiate, and execute effectively



ADDITIONAL ARTICLES + RESOURCES

▸ Breaking the Time Barrier / Mike Derment

▸ Consulting Success / Michael Zipursky

▸ Double Your Freelancing / Brennan Dunn

▸ Four Hour Work Week / Timothy Ferriss

▸ SEO Consultant/Agency Pricing, Structure & Services / Rand Fishkin

▸ Smart Passive Income / Pat Flynn

▸ Value Based Pricing 101 / Vivian Guo

▸ WP Elevation / Troy Dean

https://www.freshbooks.com/ebooks/breaking-the-time-barrier

http://www.consultingsuccess.com/

https://doubleyourfreelancing.com/

http://fourhourworkweek.com/

https://moz.com/rand/seo-consultant-agency-pricing-structure-services/

https://www.smartpassiveincome.com/

http://www.priceintelligently.com/blog/bid/162160/Value-Based-Pricing-101-The-Necessities-and-Your-Pricing-Strategy

http://www.wpelevation.com/


THAT’S IT FOR NOW…

THANK YOU!

Questions? Get In Touch:[email protected]


BEFORE WE BEGIN…

THIS PRESENTATION IS AVAILABLE ONLINE:

simdex.org/pricing More Presentations by Geoff:

simdex.org/talks

Get In Touch:[email protected]

https://simdex.org/pricing

http://simdex.org/talks