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Value Based Pricing Debate

#
85
Chris Do
Published
June 14, 2018

Chris Do leads a keynote on the value-based pricing vs. time-based pricing debate.

Read Transcript
It is call number 85 today, we're going to be doing the value based pricing debate. I could not help myself or put together a little deck for you. I may hit record on this thing. I put together a little deck for you guys. And then we're going to get into it now. I know one person for sure has a very strong opinion. She's playing the devil's advocate, but right now I don't personally like the devil, nor its advocate. And usually that's the way of saying, I really feel this way, but I just don't want to say it. So I'm going to use the devil as a surrogate for my own thoughts and opinion. That's totally OK. I hope today on this value basis, what is it? Value based pricing debate discussion ought to be able to put this issue to bed. OK, I want to tuck it in and let it sleep for a really long time. Call 85. So first of all, the recap in case you're just joining us new to the group or whatever. There's this video. It's got over a million views now, and it's called what is it called? Pricing, design, pricing, creativity. And because it's so out there, there's a lot of people who have formed an opinion about it. But in case you haven't seen it, the essence of the video. And this is when I was still kind of figuring things out with value based pricing. The message is price the client and not the job. So when we look at things, the hourly pricing fixed fee approach says that no matter which client comes to us. If we're going to design them a logo, the price is always the same. That seems fair, does it not? And a lot of people, this is the truth. Now, why would you charge somebody else more if they can afford more? Conversely, also, why would you charge somebody less just because they can't afford it? Sometimes they forget the second part of that, which is charging people less. Ok? and I think there was a lot of discussion, debate about if you're selling a book, a car or a TV. The price is always the same. It doesn't matter who walks in the door. That's not true. Necessarily not true. But that was the argument. But that also puts you in the position to say, like everything you do is a product. That there's no difference, there's no variation, we know that that's not true. If you want to take a look at value based pricing, it says that depending on the client and their needs and who they are, how much money they make, what risks is attached to doing the work that they asked you to do. And then the price should be different. It should be reflective of the individual and not what your standards are. So this was born. This very vitriolic response from this gentleman, if we can call them that, who spoke on a very emotional level. If you strip away the emotion, really what he's asking is. What right do we have as creatives to ask the business owner how much money they make? What challenges they're having, what risk is associated with doing this work? He doesn't want to allow us to ask any of those questions. He thinks that by doing so, it's disingenuous. It's unethical and all that kind of stuff, right? So he's like, what are you trying to teach people here? So he brings up the question of ethics and morality. What is fair? OK, fair is like the operative word here. This is the key word. What is fair? OK, now the question I'm going to ask you guys in a rhetorical manner is, are all clients the same? What do you guys think. Are all clients the same go and type that in the comments, are all clients the same? Well, the answer has to be no, because people are not the same, no two persons the same. So why are two clients the same? So is it fair to treat two clients the same when they're not the same people? Well, if we apply this to an example as in how much for logo, how much for a logo, I'm going to try and hide this thing here. Make this a little cleaner. Hopefully, this works. How much for logo? OK well, the answer is not one that's easy. And this is where we get a lot of pushback because you want an easy default answer that you can go to every single time. The answer should be, well, it depends how much your logo will, depends, depends on what you need, and some questions that we ask ourselves and ask the client in talking to them, in figuring out if it's a good fit for us and for them is what's at risk if they fail. What's at stake? In other words? OK, so here is a list that I put together of what's at risk, and if you guys internalize this, you can say, like if you were to hire me to design your logo for you, everybody's going to answer this question a little bit differently. What's at stake for some? Nothing's at stake. It makes no difference to them. Good logo, bad logo, whatever. Some some people think. Well, a good logo is very prestigious, but they don't usually think about the business part of it, the business consequences. So here we go. We've seen logo or brand refreshes or rebranding. There's backlash, as with uber, with the gap. And other companies, it becomes a PR nightmare for them. They could miss their market or product launch, which is critical. And the bigger the company, the more it's going to cost them. We understand that right is everybody understand that the bigger the company, the greater the stakes, the more that's at risk. If they launch with the wrong logo, there could be a product recall because maybe it didn't pass the US patent Trademark Office and something went wrong, or somebody else with a very similar logo in a similar space says, hey, wait a minute, we have this mark first. It's been registered. You guys need to change your mark. So then they have to pull everything off the shelf. Think about the cost. That the company the client has to incur, because if the pool things back off the market, not just the printing costs, but the logistics of pulling everything off, repackaging opportunity costs, not being on the market, how many sales are they losing? Loss of time, confusion in the marketplace, like I mentioned before, lawsuits or maybe the logo just doesn't feel right. So now they're questioning whether or not it's a good fit for them. We always have that. You know, when you go buy something, you have buyer's remorse because something didn't feel right. And mostly it's because you made an impulse decision. And now you regret it later, so poor, Brad Pitt. Does anybody I mean, I'm sure you guys can think of many other things that could go wrong if you do this incorrectly. But I try to get the big ones here. You don't think big companies can go bankrupt. Yeah, I do, but there's a history. The company is going bankrupt. You know, general motors, I think they have a big, a safe account to handle. They're not. OK OK. So this is how we're going to do this. All right. All right. We're going to start out 2019. Like this? Ok? you're making a lot of assumptions about what big companies can and can't afford based on probably zero information, I'm assuming. Because unless you're reading the annual reports, if you're sitting in the quarterly earnings report, you wouldn't know. So I'm getting a feeling this is mostly emotional for you to say that big companies can afford a bigger loss that can survive. They're less likely to go out of business when that may or may not be true, because the counterargument is also true if you're a small company. If your mom and pop shop, your overhead is so low that any kind of loss you can recover from. Think about this you guys can have a catastrophic year and just start over again next year without really having much impact on your life and the way you do things. Is that right? Where is the big company has factories, tens of thousands of workers and for them to restart? It's totally turned upside down. Think about all the companies that have gone out of business who have not been able to recover tower records, Barnes and Noble bookstore. Blockbuster videos. So when they go out of business, it's game over, if Mariah or you kenzo, want to start over, it's just another day. You go and file a new business certificate and it's a brand new date again. So I think from the creative point of view, we put all these negative associations with large companies, it's like the man, the machine. It's invincible, it's evil, it's greedy, it's profitable, it's all these kinds of things and we make these assumptions. So what we want to do is we want to pull away our subjective emotional opinion of them and just look at it. There are two businesses, and they operate with similar amounts of risk relative to their size, relative to their size. Yeah, OK. So let's revisit your belief now. And I love this about Tony Robbins is this you need to address your belief system because that's your b.s., your belief system. Oh, bullshit. Yes that's really what it is. No, but I understand your point of view. But is it my point of view? You just still disagree? No, no, no. It's I. I feel like every company is different, just like you said. And yes, not every small company is the same. So it may. Yes so why do you charge the same? Sorry why do you charge the same amount? Well, I don't. So what are we talking about here? Well, I've thought about I thought a lot about this. And I felt like we were comparing apples to pears here. So you talk about pricing value. And I was going all the way to let you see that I don't feel the same way, but actually, I feel for some parts that I do understand it. What I don't understand, and that's what I didn't say. So the price bracket thing, so the price bracket thing instead of a fixed price, even though the fixed price will be different for a different company. So instead of charging. K to 30,000. Why wouldn't you look at the company and say, well, it's 20k for you? Just at the beginning already. OK, you're right, we are talking about apples and pears because I have no idea where you're talking about price bracketing right now. Price bracket is just one of the tools that we teach you in terms of how to talk about budgets in an easier and less confrontational way. We're also using the principle price anchoring anchoring high so that the person gets more comfortable with the no. How we get to this number is what we're really talking about and theoretically debating, not how we present it. So can we stay on how we calculate this number because as we've heard in that guy's comment response? He was very angry about the idea of even trying to understand what the business goals risk, what's at stake. That's unethical for him to even contemplate. True yes, are we talking about something else now because I can teach you about price anchoring, price bracketing, but that's got nothing to do with how we derive the number. Um, is that what you really want to talk about? I feel like it goes hand in hand for me because. It does. Yeah, it does, because when you look at the value for other people, for your logo, you. Rice angered to see the value for them. OK, OK, let's do this, let's do this because this I can feel like it's going to just totally go sideways. This conversation, let's not use the word price anchoring or price tracking at all. Let's just talk about how you come up with the number that you're going to give to your client. As far as I know, there's principally like three ways to do this. You basically price inputs, which is how much time and materials you put into it, your pricing outputs, which is option number two, which is I have a document of what it is that you expect of me to do. I'm going to give you a fixed flat fee to do that. That's option number two. And then there's number three, which is value based pricing. Let's focus on that. And let's not use any other term because most people who have an issue value based pricing are on the other end of the spectrum, which is if I work two hours, I should charge for two hours. If I work for 35 hours, they should pay me for 35 hours. OK, where are you in this spectrum of your belief now? Not the devil's advocate. Where does kansa live in this debate? I do feel like you shouldn't charge for your time so that debate we can put aside. So, you know, OK, what else? It's like, I do have a feeling that I understand you just like what I said in Facebook. But I do have my own beliefs that you should come with a fixed price from the beginning. OK there's no argument there. There's no argument there that eventually what is presented to the client is a fixed price. Yeah, but it's a question of how you get to that number. Is that what we're arguing about? Yeah and that you are price anchoring at the beginning? Just to see the value of the client and how they look at the price. OK you're stuck on that word, so we will address that word right now. OK, so we can move on. I don't feel like I can have a debate with you because we're just going to stay around that conversation now. If you're just joining us and you've heard me say many different things, the advice that I'm giving is consistent to the person that I'm talking to at that point in time. But if you're in one minute, you said, OK, bill more like double your rates and then another minute, it's like never do. Hourly pricing is because that person is not ready to be at this other place. So you don't want to mix up the streams, ok? Because I'm talking to a lot of different people, a lot of different points in their career, in their life and what they're capable of doing. Generally speaking, you don't go from graduating school and going straight to value based pricing. You're just happy and grateful for work opportunity that validates and affirms that you have a skill that people desire. OK, so the mere concept of saying, hey, it might cost between this and this is just a way for us to talk about budget. That is a little friendlier for people. OK, can you understand that part? Are we clear? Kenzo yes, and no, I haven't said much, I don't know how we cannot be clear yet, so go ahead. Well, I don't feel like it's fair to say different numbers for your value in the beginning. We haven't talked about that yet. You can't hold me accountable for anything except for what you and I are going to talk about right now. Ok? all I said is for some of us who are afraid to talk about money and often negotiate against negotiate against ourselves in our own mind. All I say is flow to number between this and this. That's a little bit higher than what you would ask for. So that the conversation about money can happen. How you get to this number. How often you say it. We have not talked about at all, have we? No true. OK you can only have an argument with me on things that we talk about right now right here. Present state. Ok? otherwise, you're referring to videos or things. I've said that I can't respond to right now, and we'll be chasing each other's tail the whole time. Yeah so far, so good. So far so good. OK, so you're going to float a number. Is there any problem with you floating a number? Yes or no? Yeah, I do. Um, I don't feel like I did it for 5,000 euros now. But I won't do it right because you do it differently. And you take bigger companies. And that's why I want to have this conversation. OK, now you said you're not sure that you're doing it right? Let's judgment away from it. Are you doing it? Yes or no? I am doing it. Yeah are you unhappy with the results? Yes or no? OK You would like it to be better in what way? In the ways of I can say, like, I can say the word, but it is the price bracket thing. I feel like I should do it because you set the value for us. You let us see what the value is for doing that. But I can't do it because it doesn't feel right. Again we haven't talked about anything else except for what's here right now. Yes you said the way that you talk about money, you don't feel like it's good. Yeah, true. You want better results. What are the better results that you're looking for? I hope that I can charge more a lot. That's all I wanted to hear. You want to be able to charge more and you don't. So you've got to keep your answers super short. And to the question, I asked, otherwise this will take four hours and four hours, ok? And we're going to get to it. I want to solve this problem for you. And everybody else who feels the same way. So you're charging whatever amount. How are you derive? It doesn't really matter to me at this point, but you're like, gosh, it would be nice if I can make more money. And I don't know how to get there. The only answer that Chris is telling me about it, I just it feels unethical to me. I can't. It just it's wrong. So I'm going to stay with what I have. Is that right? Yeah OK. All right. So I'm going to ask you this other question, this has got nothing to do with what we're talking about today. If you don't like what you're doing now, but you feel the alternative is wrong, what options do you have? Say it again, please, if you don't like the results that you have now, but you feel like there are no there are no other viable options that work for you. What are you going to do? Well, I do feel like there are different options. It's just that, yeah, I don't know that, but I feel like it's a moment. So when I charge $5,000 for a year, I mean 5,000 euros, I feel very good. But in like three months from now, I feel like, OK, I should have charged 10,000 and then write anymore. Why do you feel that way? Because I learned so much from you guys and from books and from my OK. OK, OK. So you do realize the thing that you what kind of work do you do? Is it? Websites, logos, what do you do? OK logo design all right, so when you were in school and you did a logo, and if you look back at your old portfolio, do you feel bad of what you didn't know back then? Well, I didn't go to school for it, but if I look at my previous work like from, um, from a few years. Yeah, I don't feel like I'm happy about it. Why not? I would do what the clients would ask me to, and I wouldn't be saying that. That I wouldn't. So, OK, all right. When you were growing up, did your parents ever put you against the wall and take a ruler and make a mark on the wall? No one do that. No you know what I'm talking about, right? Yeah, I understand a lot of people have that when they put the kid up the wall and they mark it, and then you look back and you're like, all these little marks on the wall. And I do that with my kids and from when they were little like just a couple of feet tall to now, they're like five foot, whatever, right? So there's a lot of marks on the wall. If you look at your life, the logos that you make and the price you charge is just a mark on the wall, a snapshot in time. It's not good nor bad. It just is. So part of your dissatisfaction or unhappiness comes from the fact that you don't allow yourself to grow, meaning you expect yourself to be perfect at logo design and confidence, in knowledge and in pricing. So that there's no room for you to grow. Right like, I don't look at that mark and say, wow, you know, back when you were shorter, you were a terrible person. That doesn't make any sense, does it? No, that's true. And I feel like I feel like I. I am happy with my growth. And I see that it is good to have this kind of. Statement for yourself. This wasn't good. But for them, it was. But sometimes I feel like I charge something for a client. You want five logos? I charge 5,000 per logo. And now I feel like if I get that, that the assignment. I don't feel like it should be $5,000 for logo anymore. I should be. I don't know. I think $10,000 for logo, Yeah. OK, so why didn't you ask for 10 thousand? Because I wasn't as confident and it was my first, my first sales conversation. So I was really nervous. I didn't know what I was talking about, but it felt from the point of view from the blind that it was OK, we're just going around in circles here. I'm going to give you a couple of more seconds here to like, figure this out. Otherwise, I'm moving on. OK it sounds to me that you're saying I'm OK with growth, but you're not OK with growth because I look back on my student work like, ooh, what decisions without making back then? Thank god, I know what I know now because I'm going to be better today. Did I charge that guy $15 an hour before? And now I charge thousands of dollars an hour or a flat fee the whole thing and then try to do value based pricing, right? Yeah so I don't look at yesterday as with contempt, like, Oh my god, you idiot. Like, why did you design it that way? And I had sookie Haviv on their show, and he talked about logo design, and I started to think back about the logos I made in the past that didn't follow that philosophy. I'm like, dang, no wonder they suck. OK but this is an opportunity for me to look forward to say tomorrow I could charge 10,000 euro for a logo or if 20 or 50. Why dwell on the past, you can't change that. So when you say like, oh, I'm not happy about it, because now I know more, can you just be happy that more and every client moving forward, you get to apply what you know? Absolutely true. Yeah, so what are we debating about here? So I would argue that that's not value based pricing because managing risk is pretty much changing the scope. That's not true. OK, so let's talk about that. Give me, OK. OK, so a logo, it requires a certain amount of work and weather. And you know, this is really hard for people to understand is whether I do it for a mom and pop shop like a restaurant or I do it for a large corporation. In essence, the process is very similar, if not exactly the same. The hours may vary slightly, but my process doesn't really change at all. Does yours like I'll do research? I'll do brand attributes. I will sketch. I will refine and I will present. Well, it would for me, it would change this is somehow so depending on how much money I can charge, there's so many people I can put into the project. There's so many experts I could hire to do the research. There's so, so it vastly differs depending on the scope of the project and the money you take from this as well. OK, now before I answer that, I want angel to jump in. He has his hand up. All right. So Andrew, what do you want to say? I just kind of wanted to echo what he was saying. I know in the chat because we're all like chatting. I see it moving. And he was mentioning that because I don't want to take you out from where you guys are talking about. But he was mentioning that to clients. They don't care. They don't care how many team members you have, they don't care the amount of work what they see is, hey, the process is the same. We do do discovery. You do research your mood board, you present you consent. It's all the same. Why are you charging me more if you're doing the same process for everybody? That's that's what I think. The argument that we get the most from the creative standpoint is that and it's like for me, obviously through the future, I think, you know, I've been following you for a couple of years. So I learned value based pricing and what that looks like. And I always tell my wife because she's always the one kind of doing the pricing and stuff. We use blended rates, we charge creative direction. We do all that stuff together. And then at the end, I'm like, god, you got to add value to it. So what's that magic percentage that we got to go up? But clients don't understand that. So I think to them, they just see, like you said, a product and they just see, hey, it's the same process for people. Shop over here. Why are you charging me this for whatever you know, it's the same. So why are you charging me more? And I think, Dimitri, I brought that up on the chat, so that's why I had to raise my hand. I wasn't sure. Sorry about time on there, so I was like, I just right, right? OK I'm not sure. I'm a whole lot. Somebody needs to mute themselves, please. It's van. Then you're killing us. Van, let me kill her. Hold on. She's and all right, everybody, please please unmute yourself before you come on the show, please. There's a moment for you to do that. OK so angel is saying something like he's getting a lot of pushback from clients to say, why are you charging us more? Now we're going to investigate that. So everybody today, today for the next hour and 23 minutes, we're going to work through each and every one of these until you feel like it's been resolved because I don't want to talk about it again. OK, so I'm going to answer each and every one of your questions. You guys hold me accountable if I start to veer off the path and you're like, well, I still don't have a good answer for that. Now, as much as I like angel, and he's coming in strong for his first call. I'm not ESHWARI SWAHA" saying is true. Like cancer, like I'm not sure any of what you guys tell me is true. Period I don't accept any of it at face value. OK, so I'm going to share that slide again. And we can just keep talking. OK, I'm going to share this. All right, where is it. This is a slide. See, I haven't even gotten into my slide yet. All right. Here it is. This is what you're talking about, right? Are you saying you're saying this argument is flawed because the process is very different for him and he may put more hours into it now. So you're saying that the time that you put into it is impacting the price. That's basically the argument that Demi is making that it's not the same. Right, dimi? No, that's not the argument I make. What I say is more resources, you'll say you have more people. So yes, basically I say that managing risk and changing the scope of the project depending on the needs of the client is not the same as selling the same thing for a higher price just because they need it more. OK so you're saying that because the scope has changed, then the price is different, right? Yes, and that's not what I'm saying is that that's not value based pricing. Right have you gotten to value based pricing yet, you guys? OK, so we're talking about, are you talking about this slide now? No, there's a list with the drawbacks of having Yes. OK, so where is that? It's right here. Yes Yes. So what I'm arguing is this is changing the scope, this does not depend on the clients on how valuable this is to clients. It's not let's compare a small shop versus a big corporation. There's a small shop really care about backlash from changing their logo? Yes and no, that's not what I'm. That's not what I'm arguing. OK because a huge client could still need a tiny project, and that's fine. This is changing. Scope doesn't have anything to do with the client's ability to pay. This has nothing to do with changing scope. I still need a logo. The logo does not change. This is what's at stake. And the answer to this depends on who is asking the question, right? So small. Just follow my logic here. OK, big clients, small client, big client backlash is a real issue for them. Small client didn't even care. As you know, if you go to restaurants and local cafes, the logo could suck. The menu could suck. But the food or the coffee or the product. They make is so good you don't even care. So when they change the logo as important it is to graphic designers to feel like, wow, the logo really makes a difference. You can actually hurt their business. I know this OK that most people don't go to small companies because the logo is amazing. I'm not saying all most there is no PR in the about because the small shop doesn't do any PR at all. Same logo. Same product for two different companies. They can launch without a logo. So who cares? Autumn is missing their market launch. If they have to recall a product that run is so small to them, it's inconsequential. There's an awesome cafe, a small chain of locally owned cafes called meat and bread in Vancouver. I go there. Do you know how they print their logo? They literally have a rubber stamp with their logo on it. And they stamp on a white bag. And we need change logo. Two days later to have a new stamp. They literally stamping the bags right before you purchase something, so product recall is almost nothing. They might run into some confusion issues. Yes, there may be small loss of sales to a small company, but a big company. All you have to do is multiply that by 100,000. So we're not talking about scoping, none of this is scope when you talk about deliverables, that's usually when we're talking about scope you. OK, none of it is. There's none of these are deliverables. You understand that, right? Yes, I do. But perhaps I'm not using the correct term. OK the difference is if, if, if you sell a logo to a huge company that has all these risks and you don't put the effort to address it to address any of these, should you still charge more just because they need it more? Because that's what I'm arguing. We say that again. So if I sell a logo to a big company and I don't, I don't address any of these possible drawbacks. I just do a crappy job and I don't care about any of this. Should I charge more to a bigger company just because they can afford it or they needed more? Well, first of all, why are you doing a crappy job, do you do crappy job for a small company? No, it's basically the argument that comes from I'm trying to I'm trying to give a my understanding of how people react to the videos and why people are against value based pricing. I think lots of times they think that you would charging more to be get client would mean that you do the same job. That's what I'm saying. Yeah, and I'm telling you, I do the same job. I try to do the best that I can for every client, but yes, yes, but on the same time, it would be overkill to assign all your resources to a single thing, but it's right, right? I understand what you're saying. OK if you were to look at the time sheets, if we're still doing them and the amount of work that goes into a small company would look less than the amount of work and hours only then a big company. I'll give you that. The process isn't really different. Maybe there's just more hours in there for client calls and meetings and researching and all that kind of stuff. Yes and assets and photography and code. And no, no, no, that's all wrong. Then we're just talking about logos. The logo is the same. I still give them a Yes. Yes for a logo. Yes, Yes for a logo. We're just talking about logos. Don't change your argument. Yeah, Yeah. Yeah and then the identity standards guide that goes up. They're all the same. Same applications and colors. Same font. Do this. Don't do that. That's the same. So the work product is exactly the same, and I'll grant you that. Although the process is the same, the hours that we might put into a bigger company might be longer. And it's not because the logo is harder to make. It just takes more convincing and meetings for them to agree that that's the way they should go. That's really where it comes in. Now, the point I'm going to make here is that the price in which we charge them has no bearing on the additional hours that we've worked. So in one hand, we might work 100 hours for a small client. And let's just say we work 1,000 hours for a big client. So 10 x, but the price is far in excess of 10x. This is where you guys need to understand the difference between hourly pricing and value based pricing. Did me come back to me? Do you understand this? I understand and I am not against value based pricing, and you're just trying to help me understand the point. Yes, I'm just trying to, yes, press on the points that sometimes are not clear enough, especially in the short term. Is it clear now to me? Yes OK, so we will move on. So, OK, everybody. Yeah, absolutely. OK because I have like, you know. 30 more slides to get through. And we're going to circle back to everybody that has a problem with this. All right. So let me go back to the deck. And so this is where we were last, right? So this is a quote that you guys know. Good design is good business. This is from Thomas Watson jr. he's the second president of IBM. I think they've name a supercomputer after him. Called the Watson OK. Good design is good business, so people will understand this. We'll probably be more inclined to spend money on good design because they see a relationship between the two and people who do not. So this is the scale here. And when we talk about cost versus value, OK, everybody gets to decide, ultimately how much they should pay. Because they have their own metrics, internal metrics of how much value or risk or what's at stake, we need to understand that. So the buyer, not the seller, decides what is fair relative to them. So when you have a fixed price based on your idea of what is fair, the question is. Why is the argument, then, if you're following my line of thinking here, why is the argument that when the buyer gets to decide what the price is, that becomes unfair, that's unethical. To me, that's counterintuitive. And let's take a look at insurance, for example, ok? We all have different homes at different prices. This is like people in companies, right? You might have a home that's 100,000. You might have a home that's $10 million. Well, congratulations if that's the case. But if we were to buy an insurance policy for each one of these things, it needs to be proportionate to the value of the home. Everybody understands it. So if your house catches on fire, if you buy a $600 a year plan, which will cover 100,000 home, you're going to have a shortfall. OK, so if you have a $10 million home, you're going to have a liability of nine million 900,000 because your policy only covers $100,000 of damage. But you're saying I have greater risk tolerance, I don't think my house is going to catch on fire. I don't think I live in an earthquake zone, so alphago, the insurance each buyer gets to decide this. Every buyer gets to decide this, not you. This is where the fallacy of hourly based pricing and fixed fees come in. Because it does not take into consideration the risk tolerance and the value that the person places on it. For example, here's another one. If you have a million home, but it's been in your family for generations, it has sentimental value to you. So losing that home and not being able to restore it to its former glory means more to you than if you just bought the home yesterday. And if you don't have any roots in the community. Or maybe you have assets that are very liquid, so you're like, you know what, I'd rather save the money if the house goes down or build a new house somewhere else, it doesn't matter to me. So we also understand that there's idea of sentimental value and greater risk tolerance, so to very large companies could value a logo redesign. At very different price points, and that's up to them to decide. Not you. So every time you price something without talking to your client, you're not doing value based pricing. That's the crux of it, OK, because you're not involving them in the conversation. That's why we have to ask them questions about their business, what's at risk and there's a way to do that. I'm going to show you how to do that. OK, so if you were to buy an insurance policy for your home that covers you adequately, it would look like this. So the person that's got a $10 million home, it's going to have to spend $60,000 a year. Now you can look at it and say, wow, Oh my gosh, they're going to pay $60,000 a year when someone else's home is $100,000 total. Is that fair? Well, it's relative. For somebody who can buy a $10 million home, $60,000 is a good policy so they can sleep well at night. They can afford that. OK, so how do you know what to charge a client? How can you achieve the win-win scenario or what Blair talks about is a double. Thank you. Is this possible? OK, now we spent some time talking about time and materials. There are other ways to do this. There are other ways. And we're to get into that, OK, so time and materials is what we all kind of know. It's what we're most familiar with. And I suspect. It's because of the Industrial model of businesses and how we as human beings have been compensated for our time. So I know when I was 16 years old, I worked a job, I literally had a punch card to clock into to machine. I put it in and made a sound. It with time, stamp it. And when I was done, it would time stamp it again. Later on a bookkeeper with calculate the hours that I work based on my rate of pay, which was minimum wage, which I think was $3.25. That's what I made that week. So then we go on into our professional lives and we continue to emulate that well, if I was paid that before, shouldn't I be paid that again? Does it seem the most fair option to continue working that way? Well, it might until we get into it. So I'm going to go into debunking hourly pricing for you guys right now, and you'll see the only other alternative is to do option two or three, and we'll talk about that. OK, now here's the problem with hourly pricing. It's based on exchanging time, not results for money. Now I'm not picking on me, but he's relatively new, right? He just started out on his own. And I've been working for 23 plus years. You could argue that in three hours of time, I could achieve greater results than we could. And just him as a representation in 3 weeks worth of work. Can we agree to that, that a more experienced person and not all people are the same? I can approach something and come up with a more meaningful solution in less time than somebody who's less experienced would spend a lot of time trying to achieve. The problem with hourly pricing is that rewards inefficiency, because the more time you work on something, the more money you make. Conversely, it punishes efficiency and innovation. It means if you do it faster, you make less money and it places all the risk on the buyer. And this is where the friction comes in. This is where people are like, why would it cost that much? The only work that many hours, that's what angel is saying, right? Why are you charging me more? Even though these are only hours, so this is where the debate is because we've defined. The way we charge by how many hours we put into it. So the kinds like I want to see your time sheets explain to me why research took 23 hours and now you have to explain that. And if that's a job you want to have, that's a job you can have. OK hourly billing places an artificial limit on your income. Because there are only so many hours that you can work in a week, a month and in a year. So no matter what your hourly rate is, you're going to be stuck. The options are you can work more. I mean, who here wants to work more? Who here, who even has the time to work twice as many hours to make more money? You can also double your rate, which is what I've told many people. The pushback there is once you get to a certain point in your rate, you'll be priced out of the market. The other way you can do this is you can multiply or scale your time by hiring people younger than you who charge you less and then you wind up managing them, and that's how most businesses grow. OK but your goal should be totally different. Your goal should be to solve bigger problems, to work with bigger clients and have a higher profit. That's what Kenzo wants to do. She doesn't know how to get there, so she's angry at me for that. OK, we'll get into that. Your goal should be to solve bigger problems. Can you guys agree with that because the bigger problems are more important to our clients? Sadly, for some of you, the logo is not the answer. The websites aren't the answer. And if you can let go of the things that you make and focus on a client who's got a big problem, you will make more money. At a greater profit. So here's the dilemma. I'm asked you a few questions, and a lot of this comes from the book that by Jonathan Starck. Our hourly building is nuts. Ok? now I'm going to ask you this question. Those are the guys that are in love with hourly based pricing, which I think few of you guys are, but let's just put this issue to bed once and for all. Would you artificially spend more time on something knowing that if you work less on it, you would build less? Would you work more on something just to make the bill higher because you need to make rent? Well, most of you wouldn't. And to do so would be unethical. Most people would argue that, yeah, that you would agree with me that if you just sit around and just drag out the process that you can charge more, that that's not fair to the client. It's dishonest. If you disagree, unmute yourself and let's argue about it. OK and if you're doing hourly based pricing, are you incentivized to invest in better processes, equipment and tools if you bill hourly? Like, would you buy a new plug in, would you go to a seminar, would you take classes? Would you train yourself to work more efficiently? The answer's probably not. Here's here's a test that he puts us all through, and hopefully this will put it to bed to which of the following criteria should be used to calculate a student's exam grade. The amount of time spent working on the test or the percentage of correct answers. How should we grade a student? How long they work on something or how many times they get the right answer? Well, of course, it's option two that makes sense, right? Well, oh, someone wants to say something. OK Keep moving. So then which of the following criteria should be used to calculate a consultant's fee, the amount of time spent working on the solution? Or the progress made towards the client's goals. So, jimi, bring yourself back online. OK OK. Yep does this answer your issue about time because you're saying, I know it's not your issue? Yeah, I think that this sort of thing doesn't really come up when lots of people are speaking about value based pricing. I think this is a change in the emphasis, but that's just what I see. But yeah, so the amount of time you work on something has the client doesn't care, and there's a thing here that is in the book. Clients don't want your time. They want their goals achieved. So telling them about how many hours, how big your team is, they just don't care. They don't care. OK, so if you guys haven't done so already, there's an episode it's not called value-based based pricing, it's hourly. Billing is nuts, but this is a thumbnail for it with Jonathan Start. And here's how you're going to change this conversation. So this is for angel and everybody else. When the clients are, why do you charge me more? This doesn't make sense to me. Because you haven't you didn't begin the conversation in the way that's going to set you up for victory. OK so whenever the client calls your ring ring, Hello. We need this done. This is the why conversation that if you watch the show and you've been listening to me, this is the kind of questions you should be asking yourself. And in essence, you're trying to kill the engagement. OK, well, let's talk about this. So when it's like, you know, Chris, we need it all go. Well, your first question should be, why this, wouldn't it be cheaper for you to do nothing? OK, so you guys screen capture this. If you share this, make sure you mention Jonathan stark because out of context, I don't want to pretend like these ideas are mine. OK, so somebody else wants to talk to me. I'm going to stop sharing this. We're going to go through this. You can be the client. I'll ask you these questions. We'll see how you do. OK, let's do that, so I'm going to stop share. All right. Who wants to play with me, who is a dance who's worked a lot with clients? I only want somebody who's worked a lot with clients. So that they can answer these questions. Who is that? I can play along right? God Yep. All right, here we go. So this is for a logo. We're just going to talk about logo, OK, and you're going to be the client and we'll just pretend like you just call me like Chris. I need a new logo, right? And I'm just going to read the script and see how it goes. Ok? all right. Ready Yep. OK, so, Richard, why do you need a new logo? Wouldn't it be cheaper to do nothing? Well, I'm starting a new business. It's a start up and eventually I don't want to startups. I hanging up the phone right now. I don't work with startups. Oh, OK. Maybe a startup because startups have no fricking value. You have no money and they're not the decision maker. Generally speaking, what I need to establish business. So you're telling me all the list above regarding the value is not applicable to someone who is starting a new business, although they might have lots of money or funding. Yeah, Yeah. OK, so look, I'm going to show you this. All right. Let me put this on camera here. There are no physical copies of this book. They're not for sale. But Jonathan sent me a physical copy of the book. I'm like, this is my prototype, so whatever. So I had this. But if you guys haven't, you guys can buy the book. It's 80 bucks for a PDF. So in here, he says startups are inherently problematic because startups have investors. Generally speaking, and then therefore, they're not the decision maker in order for you to do value based pricing, you need to talk to decision maker. OK, so that's why you guys have heard me say this 1,000 times. I don't work with startups. They have no idea of valuation. They're super cheap. There are a couple of exceptions where I work with a startup, but more often than not, I don't work with them. They need to use their money to build product. Not in marketing, not in design. Not right now. OK so those are you guys are having lots of issues. Check yourself. Are you working well or are you working with a startup? Are you not talking to decision maker? And this works only if you talk to decision maker. OK, so let's do that again. So back you up on that. I'm currently being sued by a startup client who's talking here. I can't see you. Victoria sorry. Holy cow. Ok? don't worry about startups. I know I learned my lesson. I learned it. I learned the lesson. Well, you learn it the hard way. There's the easy way. And there's the hard way. OK to be fair, they're not going to win, but they're still pain in the ass. Yeah, they're going to ruin your life for a little while. Wouldn't you be? Aren't you better served working with clients instead of dealing with lawsuits? Hell Yes. So just don't you, as I say, not as I do, guys. Just don't make the same mistake. Don't do. OK all right. Yeah let's go. Let's keep going. OK all right. So I need a new logo. Why? because we feel outdated. The agency that the company has been there, the company has been established since 1986, and since then we haven't had any branding work done. Yeah but do you think changing your logo is going to impact your business? Well, basically, we believe so because the target audience changed and we need to adapt to the new environment. OK are you losing market share? Most probably, Yes. OK at what rate do you think that might be? Well, based on the last five years, I think we're down 20% OK, if you're down 20 percent, what does that represent in terms of revenue to you? Let's say a million. Yeah, that hurts. It does. OK normally they charge me for a logo, right? Well, normally I would get into the part about like, why do you need to do it now? I mean, you've survived for 30 years. I have 40. I don't know how many years this is. My math is not so good right now. But you've used to survive 38 years, something like that. 39 years without having to change it. Well, as I mentioned, is something neglected well, we neglected this change for the last few years, but then the sales kept dropping year by year until now. Yeah and are you certain that it's the logo that needs changing and it's not something else like the website or your communications or customer service, you're pretty sure it's the logo. Well, starting with the logo, Yes. OK just starting with the logo, so what else have you diagnosed this part of the problem? We haven't dug deeper. So for now, we believe if we do a revamp, it might refresh the company, appeal to the new, younger audience. And then we will. I see. Are you going to take out a press release or something to announce the new rebrand? Eventually, Yes. OK to kind of coincide with this because you want to start fresh, you want to probably make a splash, right? Ideally, Yes. Yes OK. So you have many options from really low budget options like Fibre to 99 Designs or one of those places. Why would you want to hire someone expensive like me? Well, we don't have the skills to mentor or work with juniors. That's not our scope. So we're trying to see an expert in the field who can help us and you popped up. Fantastic so you've determined that you want to make this investment and spend the money now to get it done right. Hello Richard, what happened to you that was so convincing he hung up the phone. I declare victory by default. OK all right. I don't even have to get through the rest of the questions here in the last question was why not use something off the shelf? Wouldn't that be cheaper? OK, I'm going to talk to you guys now. Well, how do you guys what did you guys think of the conversation so far? OK, Paul. You have your hand up. OK I can I jump back in where he left off? Yes, you can. Yes, you can. Is going to be slightly strange because the narrative is going to be a little bit different, but OK, I think so. The losses were experiencing our 20% Yeah a million in revenue. No, no, I was going to I don't want to. You would if I avoid giving you the million amount. Oh, you want, you want to do it again, you want to start over. No start right at that point where I say, you ask me the question and I say our losses are 20 percent, but then I'm going to avoid giving you the dollar amount. OK well, OK, so I'm going to. OK all right. You say 20% I'll pick it up from there. Go ahead. So we think not updating or changing the identity is going to be. It's affecting things to the amount of 20% of how long has this been happening over the last three years is really what? Yeah, Yeah. Three years now, you're losing about 20% of your sales, right? Yes what does that represent to your company in terms of revenue? Uh, quite a bit of money. What is quite a bit since I don't know your business that well. It's enough to where we might have to lay off some people, we don't want to do that. Ok? how many people would you you might have? How many people would you have to lay off if it happened? It happens again in the next year? I would say probably. To a higher level. And then a handful of lower level employees. OK, so maybe like six employees total. Around there to be safe. Wow right. So that's painful, right? It is. Yeah, I mean, we are part of our family, but we have to well. I have to make cuts, right, I understand. I empathize with what you're going through. OK, so we've got to right the ship fast because I would hate for you to lose valued members of your team who spent years learning your system and have become quite proficient only for them to go somewhere else, right? Yes OK, so bye bye. My estimate if you're dealing with senior management people. That's a couple thousand per person there. Some juniors, maybe 60,000. So you're talking about something that has to make up for about $5,000 of revenue at the minimum, right? Uh, I guess that's a fair ballpark, Yeah. OK if it's not, you, let me know with you. We're a little smaller than that. OK, so how much smaller do you think? Probably about 2/3 of that. 2/3 of that. So that's like, let's just say my math is not that good, but it's about $300,000 in payroll you have to cover. If you don't figure things out. Yeah or I guess I mean, we could try to just replace them with new people at. Lower salaries you can, is that what you prefer to do? We prefer not to. Yeah I didn't think so. So really, you have a revenue issue tied to how you perceive the logo might make an impact on your business. The consequence of it to start is downsizing the company and figuring out what's going to happen in the aftermath, dealing with morale, explaining the narrative to everybody. But you still have the problems. The thing is just laying people off. It's only going to. It's a temporary fix, right? Yes OK. And we'd rather grow, so we're talking about what's at risk is that at minimum, about 300,000. OK, so Paul, do you have a problem with the way I was able to extract the number from, you know? OK I think you wanted to play right because you're like, people just don't tell you the numbers so easily. Yeah, and it seems like even in the chat, people are experiencing that. And we're not talking to the same sized clients that you are so right. People dance around it more. OK, who wants to be the best dancer? Are not telling me the budget because I'll get it from you in a non-confrontational way. I mean, did you feel like I was just being a horrible person talking about money? I don't think so, no. OK I mean, everybody just assumes that god, he's just some greedy business bastard, and there he is, talking about money again. I'm just trying to be a business person here. OK anybody else wants to try to not tell me the budget? I want to try it as possible. OK here we are. We'll start the script over and literally I'm happy I have my deck open and I'm just reading the questions. I'm just not even trying to be that smooth or sophisticated, right? My follow up questions might sound like I'm a ninja to some of you guys, but I'm just staying in the conversation. Ok? all right, so ring ring, you want to do a logo? So I'm going to ask you, kenzo, why do you need to do a logo? Wouldn't it be cheaper to do nothing? Well, I feel like we should, because we are going to take a big step towards a new belief system and we want the company to grow within it. So I feel like we should do it. Is there anything else driving it besides your feeling? well, we see the other companies that are. We are a company that goes by discount and oh, I see. Yeah, and we see a lot of other companies changing their discount from discount to. To premium experienced way of communicating, so we want to go head to head with each other. I see. And what kind of market share do you think your competitors are taking away from you? They're not direct. I mean, we talk about a supermarket right now. I see. I discount for petrol. For petrol. Yeah, I see. So you're a pet shop and you're seen as like a discount pet shop and you want to be more upscale, right? Yeah yeah, true. OK do you have any idea what that would do to your business if you want more upscale? What does that mean in tangible terms? Would you change prices? Would you to be able to sell different products that you're not currently allowed to or authorize to sell because they see you as a discount market? Well, I think we can sell more of the same product we are selling right now. OK, more of the same. And how much more do you think you could sell? I don't know. I really don't know, it's just a feeling that the whole business is getting this from. And we see a lot of other businesses. And it's a new I feel like it's new. How do you say it? There's a. Thing going on, that's. Changing every discount shop right now in this experience, feeling for customers. So they won't look at discount anymore only. That's OK. And we see it all the time in different shops. OK in an ideal world, if this all works out right and you're feeling your gut is right and you do make the change and everything works out. What do you hope that it will do for your business in terms of sales. And when you say sell more of the same? What percentage of increase do you think that might represent? I hope 70, but 17, 17, seven zero. Wow, OK, that's super ambitious. OK, let's I'm going to temper your expectations back a little bit. I mean, because most people would kill for 70% growth, and I think I'm pretty good, but I'm not that good. All right. Let's pull it back. Let's just say you get 20% more increase in sales. Would that make you happy? No, we will want more. '20s a bit low against everything, right? Yeah, but 70 is low compared to 300. That's where we go. Why not tell me you want to grow by 10,000 percent? And so it's my responsibility to tell you this as a professional that sometimes clients have these expectations that are just totally unrealistic. And obviously, I haven't spent enough time talking to you about your business, but a lot of times we'll fail because the expectations are just magic base, right? So I think what we can do is set small goals. But let's just how about we split the difference? Why don't we go with a 50% growth? Yeah, there. Yes OK, 50% growth. And what would that mean in terms of revenue for you annually? well. I do wonder, why do you want to know? I'm just trying to assess your business. I want to make sure we're solving a big, important problem. We do. But I just want to logo. Right, so are you not willing to talk to me about that? I don't I don't see the value of talking about numbers right now. OK, well, I partner with businesses to help them, and I can only advise you on what you tell me. I could see that you're not comfortable about that, and that's fine. We don't need to talk about that. Let me just move on with a couple more questions. OK, great. And then when you you're comfortable, you let me know. OK yes, right now. Why would you want to do this now, shouldn't you just wait and see? Well, I feel like we are getting behind from the other shops when what I talked about, so I feel like we should go ahead and time. And ideally, how long would this process take? When do you want to start? Well, we never done this before, so I was hoping that you could tell me how long this would take. Well, when would you like to start? And the sooner the better. Like yesterday? Yes yeah, I know I talked to business people all the time. OK, so another question is, have many options. Why would you want to hire someone expensive like me? You could save money by using fiber. Well I don't know how expensive you are, but I know that you are very talented from what I heard from my friends, but they didn't talk about Bridget at all, so that's why I'm going blank with this. Now, now you understand why I ask you, but what potential revenue is because value and price are tied together. If you don't know the value of the work that we're going to do and what it can do for your business, then when I ultimately figure out how much to charge you, you'll sit there and like without context, you'll say like it's too cheap or it's too expensive. That's why I'm asking you about these things. I just try to help people make better decisions for their business. So if I tell you that the logo is going to be $20,000 that might make you fall out of your chair. Or you might think, wow, what a bargain, because I'm going to do a million of business. That's why I try and help people understand this. That's all. You don't need to work with me. You can work with whoever you want. OK you understand now why we ask that question. Yeah, I do understand, but I never to get that question. The question before, that's a good sign and it's throwing you off because you've talked to many designers who spent the past and they never talk about this because most of them aren't really concerned about your business goals. They're concerned about like vanity metrics like, look good and feel good. I'm really trying to help you solve a business problem, and that's why I have to talk to you like a business owner. yeah, I understand. OK all right. So that's the end of my four questions. OK, I'm going to stop right now. So we have a variety of responses. And I'm going to address that first. First, Riyadh was willing to tell me the money and all of us to super clean and clear. Paul wasn't. He was more reluctant, but we figured it out anyways. What it's worth to him. And then Kenzo didn't want to tell me at all. And that's OK. I don't even need to know. Not right now. She has trust issues, and I may or may not want to work with her because most business people who aren't willing to talk about money are not good business people, and I only want to work with good business people. OK but ultimately, I was able to explain to her, and now she can come to some kind of realization. Now, before we get into figuring out what that number is, I just wanted to take your temperature because how did you feel? I felt good, but it was also a bit confronting because I never got that confrontational in a good way. The good way. Oh my gosh. OK, we have to redefine what it means to be confrontational. Well, it's a bad sign, right? What is? So it's like it also being the good way, I think. Well, see now people think that if I say what I think. I'm going to get into a fight with a client. And that's where your anxiety and your stress comes from, but it's exactly the opposite, imagine if we don't have these kinds of conversations, then you go back to your keyboard and you're like, how much should I charge? Oh my god, I'm I charge 5,000 euro. I'm going to hate myself later. No, they can't. They can't afford five. They're a small pet shop. Probably 2000 euros. Probably around, right? So now you're having the internal conflict instead of just saying what it is that you think, if I remain objective, professional and I act in the best interests of my potential client, how could I be confrontational? I'd even use my stories. Usually I have a bunch of anecdotes, but I'd even use them because you guys don't have the same story, so I try to stay to the script as much as possible. And did you want to say or is that just an old hand up? My lower your hand, if you want to say something. Raise it again, ok? Go ahead. Can I keep going? OK, maybe confrontational wasn't the good answer to that, but. It it took me off guard, if you know what I mean. That's maybe a better answer to that, right? And did you know how I said that to you? It's like, oh, I'm glad it caught you off guard because it's the first time I'm going to have a real business conversation together. So in your mind, you should be thinking, wow, this designer is not like every other designer I've met. Absolutely true. Yeah, I try to make anything that you say negative into a positive. OK there's a little secret. I'm working on. OK any time somebody says something negative 2 you or has a negative observation about whatever it is they're feeling. Say to yourself in your mind or you even say out loud, congratulations, then trying to figure out how to congratulate them. So when you say, Oh no designers ever asked me this before, I say my mind, congratulations, we're finally going to have a real business conversation. Try that mental trick. Throw something negative out and say congratulations in your mind and make that into a positive statement. I've lost all my money, Chris, I've gone bankrupt this year. Congratulations now you can have a clean start. You don't have any the baggage holding you back and now you can make very clear decisions. All the legacy is gone. Congratulations OK, try and see what happens. I share it with my wife, she got a call. That's interesting ninja trick. You just pulled on me like, yeah, congratulations. You just realize something, honey about how valuable your husband is. OK all right. Just kidding around. All right, here we go. OK, I have more questions for you to ask from the book. OK, so I'm going to go ahead and share this. Questions to ask from Jonathan stark from the value-based pricing. Book or not, the book hourly billing is not OK, now these are questions you probably want to capture this again if you're going to share this. Make sure you tag Jonathan stark. It's just like the way it sounds, Jonathan stark. What is a home run look like and even get into these questions because I don't want to cheat? I stuck to the four questions that I wrote for you guys or that I outlined for you. Excuse me. You got to ask these questions like what keeps you up at night? If you could wave a magic wand and change one thing, what would it be? What's at the top of your to do list? Is there anything that your competitor could do that would threaten your business? How do you acquire new customers? Oh, this is written poorly. How have you been? Have you been putting off any difficult decisions? This should have. Does your business go through slow periods? What are the three things that must be accomplished now? How has your business performed over the last 12 months? And who is not performing up to your expectations? So these are questions that you can ask, like when you're in the why question to face these are follow up questions that you can ask. You notice now I've asked some of these questions inadvertently while just having a normal conversation with Kenzie and some of the other people. And with Paul. OK all right. Any questions about the questions? These are just good. Go to questions that you can ask. Now I'm going to stop sharing this, and I'm going to get into full debate mode right now, and I'm trying to answer every single question, so let's go back, let's circle back, angel angel said. My clients are asking me, like, why are you charged me? Why are you charging me more right? Well, I challenge that because how do they know what you charge your other clients? And how did this conversation even begin in the first place? If you make it 100% about them and nothing about you, then the answer will be answered already because the clients will have told you why. Like you could literally say to them, I don't want to do a project that doesn't impact your business in any kind of significant way. I don't want to do any project that doesn't impact your business in any kind of significant way. Is this a significant project? Are there real consequences, both good and bad? If we don't do this right. Well, if we do do this right. Yes, Chris, there are many consequences, yeah, oh, people losing jobs this and that. Wow growth, period, can you imagine what that's going to look like? Yeah OK, now Ken's and I were tripping up on each other because we were talking about the number, the number, that price anchoring, price bracketing, how you get to this number is very important. Ok? many of you guys who do fix fees think about the time and the energy that you put into something and the rate your effective hourly rate, ER. And then you add in some pad because there might be scope creep revisions and things like that. And you come up with the number. That number has to be justified to the client. It has to be explained, it's going to be debated. Let's just say that numbers $10,000. Hey, you've huddled away. You scurried off into your desk and you sit down and you use a spreadsheet and a calculator and you're figuring it out, and you come up with the number 10,000 because you figure that 6,000 is really what it's going to take you to do, but you add in 4,000 to cover any weird miscellaneous, unforeseeable things. The unknown unknowns, right? That seems fair because now you've assumed all the risk, because now the clients keep changing things. You just don't have to deal with it. Now, let's say you had a conversation with the client and they talked about, oh, you know, it's going to be hundreds of $1,000 of lost revenue, it's going to be whatever, then you say, well. Does spending 10% to mitigate that problem, to solve that problem seem reasonable to you? So if I came back with an estimate for 30 thousand? How does that sound to you? Was that too much? Well, I sense your pain. In what? 10,000 work for you? I wouldn't say that. Never mind. Don't forget about that because we're not going to negotiate there. I'm like, no, Chris, don't do that because then you guys will just fall right back to that. But even if we're exactly the same number 30,000 submitted as a blind bid, you go back and you work on numbers. We have a conversation with the client and then you ask them $30,000. Does that work for you? Same numbers, two different approaches, which one is going to get the pushback, which one is going to need the justification, which ones are you going to have to defend your budget, your price, which one's going to be more likely to close versus go away? I think the answer is self-evident, is there not? Because I had a conversation with them. They realized the value, not me. And I take all the guesswork out of trying to figure out how much to charge a client. I do that up front, I do an open and I do it honestly. So those are the guys that want to argue with me, let's argue. Good morning, Priscilla. who wants argue with me, let's do it. So I want to argue with you. Of course, you do do it. OK can we we'll play for it. Did you give me a price? I'm the client and then we'll discuss this. OK OK, great. So I ask a logo with you. Let's go ahead. Let's go ahead. Yeah we're going to do it all over again. Or you want to talk about the money part? Money part? Yeah, true. Yeah so I said, you know, you just told me that you're having losses of in revenue in the amount of 300,000. So most consultants would charge about 10 percent, 10% to 20% So how does 30,000 sound to you in terms of a price? Would you make that kind of investment? I would think about it, but I've had other people who charge me 10 thousand, so it feels like a lot, even when you say it like this. OK, so you have options you should probably exercise that I don't want you to spend any more money than you need to. If you feel like they can solve the problem for you and say $20,000 as a business owner, I can't recommend against it. You have to go that route. you should go that route. So you're saying right now that I shouldn't go with you if that's what you value. If price is the determining factor, you should definitely go with the cheaper option. I can't see why you would want to spend that much money with me. OK, so well, my question is, why would you such a price. So high? Because 10,000 is a good deal, too, right? Why would I set the price. So high? Yeah, it's 10% of realized revenue gain for you. Hi well, if I compare it to the others, yes, it is OK, like I said. But let me ask you this question. If I told you today that you can invest in something and get a 90% return on your money, would you say that that's high? No so why are you saying that it's high, I mean, relative. Yes, and you could go on forever and get the logo for $5. So the person is charging you $10,000 is expensive relative to five. But you're not going to hire somebody on fire, are you? No, definitely not. That's what I'm talking to. Right and let me ask you another question. Like, do you like buy Apple products? Do you own any products at all, like a phone or tablet? Do you buy? Have you purchased a car recently? No also not. What have you purchased recently? I purchased, I spent my money on the dog recently. OK a dog? You bought a dog? Ok? did you go to the kennel or did you go to get something like from a breeder where you have Providence over where the dog came from, the breed and he's clean bill of health and you know, it's. Yes you do that. Yes so somebody could sit there and argue with you and like a family member can come up to you and say, kenzo, you just get a dog from the kennel, we'll be fine. It might be like flea ridden and has bad habits and all, but you make that decision, so in all cases, you get to decide. You get to decide what you want to do. That's in alignment with your, your business principles, your values and the risk you're willing to take. So it's all about risk. If I know your value system, you get to decide and all I can do is present to you. What is that we do? And I've told you it's probably going to be around 30,000 or 30,000 euro and that's 20K more than the other person. And so if you feel like the risk tolerance is there and you don't feel like there's a gap between what we would do, it would be insane for you to spend 20,000 unnecessarily. Don't you think? So are you saying if I'm going with you, that I'm spending for less risk? Do you feel that way? Well, you should. You did say that I goal to scour Britain because of the risk that I won't be getting or less risk. So you are protected. Wait, wait, hold on Kent. I didn't say that. I just said you decided to go to the breeder because that aligns with your values and your principles because you know, the provenance of the dog versus going to count on getting a stray. Those are your decision, not mine. I would make a different decision, to be honest. And you get to this, you get so sorry certificates, you get a lot of right things that are giving you less risk. So what are you giving me for 30,000 compared to ten? I'm giving you what it is I do for my clients that I normally charge as much for. Would you like to talk to some of them, would that help you understand? I mean, you can look at our body of work and you can compare to other person. You can compare how what we've talked about business goals and you could make your own assessment. I'm not here actually to pitch or sell you or anything. I just had a conversation with you, and I told you a price, if you don't think it's a good fit, then it's not a good fit. Well, I do want to charge or I mean spend 30k, but I want to have less risk. So if you can guarantee me that, then we can move forward. OK, what kind of guarantee would you like? What kind of guarantee can you give me? Well, since you're the one who needs to guarantee I'm willing to meet you there, I get it. I want to mitigate your risk. I'm willing to back up my work. OK, great. Well, you tell me what kind of guarantee so I can make it work for you. OK I do want to have that 50% that we talked about. And it's just about the logo right now, right? It's just a logo, it's what you ask for. True now I cannot guarantee you that things are out of my control. You do realize that right? Since I have no impact on your sales team, your customer service, the products that you choose to carry, the positioning, the lighting, the marketing of said products. I can only guarantee the work that I do. I believe I tried to pull back your expectations of 70% growth. And those are numbers that you gave to me, and you are the one who told me the logo is going to do that for you, not me. Well I can give you 100% guarantee, but then I would charge you 100 percent, if not more of the price. OK, so what kind of guarantee can you give me for the 30 thousand? Because I'm asking what kind of guarantee would you like if you're unhappy or what kind of guarantee would you like? I can meet you there. Well, I said that I want a 50 percent, but do you feel like that's a good? Think to ask you. Well, like I said, would it be fair or realistic for you to purchase the logo from me and have me guarantee results that I'm not in control of? So what I do is I can I'm on in control of the logo that is designed for you. Well, isn't that fair? Yeah I don't blame the sales team seat, so I don't know what kind of guarantee you're looking for. Well, now if you wanted to do this, I can. I can enter in this discussion with you. You want to grow your revenue by 50% Sure OK. So was not going to solve that problem. As we can already see, it's going to be a number of different things. And if I guarantee you to 50 percent, then I'm going to need to charge you 100% of the value you hope to gain. So what is 50% in revenue growth mean to you. So we can determine this? 1 and 1/2 million. OK, so I'd have to charge you 1 and 1/2 million from that 30 thousand, and then we would have to enter into some kind of consultative process and phase where I kind of sit around. This is going to take months, if not a year. There's going to be a lot of work for both of us. Is that something you want us to do? So you be that. Yeah, if you want to guarantee a million and a half of revenue, I'm going to charge you a million and a half in revenue. you see, because that's a guarantee. And if I don't deliver, I'll refund whatever the difference is. So if you only realize 600,000 are new revenue, you only pay me 600,000. Does that take the risk away from you? Yes, it does. There we go. So you are not saying that I should. The two should charge me more. Right? yeah, I'm going to charge you more if you want a guarantee like that, if you want me to guarantee the results, I might charge you 100% of what it is that you're trying to capture. Now we could discount it for uncertainty. I can discount it to 50% So if you're going to realize $600,000 in revenue, I can charge you 300K. For some uncertainty, right? I could just kind of find certainty, is that OK for you? Yeah, I think so, but we are about the same project. No, we're not, we'd have to sit down and kind of figure out what we need to do together. OK. It's much more complicated now than a logo, right? Because as we said, a logo is only going to do so much for you. OK, I understand. OK fantastic. All right, let's stop. OK that's the value conversation. And I think the belief is from how the world is getting around for decades. Right now. So we are so fixed at fixed prices and don't see the value of value based pricing. So that's I think that's where the biggest concerns are. So here's how I look at the world. OK, I see the world in two groups of designers the designers who love what they do and are stuck in their process, and we want to be miserable. That's fine. I'm not here for those people. I'm here for the people who are like, you know, this sucks. I want to change. Is there a better way? Because somebody told me a better way. I'm going for those people. So I spend no time trying to convince or convert or evangelize people like that guy. I have no interest in working with them because actually, there's more for us. But you did say that you want to help him. No, no, no, no, I want to learn what the hangup is so that when the people who want to learn the information, I can present it to them differently. So that they want to move in. I'm not worried about that guy. I spend no amount of time thinking about how he's going to do in life. I don't even care. You understand. I don't count that. I'm not trying to solve his problem. I'm just trying to help the people who are ready to make the leap, but have a little bit of hesitation. When I can understand that, then I can explain what it is that I'm trying to communicate more clearly in our industry. It's that it's that we already have a logo is, you know, I don't know, five grand or 2000 or 10,000, or whatever. We already have these numbers in our heads. And me, I'm just like, I'm writing down like, I need to get rid. I need to start fresh and make it 100% like you said about them and just let them decide what the value is, you know? Yeah I mean, no, I know, I know. So what you have to do is you have to get rid of your BS. Yeah, a lot of yes, you have to get rid of your belief system. You have to change. OK, Yeah. The quicker you can absorb, reflect and practice what it is that I'm trying to share with you, the faster your growth. So you back on this point in time, you're going to say, wow, how far have become amazing? How far will I go? The sky's the limit. I do not place artificial limits on what my earning potential is. Not at all. Why anybody does, I don't know. OK, there's this thing, right? It's like you're in a village somewhere super secluded. And then one day an Explorer comes in is like, you know what? The island is much bigger than this. Would you like to go and see the new world? And you're like, nope, I'm good with island. I say, OK, see you later. I'm going to lie here and other people like scoot over, make room in the boat. I'm like, yeah, come with me, come with me. Let me show you this world, and you get to decide if you want to go there, if you want to come back, if you never want to leave. Those are all your decisions. But then you live with your decisions. That's the beauty of free will, man, you get to pick whatever it is you want to do. And you are in control, so yeah, you're right, you're coming in there and you're thinking to yourself, you can only be worth this, much so. And in actuality, what you're doing, I could argue, is unethical. Because it's all about you has nothing to do with me. You're the controller of the price. Whereas the other person is in control the price, and that's my approach. And you can see you could see guys the four questions, the y conversation, just those four little questions, where are they? I lost it. Here it is, the y conversation, right, so I'm going to share this once again. It's going to screen capture this, I literally was reading these questions down the line until I felt like, OK, I'm done, and some of them got answered on the first one. And none of the scenarios did I get to the fourth question? So the shorthand of this is why this why now, why me? Why this, why now, why me? You only need to remember three words this now me. This now me. Why do you want to do this? Would it be cheaper to do nothing? Why now shouldn't we just wait and see what happens? Why hire me, you know, I'm going to be the most expensive option. That's it. They will then tell you, because what I want to do is I want to solve bigger problems. I'm not interested in taking on a small problem that has no impact on a business. When you understand that your life can change. OK I mean, you guys saw that right. This wasn't so much a debate, this is just like a therapy for some of you guys. Oops what am I doing? Close that. Yeah, I definitely needed that therapy in the new year, Brendan bridge, I needed to do. My biggest apprehension was not fully understanding it or understanding how to do it. I had seen the videos of you speaking about it. The questions really helped significantly because it was getting to the point of trying to get them to figure out the value. That really kind of sells it for me because I just didn't know how to get to that point. Yeah so, you know, the thing is, since I don't write like books and things like that, most of what I do has been taught to me or learned in the battlefield, and I do it intuitively. I'm just going to ask them some questions, and I didn't codify it. So it's nice to have a book like this, and you can download the PDF from his site and then you can just read it and then you could just use it right away. Right? most of the times I'm just trying to figure out my mind like. Is this a big, important problem you want to solve? If you do, I'm your guy. If not, I don't want to do it. Call somebody else. Call this angry guy who wants to spit on people. Call that guy, he's happy to do it. I think the main reason that the guy left the comment is pretty much the audience of the channel is good designers who don't ask for the money. They should be taking. While I think we, we emphasize like four, for every time you say, let's hire the best to deliver the results, we say charge based and value. We say it's like four times. I think that's a disconnect. I don't think this guy has seen all the videos and seen all the background of that. It just the audience of the channel, I think. Yeah, I mean, we're talking to internet, so there's going to be haters and lovers and everybody in between. It just that's totally fine. But there are a group of designers I don't know where we all learn this rule. That hourly flat phi is the fair way to go. And if you examine if you do any kind of thinking about it, you start to realize the fallacy of your own logic. It's really that simple, so once you've been shown that light, it's now up to you, whether you choose to ignore it or not, that's all. There have been enough articles, papers, seminars, videos, workshops that people put on to pretty much address this, I don't feel like. There's anything left to cover, so anybody else would like to argue, debate this with me because I want to put it to bad guys, because that post I wasn't expecting to have that many people discuss on the thread. I just I was shocked me a little bit. It's why we kind of intercepted what was going to be the first call of the year. I do have one last question, if possible. Yeah, of course. Yeah what do you do if there are companies that you are talking with that are so on fixed prices and they don't see the value of what we're telling me about assurances and stuff? Do you walk away from them or do you just give them a fixed price that feels good to you? Well, a fixed price. If you do value based pricing, it's still a fixed price. A fixed price means there are no cost variants, right? No matter what happens, you're going to do for that price. So how I determine that fixed price, like I said, is kind of where we're going with this. So if they want fixed price, they are getting a fixed price. But if they don't want to. See the value of those questions that you are asking, and they just want fixed price front. What do you do? You say it depends. Let's talk. Let's have a business conversation. Then what do they say? Well, if you are telling me what you were telling me a bit ago, yeah, and I would have then the mindset of have cheap restaurants and you also have very expensive restaurants. The to look at how big your wallet is and what the value of the food is to you. They have fixed prices. We'll go back there again. No, not at all, but I feel a commodity product, right? I feel like some people won't get it. I mean, have you ever? Have you ever tried to say the things that I've asked you to say or taught you and gotten a bad result? No, not yet. This is an imaginary argument that we're having because I don't, you know, they would put you in the hospital for having these kinds of conversations like it hasn't happened yet, but for some reason, it's very real in your mind. Yeah so why don't you do it and see what happens? Well, I've never had a person come back and tell me, oh, you're crazy, I don't want to talk about my business, I'm like, OK, what should we talk about colors? What should we talk about? Sunsets like? I like sunsets. But you won't get the kind of pushback, ever. I'm not saying I won't, but I have not. Because I just ask the business question. Actually, most people, most business people find it refreshing to talk about their business with other people. Have you ever hang around with business people, it's like, oh, man, our sales are up, our sales are down or I'm going through this crisis right now. I'm like, really? Tell me more about that. The last thing they want to talk to you about is Pantone colors and try to color harmonies. So what they're going to do. That's all you care about. You know, did you see like Helvetica noise like far superior or Newhouse grotesque or whatever? It's like, just shut up. I want to know about those things. OK Why does that even matter to me? Right sounds reasonable, Yes. Yeah I mean, imagine if you went to a relationship counselor that didn't ask you about how your relationship is doing so, the fundamental shift here is this is that designers see themselves as aesthetic people just concerned about the way things look. So to talk about business like, wow, that's not what they came to me for. Well, maybe we need to redefine what it is that we do if we can't make a difference in a business. The bottom line, though, we're doing the wrong thing. Then we're an expense. I want to be an investment. OK you're not going to be reluctant to buy a piece of gear, a computer, a camera, if you think that's an investment on how you can make more money. Conversely, if you buy an expensive handbag or something like, whew, that's expensive because it's very hard for you to recoup whatever you spent on it, because it's not an investment. So if you change how you think about yourself, you'll talk differently, you'll focus on different problems. You'll make more money. You'll be happier solving bigger problems for bigger clients. And said, and this is a crazy chat, I'm about to read this at some point. Hey, is anything interesting coming from the chat, is there anything I need to talk about? Anybody that's reading the chats, bring it up. Yeah, so one of the things that we've actually been mentioning a lot is that a lot of the clients that Ken's is bringing up are just ones that you don't really want to work with anyway. It's as if they're very afraid to talk about money up front. They're very apprehensive of really giving you what they want, and you can keep asking questions to try to probe and figure out what the scope of the project is going to be. But we're not really getting anything. So it's just like if I don't know what I'm supposed to be doing or what you really want to do, then there's not really much that we can do to help you. It's just a lot of the clients that she brought up there, just like, I don't know I would. Well, we're not right. We're not going to fit Brennan. You're right now. Chances are you feel this way, but you've never had this conversation. Chances are, if you have this conversation, you weren't trained in how to do it. So you fumbled it. You came across as like, oh, I see what you're trying to do. So, no, I'm not going to talk to you about that. But if you do it the way that I taught you in the way that we did in the role play. See what happens? Because, like, is it a miracle that I've never met anybody, I won't talk to me about their business, or is it a miracle that the only people you talk to are the only people who don't want to talk about business? Something is off, right? That's why I say I'm always suspicious when you guys say, this is the way it's working, like, well, are you sure? Let's reexamine how you got here. So if somebody if you ask them like, well, tell me more about your business, why do you why do you need to do this? And they're not going to tell you it's like, so you expect to work with a partner who you won't tell them what the problem is that you expect them to arrive at that solution. There's some kind of immaculate conception there, don't you think? Wooden, whoever you work with. Better serve you if you are inclusive in that process or that discussion or no.

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