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Tom Hirst

There are plenty of ways to bill for your work. Hourly, daily, fixed price, value-based, and retainer. But which way is the best? And is it fair and ethical to not bill for the time you spend on something?If these are questions you struggle with answering, then you are in the right place.

How to Price Your Work
How to Price Your Work

How to Price Your Work

Ep
130
Apr
21
With
Tom Hirst
Or Listen On:

Hourly, flat fee, or value-based: what is the best way to price your work?

When it comes to talking about money, a lot of creative folk tend to get uncomfortable. Many of us believe that the work should speak for itself. And that the cost of something correlates with how long it takes to produce.

But that’s not always true.

There are plenty of ways to bill for your work. Hourly, daily, fixed price, value-based, and retainer. There’s even the good old barter system.

Which way is the best? And is it fair and ethical to not bill for the time you spend on something?

If these are questions you struggle with answering, then you are in the right place.

Our guest, Tom Hirst, is a freelance web developer, author, and mentor. Beyond building custom websites, his specialty is pricing. How to think about it and how to talk about it with your clients.

As much as we all want it to, talent alone will not magically get you work. No matter what business you’re in. You need to market, need to sell, and you certainly can’t shy away from talking about money.

Do yourself—and your business—a favor and listen up. Because we’re going to change the way you think about pricing forever.

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Episode Transcript

Tom:
If you hire a builder, you don't want to know exactly who's going to be laying each brick, when you hire someone to build your house. So if I sell a project that's a huge project, I think it's well within my right to then get other people involved because you might need specialist assistance, you might have less capacity than what you can do on your own.

Greg:
Welcome to The Futur Podcast, the show that explores the interesting overlap between design, marketing and business. I'm Greg Gunn. When it comes to talking about money, a lot of us creative folks tend to squirm a little bit. We think that the work should speak for itself and that the cost of something directly correlates with how long it takes to produce, but that's not necessarily too. You see, there's lots of different ways to bill for you work. There's hourly, daily, fixed price, value based and even retainer. So then which one is the best? And is it actually fair and ethical to not bill by the hour? If these are questions you struggle with answering, then you're in the right podcast episode. Our guest today is a freelance web develop, author and mentor. And beyond building custom websites, his specialty is pricing, how to think about it and how to talk about it with your clients. As much as you want it too, talent alone will not magically get you work, no matter what business you're in. You've got to market, you've got to sell and you certainly can't shy away from talking about money. So do yourself and your business a favor and listen up because we're about to go deep on pricing and change the way you think about it forever. Please enjoy our conversation with Tom Hirst.

Chris:
I'm super excited to talk to you today because I think we're going to geek out about pricing. And this is crazy because you are the second web developer that's really owning that positioning and space of talking about hourly based pricing and pricing strategies, you and John Stark. And I think what really caught my attention was your Twitter account and how you chained together a bunch of tweets to pretty much write a book using Twitter, but just really high level stuff, very easy to consume, process. You're very logical, very methodical, you leave a lot of the fiery language out, the bombastic language, and it's just really solid information. So I'd love to just dive deep in there with you if that's okay with you.

Tom:
Yeah, sounds good.

Chris:
Okay, beautiful. So for people who don't know who you are, can you introduce yourself?

Tom:
Yeah, sure. So my name's Tom Hirst and I guess by trade I'm a web developer and I've been doing this freelance for 11 years now. And I've recently started creating digital product to help other freelancers get ahead.

Chris:
Mm-hmm (affirmative). And what inspired you to start doing that?

Tom:
I think people were asking for it really. I have a few friends who were transitioning from design jobs, development jobs, wanting to get into the freelance space and they're kind of coming to me naturally just saying, "Tom, you've been doing this a long time, what should I do in these scenarios?" And it kind of just felt like a natural move really.

Chris:
Mm-hmm (affirmative). And how did you learn about pricing? Is it just on the job training, figuring it out? 10 ways of doing it wrong and then figuring out the one right way. Or did you take a course, did you read a book? How did you come upon this knowledge?

Tom:
Yeah, so I would say that that's a bit of a 50/50. So a lot of it's through experience and a lot of it's through someone who we've already mentioned, Johnathon Stark's book, Hourly Billing is Nuts. That was a great primer for me and it kind of crystallized a lot of what I'd been doing already, trying to move away from selling units of time towards selling value and fixed based pricing and things like that.

Chris:
Mm-hmm (affirmative), okay. So I'm going to give everybody a heads up. I think this is going to be an unusual podcast because usually we're talking about stories and back story and childhood trauma. I think because we have this rare opportunity to talk to Tom, I'd really just like to really go point by point some of the big ideas that he shared. And I will let you guys know, he has a book, it's called 10 steps to becoming a better freelancer that's available. We'll provide links in the description below, but that's the jumping off point. So you have these 10 steps to becoming a freelancer. Just so I don't make you memorize all of it, I'll just read them off, because I took some notes.
So, hold yourself accountable, refine your position, which I want to talk to you a lot about positioning. Profile your ideal client, make yourself known, understand pricing deeply, which we're going to dive in of course. Become a negotiator, introduce structure, automate and outsource, do a good job, hone your skills and stay relevant, and last but not least, seek balance.
Okay, let's begin with understanding pricing deeply. Now, you say in the Tweets and the things I was able to collect, there are different pricing models, use any and all of them that are appropriate. It's not always a one size fits all.

Tom:
Yeah, that's my overarching thoughts about pricing.

Chris:
Mm-hmm (affirmative), so let's get into that. What are the different types of ways in which you can charge for creative or freelance work?

Tom:
Yeah, so we've got the main ones really. So you've got hourly billing, daily billing, fixed price, value based pricing and retainer. They're the five ones that I talk about in my pricing book. And yeah, my overarching view is that whatever methodology you use, you should always consider the value you're providing, whether that's the individual value that you provide as a differentiator, what's the value of hire you specifically? Or perhaps what's the value if the company doesn't hire you? And things like that. So that's my overriding thoughts.

Chris:
If I'm a new person, even the idea of value to a person who's been in business for decades, it's very subjective, it feels like it's kind of loose and amorphous, so how does one even begin to determine what my value is if I'm just say one or two years out of school?

Tom:
Yeah, I think you've got to look at what I kind of touched on before, so what is your differentiators? What makes you stand out? What's different from this company hiring you to the next best option? And things like that. And then what you've got to do is then convey that to the client and let them see that with their own eyes.

Chris:
Okay. I'm going to pull you into my world which is people who do graphic design. And so, something that a lot of graphic designers do is they make a logo. So I graduated from school, I have a portfolio, and when you say what differentiates me relative to the market, there's a lot of people making logos for $5, literally, to people who charge a million dollars for a logo. How do I know where I fit in there?

Tom:
Yeah, that's a good question. It's obviously you got to look at your track record, you've got to look at your credibility, your expertise. What can you show that you've done before? Proof of work, things like that. What's your standing in the space that you're working in? Obviously if you're a specialist, which goes back to the refining your position chapter of the book, if you're a specialist you can charge more because you're zoning in on that type of client. So if you're doing logos for a specific type of business, then you're obviously going to be different to someone who's a jack of all trades.

Chris:
Is it then your recommendation and position that people should start to find their niche and specialize?

Tom:
Yeah, I would agree overall. Especially in the beginning, I think that's what a lot of freelancers struggle with. They just think that they're going to cut out a lot of the market by going so niche and so refined. And it's pretty scary and I understand that, but yeah, I think the sooner that you niche down the better.

Chris:
Mm-hmm (affirmative). Now this is one of those things where you may have transitioned out of doing service work, but if you're still doing service work, how have you positioned yourself as a web developer?

Tom:
Yeah. So I'm still doing service work alongside the products, so yeah I've got a bit of on the ground experience still. So yeah, when I first started, I thought, "I'll just be a web developer. I'll serve every single type of client, anyone that comes my way, whether they're a plumber, electrician, dog walker, whatever." And the way that I specialized was to focus down into WordPress. So WordPress there is a CMS that people can use to build their own websites, but you can also take it a bit farther and do more custom and advanced stuff. So the first thing that I did was just zone in on that and really heavily specialized in WordPress and tried to be the go-to freelance WordPress developer. And that's where it all started to really kick in for me.

Chris:
And you go further in terms of niching or is that niche enough for you?

Tom:
Yeah, I went a little further in terms of I wouldn't do theme work. So I would only work with people who had slightly larger budgets who wanted to do custom development. So let's say they wanted a custom integration or specific functionality that you couldn't get from an existing theme or plug in, then I would be the guy for that and that's the type of client that I focused on.

Chris:
Okay, just so in case somebody's uninitiated and they're listening to this conversation, WordPress is a content management system, that's the CMS part, and there are themes readily available for free or hundreds of dollars. And one of the things that Tom just said is that if you wanted him to adapt and plug in content to an existing theme, you're not the right person for him. Those tend to be lower budget projects and smaller scale clients who really don't want to have a bespoke sight. Now WordPress, for a lot of people that's all it is. But if you work with a talented developer like yourself, it can be anything you want because you can pretty much customize everything on the back end, including the dashboard to how you look at things, right?

Tom:
Yeah, exactly. I mean, there's not a lot of things I have not built on WordPress over the years. Like from really brochure websites to proper software as a service products, like intranets and things like that. So yeah, it's really versatile and it's served me well.

Chris:
Mm-hmm (affirmative). Now, would you recommend that, because we're on this topic here, a WordPress developer who's doing the high end custom work to then go one layer deeper and say, "I only want to work with sports companies"?

Tom:
Yeah, that could work. You could specialize in terms of the horizontal and the vertical at the same time. I think there's a lot of value in that.

Chris:
Okay, beautiful. Now, I'm curious today what methods of pricing do you like to use the most when you're pricing your services?

Tom:
Yeah, sure. So the main thing for me is I try to go for value based pricing if the business has tangible results that they can share or they want to share, because this might differ between the UK and the US, but sometimes value based pricing as a methodology is a hard sell. A lot of people don't really know what a lead costs them, so then you have to fall back to some other methodologies, and that's kind of what I talk about in the book. So yeah, if I can't get the value based pricing thing working then I'll go towards a fixed price and I'll do the things that I talked about before like try and analyze how valuable is this engagement? Try and estimate the outcomes, the financial outcomes, try and estimate what someone else might charge them who's the second best option and things like that. So it's kind of a semi value based price is what I would go for after that. And then I would fall down to perhaps day rates if I wanted a bit of a cash injection. But I have one rule with the day rate though and I don't do day rate that's eight hours. A day is a day. And they're kind of my three go-to models.

Chris:
Okay. I'd like to talk to you about value based pricing because that's the holy grail, everybody wants that, it's the most complicated set up, the most misunderstood thing. So we'll go to fixed based pricing. I think I read somewhere in your Tweet or in your site somewhere that said something like, if you have to do research to write a proposal then you probably need to do some kind of phase engagement where you're doing discovery. So in cases like this, let's just say these clients are not that sophisticated, I'm not going to be able to do value based pricing, I'm going to do a fixed project fee. Talk me through a scenario where you're going to do this discovery thing, and how does that work for you?

Tom:
Yeah, sure. So if you go to a fixed price, you need a brief and it needs to be pretty specific. So if you don't have that, then you don't want to write one for free, so that's the play. So you're going to say, "Look, I can help you get this tangible outcome, but you're going to have to pay me for it." So let's say a discovery pre project you might put a price on it for 5000 and then you would do that first, you would get then to the end result of you do all the discovery, you do all the research, you do all the interviews with the client, you find out what their requirements are, and at the end of that you would then present them with this document that then allows them to get a price on the main project.

Chris:
Okay. That aligns with a lot of the things that I teach people to do. So the discovery, you're getting paid, it is real work. You kind of have to figure out a lot of different things, interviews, figuring out outcomes, researching competitors, all this kind of stuff. And theoretically you're going to be able to come away with a very creative brief, these are the outcomes and goals, this is how we'll measure success, and now you'll leave me to go and build this thing. Do you run into this thing where they agree initially to the 5000 pounds or dollars and then it turns out the scope is actually really big and the price you float in front of them for building this thing, let's say it's 45000 and they're like, "Oh my god, I didn't think it was going to be like that." And I that happens, how do you deal with that?

Tom:
[inaudible 00:14:55], I've never had that happen. Because what I try to do is try to set expectations, I just think it's only fair. So let's say if I can try and give a rough ballpark before, so I'm going to say, "Look, it might be between 20 and 40 thousand. But if we do this brief and this discovery, we'll have that piece of mind. We'll mitigate risk and then we'll be able to give you an exact price within that range after that point." So usually it always works out. But what I always try to say is, "If my price is too expensive for you, after this pre-project then you can go to someone else and get a quote if you like, that's fine." But a lot of the time, if someone does the pre-project with you, they're going to do the main project too.

Chris:
Yeah, okay a lot of good points here. I just want to highlight some things for our audience to understand. So you're asking them for a commitment upfront to put some faith in you and also to mitigate risk because if this process doesn't go well, they've invested five and not 45 and it's a good way to test the waters, if you will. And you've also done price bracketing here, you're saying it's going to cost five to start and then most likely based on what I've heard so far in a very preliminary basis, in my experience it's going to be between 20 and 45, so those are brackets. And so now they have a range, so if they're thinking 20 on the low end is way too much, they'll stop the process right there, eliminating some friction down the line. And you're very open and honest and transparent and you speak about it very clearly so that there's no weirdness and no misgivings or mistrust that you're developing.
I love that, all people should try to do this if you're doing fixed based pricing, is have some kind of discovery initial investment, because it primes the client to say, "I'm a professional. You have to respect the time and the effort and energy and what I'm doing is valuable." And you're also getting them ready to spend more money because if you just say, "Sign on the dotted line, you've never heard of me before, for 45K", that's a big scary decisions and there's a lot of risk involved. So you're reducing risk by doing the phase engagement and including discovery and getting paid for your thinking and research. So I love that. And has it happened, I'm not saying never, but has it ever happened where you do do that discovery and they're like, "We changed our minds, something else is happening. Give us the creative brief, the goals", and everybody's happy and they walk away.

Tom:
Yes, I think one or two times it's happened where they might think, it normally happens it's not about the money, it's normally about what we've uncovered and they want to rethink their strategy overall as opposed to getting sticker shock form what it actually could cost.

Chris:
There's something else that you're also tapping into, which is called the loss aversion bias, because once they spend the 5000 dollars, even if they totally don't love you 100%, they're like, "Well, better the devil you know than the devil you don't." To start again, it's just a human bias, it's a cognitive bias. So, "I've spent money with you. I like the way you talk, I like the things that you're doing. I get a sense of trust. There's a couple things we might not agree on, but it's better to just keep moving forward." And so these are all very practical business tips that anybody listening to this should start to think about, "How's my process working?", so they can map onto this.
Now, let's get into value based pricing. Because I think this is where it gets really complicated. So let's say, take me through a typical scenario. It doesn't have to be any kind of specific client detail that would reveal too much, but take me through one how it typically sounds like in your world.

Tom:
Yeah, sure. So I'll caveat this with what I said before, I think value based pricing is a bit of a harder sell in the UK than it is in the US. But you can do it with the right clients. It normally needs to be someone who is a medium business size plus, I've noticed. If you're talking with mom and pop stores, as you say in America, you're going to have a struggle. But yeah, the way that I would try and approach is if I think the client's a good fit and I think that they're perceptive to a value based price, I'll start the process of asking the questions. So what outcomes are they looking for and how much do they turnover, how much are they making? What successes are they seeing currently? How much does that success currently cost them? How much does lead acquisition cost? And try and extract all the information that I need that would help me construct a value based price. And if it's not happening, if it's not flowing and I think that it's going nowhere, then I'm just going to try and do my own calculations and give them a fixed price while considering the things that I have uncovered.

Chris:
Yeah, okay. First question for you is, how do you define a medium sized business? How do you know they're a medium sized business, what qualifies that?

Tom:
Yeah, so I'm looking at how big they are, how many people they employ. We have a website in the UK called Companies House where you can look up the accounts of any limited company. So it'd be like an LLC, looking up an LLC in the US. And you can kind of by looking at the accounts kind of see how much turnover they make and things like that. Look at their existing website, do they have any premises? Things like that. So I'm already thinking about all this stuff before I enter any negotiation.

Chris:
So for you, would you consider number of employees the minimum, like if they have 20 employees that's a sizeable enough company? Or if they have multiple offices or if they have a big footprint? I just want to know specifically for you what triggers, beyond this point they're medium sized up and I can approach them in this way.

Tom:
Yeah, it's probably a combination of all those things. Like a certain amount of turnover, like a few hundred thousand, let's say yeah a couple of offices or at least one fixed office, 20 staff plus yeah, I would probably roll with that figure.

Chris:
Okay, very good. And the thing that people struggle with the most is, how do you begin even that conversation and getting them to trust you enough on that initial call to even disclose their revenue goals or turnover rates? And that's bridge that a lot of people don't know how to broach, so how do you begin that conversation so it feels natural? Is there a little pre-dialogue, a little warm up that you do before that? How do you get them to start to open up?

Tom:
Yeah, we'd normally start with maybe one or two emails and then we'd get on a call pretty quickly. And I would just try and keep it like 30 minutes, just let them talk as much as possible essentially. The way that I phrase it is, you would just tell me about your business Tom and then go deep from there. So after I know a bit more about their business, tell them I want them to tell me more about the project, why do they want to do this project? Why do they want to do it now? How did they find me as well? And then we can start trying to build that picture of value.

Chris:
Mm-hmm (affirmative), okay. Do you have any go-to tricks? Because a lot of people are good at building up that and then it's a hard, hard wall that they hit in terms of, "Uh." So for example, how much is the lifetime customer value for you? And they would just bring that out of nowhere and the other person's like, "Wait, I know what's going on. You're trying to gouge me on the price based on what a customer is worth to me." And so do you have any kind of tips or advice on how to transition from, we were talking about things that are pretty, what most people would ask, and now I'm really going to get into your business?

Tom:
I think I would phrase the start of that conversation by just saying, "Look, when you succeed I succeed. I need this information to do the best job that I can for you. If I'm giving technical strategy, I need to know about the business metrics if we're going to make this work well." And then just go at it from that angle and just try and soften them up a little bit. But to be honest, a lot of people they either don't have it or they're happy to share it anyway. So it's not too difficult to get the conversation going and start to talk about these figures or at least get estimates.

Chris:
Mm-hmm (affirmative), great. Okay, let's go back to one of the other five methods or pricing projects that I think most people are familiar with and is probably I would say the majority of people price projects this way, and it's based on hourly. What is your take on this? Why is this the worst pricing methodology?

Tom:
There's a number of reasons really, and obviously Johnathon wrote the book about it and it's the misalignment of client and freelancer is the main one for me. Because obviously, the longer it takes the freelancer, the more they get paid. And there's just no incentive really to be efficient at all and there's a lot of other reasons that we could go into like the paperwork, justification of time sheets and things like that. So yeah, it's something that I moved away from really early in my freelance career.

Chris:
Same here. For people who are listening to this who are doing hourly billing, how do they get over this mindset? Because I get this all the time, as much as you and I will talk about this, there are a lot more people that are like, "No, this is the way, this is the fair way, this is the only way, it's the only ethical way." So there's obviously some kind of mental mindset limiting belief that's holding them back, how do you help people get from there to the next stage up in terms of say even daily billing or fixed pricing?

Tom:
Yeah, I think you've just mentioned a really good thing there, it's about moving up those ladders. Moving from that hourly billing mindset to day rate is a really good step to take, just as long as you do what I said before, don't make day rate eight hours because you're just hourly billing but for a cheaper rate, essentially when you do that. So yeah, that's the way I encourage people to start. So hourly billing, think daily billing, can I sell that? Then move on to your fixed price and your value based, it's working your way up.

Chris:
Okay. When it comes to, say, fixed pricing, you wrote down a bunch of tips. And like I said, I really like how structured your thinking is in terms of it's no-nonsense and it's almost like a recipe, do this and do that. Can you talk a little bit about the things you should be doing if you're doing fixed pricing?

Tom:
Yeah, sure. So like we kind of touched on before, you need some kind of outcomes, some defined outcomes whether you've done the pre-project or you've been provided by that, that's essentially what you need, that's the blueprint that you're all going to work to that you can all reference and there's no ambiguity there. And you're getting these things for this price. So yeah, that's the main thing, the brief. And then the second thing is get some money upfront, every time. Do not lift a finger until you've got some money in the bank because in my experience no one's fully committed until they've got some skin in the game.

Chris:
Right, okay. I know what I wanted to ask you here, so you've worked with the client in a way that you can figure out scope and you're clear on the brief and the outcomes, how do you then know what to price it at? What are you basing your own internal math on?

Tom:
Yeah, so it's kind of like what I said before, so whatever pricing methodology I use I'm thinking about value. So I'm using my own experience of what similar projects have cost. I know a lot of developers as well, I know a lot of other freelance developers, so we kind of have these pricing discussions too, so I know what they're pricing, so I've got that behind me. But then on a per project basis, a per client basis, I'm trying to analyze value all the time. So even if I don't get the metrics that I need to do a true value based price, I can still think, "How much is this going to be worth to someone?" And I'm just building that picture all the time, so I'm kind of thinking like, let's say they want to get something done next week, how important is that? Let's say, can I charge a bit more than that? They want to get it done really quickly, that's obviously worth a lot to them. And just constantly building that picture of value and then just giving a price and seeing where it sits.

Greg:
Time for a quick break, but we'll be right back with more from Tom.
Welcome back to our conversation with Tom Hirst.

Chris:
I love this, because you're European and usually when I talk about money the Europeans push back really hard, they're like, "That's so American capitalist, you pig", kind of thing. So we are talking very similar things, so I'm going to assume some of the voices that I usually hear and allow you to respond to them. These are not my true feelings, but I hear this all the time, okay Tom? So brace for impact, I'm just going to warn you here. So are you saying Tom, that the price in which you charge has no relation to the amount of work in which you're putting into it?

Tom:
That's a good one. I would just say, "No, it's completely disconnected. It'll take as long as it takes and that's it, the price is the price."

Chris:
And I'm talking as the creative person, not the client, so is that ethical to do that? It's just all BS and puffery then, isn't it?

Tom:
It's only worth what someone will pay for it. End of the day I've got people queuing up for my services, so if you don't want to pay, then someone else will.

Chris:
So let me clarify here then, so basically the same amount of work that you put in for one type of client because their customers are more valuable, you would charge them more than the same amount of work you would do for a smaller client? How do you resolve that?

Tom:
Yeah, but every project is different. No project is 100% the same, so why should every price be 100% the same?

Chris:
Mm-hmm (affirmative). And so then are you just taking advantage because they're worth more and they can afford more to just charge them more money?

Tom:
No, but I'll probably make them more money.

Chris:
Okay. You kind of see what I have to deal with, right? I'm just letting you know. It gets much worse than that, but I'm just trying to not go full crazy on you here. This is the mindset that people have that they're saying, "You're taking advantage of people." And people are stuck on this idea of time and money and they tie those two together. "So if you spend 100 hours, whether the project's a little big different or not, you're saying that because it's worth more to this person, you're going to charge more and some smaller client you're going to charge less", and they can't get over that. Like, "Isn't your worth and value to the world fixed? Isn't it tied to a certain amount of units of time or effort?"

Tom:
But it's situational, right? Like I said before, there's not one project that's exactly the same. Some projects might need more commitment than others but some projects might make the business more money than others. And sometimes you don't know that in advance, so the link doesn't have to be so rigid between time and value and money.

Chris:
Mm-hmm (affirmative). Let's talk about another concept here. And you say if it's more risky for you to work with a client, the price should be higher. And if it's more risky for the client to work with you, the price should be lower. And that the idea is the price mirrors the risk. Help people understand, expand on that idea please.

Tom:
Yeah, so you want to talk about who's it most risk to do business with on this engagement. So if it's more risky for the client, then the price will be lower, but if it's more risky for you, than the price will be higher.

Chris:
The thing about risk is that, and Peter Drucker said all profit comes from risk, whoever holds the largest share of risk they make the most money. And the easiest way to understand this is to look at the stock market. Whenever you're working with a financial investor or advisor, they're going to say, "How much risk do we want to tolerate?" So if you invest in high growth funds, that means there's a lot of risk, you can lose it all, they can go bankrupt. And tech stocks tend to be like that and Bitcoin especially. It skyrocketed like thousands and thousands of percentage of return, but it could all disappear tomorrow because governments shut down or something else happens. And so this is a great way to understand it. For instance, if you put it into a mutual fund, slow interest, it's like what your grandma and your parents would put money into, it's going to give you four or five percent year over year, which is still a pretty good return, but it's not going to give you two thousand percent return. Now we understand that conceptually in the market, but in terms of freelancer to client, how do we measure and understand risk? I understand it conceptually, but practically how do you apply that?

Tom:
Yeah, so you've got to think if you're obviously the best option, if they're going to get the best service or the best results from you, then it's a risk not to hire you. So you've got to be thinking, how good is that next best option? How much risk's involved in hiring them over me? And things like that. So then you start then building again that picture of value and the price starts going up or down depending on your answers to that.

Chris:
And how do you know relative to your competition? Because often times clients we'll ask directly, point blank, "Who else is bidding on this project?" And they will not tell you most of the time. Sometimes they do tell you. So how do you even know if you're the best or if you're at the bottom of a list?

Tom:
That's kind of different to how I do it because we don't really pitch in the development world, especially in the freelance world it's more just this is the brief, this is the price kind of thing. Can you just repeat that question again Chris? Sorry.

Chris:
Yes. You were saying relative to your competition if you're already the best then you can charge a little bit more because it's less risky to work with you, whereas if they hire somebody off of Fiverr or 99 designs, that's like a fly by night kind of situation so they're going to assume a lot of risk so the price will go down, because you're more of a sure thing, your reputation, your experience. But I don't know who I'm competing against often times, so how do I know?

Tom:
Yeah, you've got to be looking at your position in the market really. So if a client comes to you then obviously they know who you are, they're already aware of you, they've not just picked a load of names off the list and are just getting prices off them all. They might be someone that comes recommended to you and things like that and obviously that's all lowering the risk.

Chris:
Mm-hmm (affirmative), okay. So let's move over to positioning. We talked a little bit about it and you had said that if you're not specialized enough, it's very kind of hard to see the value that you bring. So whatever kind of tips can you give, because this is a tricky subject to talk about. How do I refine my positioning or how I'm positioned in the marketplace so that I'm seen as lower risk or more credible or more experienced? What kind of tips and advice do you have for that?

Tom:
So, the first thing that I would suggest is just is to find out who your ideal client is, work that out, do some research on that and work backwards from there. So try and think about what their problems are, try and think about how your skills can answer them. Build a picture of credibility by all the things that you've done before so the clients that you've worked with, get social proof from testimonials and things like that.

Chris:
Mm-hmm (affirmative). So now you're talking about point number three from the 10 steps to becoming a better freelancer, which is to profile your ideal client. If I'm not familiar with this because obviously if you come from the UX web development world, you totally understand what that means to profile a person, a user, or an ideal client. If I'm a graphic designer, "What does that mean, profile your ideal client?" Can you take me through a little bit of the process of how you profile a client?

Tom:
Yeah, sure. So you want to try and find out who is the perfect customer for your service, essentially. So you want to try and find out who they are, what businesses do they work for? Even drilling down to things like are they a man or a woman? What kind of age are they? And things like that. And then from that you can kind of build a picture of who that ideal client is and how you can market your services towards them.

Chris:
Okay so you're building, I would describe this process to people like if you're a forensics person, a criminal profiler, like the special agents, a crime has been committed and they start to build a profile. It's like this person had to be strong, they carry these things, and they're a certain stature, it's a man, they're in their mid 30s, and they like chocolate chips cookies, whatever it its. You have to get clarity on who you're going to serve because ultimately, and I think Dale Carnegie talked about this, he's like, "I like strawberries and cream, but when I go fishing it has no impact on what I use because the fish likes worms." And so you need to understand the triggers and what motivates people, what kind of pain points and challenges they're going through so that you can be the perfect answer to their problems. At first it's just like, "I do this." Well, nobody cares about that. So getting clear and profiling your ideal client allows you to speak their language, to address their pain points and their challenges and that's what we're talking about here.

Tom:
Yeah, exactly. It's about how you're going to get them from where they are now to where they want to be.

Chris:
Right. Okay, so for you, who is your ideal client as a web developer?

Tom:
Yeah, sure. My ideal client is someone preferentially who's got more money than they have time, so they're willing to invest. They know quality. Obviously like what we touched on before, they want a custom website, they don't just want to work with themes or off the shelf products. I'm thinking someone who's maybe more than just a one person business, so like what we spoke about before, medium sized plus. And yeah, that's kind of what I'm looking for.

Chris:
Okay. When we were doing service work as Blind, we described our ideal client as the discerning entrepreneur with a fast growth company with 100 million dollars or more in annual billings, that was our ideal client.

Tom:
Yeah, that's really specific.

Chris:
Yeah, we tried to because it's interesting, like when you try to bake a cake for somebody that you don't know it's quite difficult. And the more specific you get, it's like, "Oh, I know your preferences. It's a multi-layered cake and you have certain dietary restrictions, that makes a lot of sense." Okay. I'd like to move on to one of my favorite things to talk about is, people hire who they know, like and trust. So number four on your 10 steps to becoming a better freelancer is make yourself known. How does one do that in today's market?

Tom:
Yeah, so the way that I would do it now if I was starting today would be to build an audience on social media and I would do it that way, definitely. And I've kind of gone into this realm a little bit on Twitter and that's how we met. And so yeah, it works really well.

Chris:
Okay. What tips and advice can you give to people who are on social media but have like 200 followers and they can't figure out, "I've just been posting things but nobody cares, it's not growing at all"?

Tom:
Yeah, I think the number one thing that I found is consistency. So if you can stick to doing, let's take Twitter as the example, if you're going to by trying to grow, you want to be doing between four and 10 tweets per day. And it sounds a lot because it is a lot, but if you want to see that growth then you've just got to put the time in. Another tip would be to engage as well because it's a social media, it's not just about saying what you want to say to the world, it's about listening to what other people have got to say too and striking up conversations, getting into the DM's and really building that rapport.

Chris:
Yeah, I noticed that about you that you actually are pretty active in your responding to things that you don't write yourself and it's one of those critical things. It is called social media, not anti-social media. Conversations require two parts, some talking and more listening. And that's the combination ratio I like personally. Okay, so somebody's going to be like, "Tom, four to 10 tweets a day? Where does that content come from? What are you writing about? Where do you get your ideas from? Aren't you going to run out of things to say?" What's your take on that?

Tom:
It's easier to write content when it's something that you're doing every day anyway. So if an interesting situation happens with a client or something like that, I might riff off that and make a tweet about it. But I'm constantly thinking about tweet ideas, let's say if I'm out for a walk with the dog, I'm just writing notes, writing little ideas that I can reuse and things like that. One good thing that I like to do too is to steal from myself. So let's say a tweet's done really well, it might be the format that I steal or the topic that I steal and I'll rewrite it again in a slightly different way. So obviously that then boosts up the amount of content that you've got.

Chris:
Mm-hmm (affirmative), okay. So how much time percentage wise or hours do you spend on cultivating, writing, thinking, responding to things on social media?

Tom:
I would say it's about from one and two hours a day on average. So I mean I schedule tweets quite a lot, that normally takes me between 20 minutes and an hour depending on how long the tweets are. If I do a thread like the pricing one that we talked about, that took like an hour in its own right. So yeah, about between one and two hours a day, so it's an investment.

Chris:
Yeah, and to the people who are going to push back on this, but you're not doing the work then. If you're spending one to two hours a day, well isn't that taking you away from your craft?

Tom:
Yeah, it is. But it's also getting me more leads for better clients in the future. So it's all a compounding effort.

Chris:
Yeah, I think creative people especially suffer from this because if you go to a four year school, no class or hardly any class ever tells you that you'll have no business if you don't work on getting business. Marketing and sales are essential to all businesses, not just creative businesses. And to avoid that purely based on the fallacy that your talent will get you work magically, that's a road to financial ruin I think.

Tom:
Yeah, you've got to do the work to get work, that's what I always say. You've got to put that time in to do the marketing, the sales and the rapport building, the network building and things like that. Unfortunately it's not just the people who do the best work that always get the work. You need to know how to do the marketing, you need all that side of stuff, you need the business skills as well.

Chris:
Yeah, it's actually rarely case that the best people are the most successful financially speaking. You may have a small town hero who's an amazing musician artist and you're thinking, "Why aren't they on the TV show on music videos and have millions of dollars and on the tour bus?" It's because it requires certain skill sets for people to become really, really successful. Talent, definitely part of it. Hard work, timing, ambition and drive and the ability to be marketable. There are amazing singers that have incredible voices who never go anywhere, the background singers, because they just don't have that 'it' factor, they're not that marketable. And so people need to become aware of that.
Okay, I have one more thing to dive in with you. It may be the scariest one, I don't know, let's see what happens here. Now, you were saying something here about being a freelancer, we may have a terminology debate there but I'm not going to go there just yet, you're going to say in point 8, "Automate and outsource." So Tom, you book a project, it's fixed based, you've done discovery, you got paid five grand, they're agreed to 36 thousand dollars for the web development, and now you're going to give it to someone else. So the pushback, people are going to say, "Wait a minute, didn't the clients buy you, your talent, your unique way of doing things, and you're just going to hand it over to someone else? What?" Love for you to respond.

Tom:
Yeah, well I think that's my prerogative. Like if you hire a builder, you don't want to know exactly who's going to be laying each brick when you hire someone to build your house. So, if I sell a project that's a huge project like 36 thousand is a pretty big project, I think it's well within my right to then get other people involved because you might need specialist assistance and you might have less capacity than what you can do on your own. So I don't think that's unfair whatsoever.

Chris:
So from the creative world, maybe less in the web development world, people are like, "No, they hired me for my style, my rendering, the way I paint or the way I illustrate, how can I give that to someone else?" And now they have some issues with that.

Tom:
Yeah, I think its different between the creative design stuff, because obviously if they wanted your specific style then that's a little bit different. But I suppose in both worlds, if you are overseeing that project, if you are directing that, so let's say you're art directing the overall project, then I don't think it's unfair to get someone under your guidance on that project.

Chris:
Yeah, so the thing I'm trying to help people with is to understand it his way, is that clients are not necessarily paying for your hands to touch the work, they're paying for your stamp of approval that this meets or exceeds the standards in which you've agreed to. And so when they look at a body of work, they're not literally thinking, "Tom or Chris is working on all of the pixels everywhere that they see." Or, "Every line of code is inputted by their hands and fingers." They're saying, "We like that, we want that for us." And so my usual statement to clients is, "If you want that result, then you have to trust me to do it my way. Because if we do it your way, this is not going to work out."

Tom:
Mm-hmm (affirmative), that makes a lot of sense.

Chris:
Right. Still, it's a gigantic conceptual hurdle for people to say, "Okay, so you're saying charge different rates for the same amount of work. Charge clients based on what they can afford. And then when you get the work, feel free to give it to whoever you want." So there's a lot of problems, their heads probably on fire right now like, "This is not working for me. It's like cognitive dissonance overload." But when you start to realize that this is how the world works, then you'll start to become more successful business wise. If we think about films, which is one of the most collaborative mediums out there, the writer didn't direct the film, the director didn't write the script, and the actors didn't write their words. It's a lot of people coming together to make this very high form of art when it goes right. We have no problems understanding that, accepting it and loving it. Sometimes we mistakenly believe that the characters, the actors, that that's really who they are and they wrote these lines. Like I love when you said that, well, they didn't write that line, you need to understand. Like you said, sometimes you may need to assemble a team of specialists who are actually more qualified and skilled than you are doing that very specific thing for the benefit of the client, even at a greater cost to you, because that's the promise you made.

Tom:
Exactly. And I think the client wouldn't want to know if you hired an accountant to do the billing for the project, so why does it matter if you get another designer in or another developer?

Chris:
Yeah. I appreciate you sharing all your knowledge and time with us and talk about pricing. What else are you working, what's next after this pricing for freelancers?

Tom:
So I'm actually working on a course right now, it's called the personal website playbook. And it's basically a resource for freelancers to, well not just freelancers really, anyone who spends a lot of time online, to improve their personal website, to get more opportunity from it. So yeah, that's the focus right now.

Chris:
Okay. This is interesting, do you touch on how to build an effective sales page?

Tom:
Yeah. Crafting an offer's going to be one of the modules.

Chris:
Okay. Can you give us some high level, or is it too early to give us some high level insights or tips that you're going to be diving deeper into?

Tom:
Yeah, sure. So the kind of things I want to teach is choosing the best tools to assemble a personal website, how to structure pages to increase conversions, style and layout strategies that help people actually read your content rather than just breeze past it all. What pages to include, what to show on them, because I think a lot of people struggle with that. And then how to place trust signals on your website. We touched on this earlier about using photos, getting that head shot high up the page, getting social proof in there, the reviews, testimonials, things like that. And then just overall trying to build your own personal brand awareness through your website, which builds trust and gets people to get in touch with you to hire you for work.

Chris:
And did you say this was a course or is this a book?

Tom:
No, this is going to be a video course this time.

Chris:
Mm-hmm (affirmative), and do you have any ideas on when it's going to be done? It sounds very exciting, things that people are going to want to learn from. When is this going to be done and how much is it going to be?

Tom:
Yeah, so you can pre order it right now for $24, so I'm keeping it pretty accessible. But it's going to be launched on the first of February and it'll be $49 at full price.

Chris:
That sounds like a steal. I think it needs to be more than that, no?

Tom:
Yeah. I've got a bit of a pricing tactic, so I've seen this one a few times where the markup is that it sells after launch, you just put it up and up and up as the demand gets higher. Because obviously what I want to do is get that social proof initially, get people to use it, get people to review it. And I want to make it accessible to the people who want to get it at the cheap price as well, so I want to try and cover all the bases. So yeah, it will be going up eventually after launch.

Chris:
I love it. That's a principal that we encourage people to do, it's called the reverse sale. In stead of the price going down, the price goes up. So early movers, early adopters, get the best price. So you're not sitting around like, "I'll wait for it to go on sale." Well, that's not going to happen, it's just going to increase in price as there's greater social proof and there's evidence out in the real world that people are using it and getting real results.

Tom:
Yeah, that's the exactly play.

Chris:
Okay. Tom, I truly appreciate you doing this. And also for staying in the hot seat for a little bit there. I know I was testing you a little bit.

Tom:
I'm sweating.

Chris:
Yeah, but it's just the daily nonsense I deal with because I talk about pricing all the time and people push back so hard. People in America, especially people in Europe, it's like, "This is just crazy, nonsense, voodoo, unethical things that you're trying to tell people to do and just shut the f up", is pretty much what they say to me on a regular basis. So I just wanted to share a little bit of that love with you.

Tom:
I appreciate it Chris, I know it's tough love.

Chris:
If people want to find out more about you, where should they go?

Tom:
Yeah, so the best place to get me is on Twitter, I'm really active on there. So I'm @tom_hirst. And if you want to send me any DM's about anything that we've spoke about, that would be great. You can find out more about my story at tomhirst.com/about. And you can check out my products for freelancers at tomhirst.com/products.

Chris:
Mm-hmm (affirmative). Now, if you're for whatever reason tuning in at an odd time, I was just talking to Tom and he's written a book called Pricing Freelancer Projects. It's a $39 resource, it's sold over 652 copies and the prototype of this was a series of tweets he put together that have gone completely viral. It's got something like over 30 thousand likes, over 10 thousand retweets, and it's one of the reasons why we're talking today. So definitely go check that out. Tom, thanks very much for being a part of this show.

Tom:
Thanks Chris, I've really enjoyed it. My name's Tom Hirst, and you're listening to The Futur.

Greg:
Thanks for joining us this time. If you haven't already, subscribe to our show on your favorite podcasting app and get a new, insightful episode from us every week. The Futur Podcast is hosted by Chris Do and produced by me, Greg Gunn. Thank you to Anthony Barrow for editing and mixing this episode, and thank you to Adam Sandborn for our intro music. If you enjoyed this episode, then do us a favor by rating and reviewing our show on Apple Podcasts, it'll help us grow the show and make future episodes that much better. Have a question for Chris or me? Head over to thefutur.com/heychris and ask away. We read every submission and we just might answer yours in a later episode. If you'd like to support the show and invest in yourself while you're at it, visit thefutur.com. You'll find video courses, digital products, and a bunch of helpful resources about design and creative business. Thank again for listening and we'll see you next time.

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