Welcome aboard! We are thrilled to have you.
Uh oh, something went wrong. Try submitting the form again.
The Futur Logo
Cart Icon

Blair Enns

If you’ve followed us for a while, then you’ve probably heard the name Blair Enns a few times. Blair is a business consultant, speaker and author of the acclaimed book, The Win Without Pitching Manifesto.

Pricing Creativity
Pricing Creativity

Pricing Creativity

Ep
122
Feb
24
With
Blair Enns
Or Listen On:

Pricing Creativity

If you’ve followed us for a while, then you’ve probably heard the name Blair Enns a few times. Blair is a business consultant, speaker and author of the acclaimed book, The Win Without Pitching Manifesto. And if you were to ask Chris Do what one book you should read is, it would be that one.

We’ve had Blair on the show before, but we wanted to share this deep dive livestream with you because it’s filled with invaluable information. The insights that Blair shares and the perspective he offers is unmatched. You can actually hear Chris’s giddiness during their conversation.

They cover a lot of ground in this talk. Discussing things like specializing vs generalizing, how to measure the value you bring to the table, pricing the client not the job and, of course, value based pricing.

But the best part is that these are universal business concepts. You’ll find them everywhere outside of the creative industry, but Blair does a fantastic job of contextualizing them for people like us—the creative professional.

We suggest listening to the episode once, all the way through. Then on another day, listen to it again. But this time, take notes.

Hosted By
special guest
produced by
edited by
music by
Appearances

Episode Transcript

Greg:
Welcome to The Futur Podcast, a show that explores the interesting overlap between creativity, business, and personal development. I'm Greg Gunn. If you've followed us here at The Futur, then you've probably heard the name Blair Enns a few times. Blair is a business consultant, speaker, and the author of the acclaimed book The Win Without Pitching Manifesto. If you were to ask Chris Do what one book you should read is, it would be that one.

Greg:
Now, we've had Blair on the show before, but I wanted to share this deep dive livestream with you because it's pure gold. Front to back the insights that Blair shares and the perspective he has to offer is unmatched. You can actually hear Chris's giddiness during their conversation, and they cover a lot of ground, discussing things like specializing versus generalizing, how to measure the value you bring to the table, pricing the client not the job, and of course, value-based pricing, but the best part is that these are universal business concepts. You'll find them everywhere outside of the creative industry, but Blair does a fantastic job of contextualizing them for people like us, the creative professional.

Greg:
So, here's what I suggest. Listen to the episode once all the way through, then on another day grab your laptop or a notebook and listen to it again, but this time take notes. Please, enjoy our conversation with Blair Enns.

Chris:
Just a few days ago I was in Warsaw, Poland, and the reason why I'm back is because of my guest today, probably a couple of years in the making, it's Mr. Blair Enns and he's in the booth with me. It's the first time we've met face to face. We've talked before, but gosh, I'm so excited to get on with today's show. Really briefly, really briefly, he's the CEO of Win Without Pitching, he's also before I guess, in a previous life, the business development person at Cossette Communication-Marketing. He was the account director at McCann Erickson, account supervisor at Y&R. This one's a little questionable, he has a master's degree in marine biology and underwater welding from Doggerland University. He's the co-host of 2Bobs, which is a podcast, and you guys can listen to that wherever you get your podcasts. He's from a very small town in Kaslo, Canada. I think they're under 900 people there. I can't even wrap my head around that, Blair, I just can't.

Blair:
It's a tiny place.

Chris:
He's written this book, guys. This is the Bible. You've been hearing me talking about this forever. Everybody that's read it has been impacted hopefully in the same way that I have, and his second book is equally amazing, Pricing Creativity. If you guys want to join the conversation today go to Slido.com. Use the #H256, that's H256 to submit your question. Vote those questions up and down and we will be tackling the highest, most popular voted question.

Chris:
Mr. Blair Enns is on a mission to change the way creative services are bought and sold the world over. He is my fellow comrade in Pricing Creativity. Everybody, please help me welcome Blair Enns to the show. Yeah, Blair.

Blair:
Thank you Chris and team.

Chris:
Okay Blair, here you are. I can't believe it, you're here.

Blair:
I'm so glad you came back from Warsaw for this. Nobody's ever come back from Warsaw for me, and that explains the poster of-

Chris:
See.

Blair:
... the communist image.

Chris:
Yes, yes.

Blair:
Yeah.

Chris:
Now, we're going to be fielding some questions, but I have my own questions for you. I've got some questions for you. I'm going to start off by asking you a couple of questions about the whole Win Without Pitching Manifesto. It's been so influential in the way that I think and the things that I've been able to share with people, so I'm going to just tee it up for you, okay?

Blair:
Yeah.

Chris:
So there are 12 proclamations, I believe, 12, like the 10 commandments but there are 12 commandments here. So, let's talk about this so everybody can get really familiar with you, your concepts. One of the proclamations is we will specialize, and creative people struggle with this all the time. Sir, please expand.

Blair:
Yeah. It is the nature of the creative personality to want to solve the problem that you have not previously solved. That is essentially creativity is the ability to see the ability to bring novel perspective to a problem, therefore if you're a creative person you're really drawn to the problem that you haven't solved before. So, it's in your nature to build a business that allows you to solve any problem that will ever come along. It's not a problem that's universal to creative people, but creative people tend to have to deal with that more than others.

Blair:
So, as a creative person, you have this personal need for variety but your business really needs you to focus, because it's not until you focus on the same types of problems or the same market where you start to see the patterns, and you can't really build deep expertise until you set yourself up so that you're solving or staring at dealing with the same types of problems over and over again, and that's when you start to see my friend David Baker, who I do the podcast with, he talks about pattern recognition. That's when you start to see patterns everywhere. You really become a subject matter expertise when you're starting to see the patterns.

Blair:
So, we have this universal problem among creative professionals or creative firms in that they tend to be too broadly positioned because it's what the owner of the business really wants. It's not like you'll burn in hell for having kind of a generalist agency position, you're just going to make sales and marketing to much harder because you invite so much competition, and it's really hard for you to stand apart from the crowd. It's hard for you to command a premium price. So, we begin with the first step, and that is specializing.

Chris:
So, of all the creative people that you've spoken to in your many decade long life as a consultant coach and as an author, what is the thing that they push up against the most? I understand the idea conceptually, I'm playing one of them, that if I specialize it'll be easier for me to develop expertise, to do the pattern recognition that you're speaking of.

Blair:
Yeah.

Chris:
But why do I hold onto the idea to tightly? What can you say to them so that they can finally let go of that and actually start to establish some expertise?

Blair:
So, the number one objection is if I specialize, Blair, I'm going to die of boredom. That's the number one objection.

Chris:
That sounds about right.

Blair:
Yeah, isn't it?

Chris:
Yes. Die of boredom.

Blair:
So, I always say, and I think this is in the book, the book's eight or nine years old now, so it's been a while since I've read it. I think it's in the book, but I always say you're standing in a room full of doors, and being a highly curious, creative problem solver you want to know what's behind every door, so you structure your business in a way that allows you to open every door. I'm standing over your shoulder and I'm saying, "No, you need to pick a door, you need to walk through and you need to never look back." And you are convinced that on the other side of that door is one boring, gray, empty room where you are doing to die of boredom, but that's not what's on the other side of the door. What's on the other side of the door are more doors, more doors than you can ever imagine. Not Mordor, more doors. So, it's like crawling into a closet and having it open up into Narnia.

Blair:
So you think the niche is going to be so small it's suffocating, but it almost never is. The niche is just filled with other niches and other places to go, and you'll soon realize that this specialization, whether you've chosen to specialize by a discipline or a market, or a combination of them, the specialization, you won't live long enough to be able to explore everything in that little niche of a business, but you don't see that from the outside. You don't see that until you walk through the door.

Chris:
I see. So let's say I'm drinking the Kool-Aid, now I'm ready to go to more door, or more doors.

Blair:
To more doors.

Chris:
And then what do I need to do? Because I understand conceptually, let's specialize. What do I need to do now?

Blair:
Yeah, and first I want to offer a caveat, because I know your reach is global and there are a lot of young creative professionals, some who are still in design school or just out, who are just launching their practice. You need to take that first step of specialization with a grain of salt in the beginning, because in the beginning of your career, your career should kind of look like this where you have all these variety, and then over time you specialize. So when you're young, and it really makes sense to get a breadth of experience and try different things, and go down different alleys and try to take different specializations and weave them together, and just try your hand at a whole bunch of different things. I think it can be a mistake to specialize too early.

Chris:
I see.

Blair:
Unless you get into it and you just see an opportunity, and you think, "Wow, there's a whole bunch of white space here, nobody's going after it." Then it makes sense to go after that, but generally speaking I think when you're young you should explore a lot and then you should focus. Now I was just set up the answer to your question, but I've forgotten the question.

Chris:
Well, the question was, I want to specialize now, I'm a couple years out of school. I'm hearing what you're saying, it's going to benefit me in pricing, communication, marketing, all that kind of stuff.

Blair:
Yeah.

Chris:
What steps should I do?

Blair:
How do I start?

Chris:
How do I start, yeah?

Blair:
So, the first thing I would have you do is what I would call a fast-track strategy exercise, which is a time constraint driven exercise. Just write down on a whiteboard or a piece of paper the opportunities that you see in the market. So where do you see a unmet need? Don't limit yourself. Don't think if you're a designer and you're thinking of opening a design firm or you have opened a design firm, don't limit yourself to this business model of fee-for-service for design. Just where do you see business opportunities in the market? And don't even worry about whether or not your skillsets match that opportunity. Just throughout your day you probably from time to time think, "Oh, this isn't designed very well." Or, "Somebody should offer a service that does this." Et cetera. So, what are those things, and what are the trends that you see in the market business wise that might lead to some opportunities? And then just explore that for a bit.

Blair:
Then if you've been able to chart out some white space, some business opportunity in the marketplace, then you just start thinking around that. So that's kind of an easy first step, but really when you get down to it you ... So, when most creative firms endeavor to position themselves so that they are specialized and they are able to claw back more power in the buy-sell relationship, the first mistake they make is they see it as a linguistic exercise. So they go in search of language that will allow them to do what they've always done for the people or the market that they've always served in just a new, more compelling way.

Blair:
So, the first step I have them do is I strip away language. I say without using any adjectives I want you to define your future positioning in two boxes, discipline for a market. What are you going to do and who are you going to do it for? And you can't do a full sentence, just discipline for a market, and then try that on. Then read that out to people. What do you think of a firm that does this for this discipline, for that market?

Blair:
Then once you have arrived at something that feels good to you, then you can start to put the kind of use your creative powers, your powers of language to make that offering more compelling. But if you skip the first step of just articulating a discipline and a market, and then asking questions around okay, does this feel like this is meaningfully different or do you think we can carve out kind of an expert position in this? If you skip that step you're just going to be left with meaningless language. The first step really is, even though you can use other frameworks but I really like this idea of discipline for a market, and that you should view this as an exercise in sacrifice. So it's really about if it's discipline for a market going forward, then there are all kinds of implications around what you will no longer do.

Blair:
One of the tests that you should apply to whatever positioning decision you come up with is the first test I believe is, are you afraid? Is the decision that you've written out on paper, and you try it on, you're considering it, is there some level of terror around you building your business around this narrower value proposition? The terror obviously comes from the vast hoards of business that you would be walking away from, because if there's no terror, you're probably not doing it right.

Chris:
I see. So you have to be afraid.

Blair:
Yeah.

Chris:
Okay, good. I thought there was going to be step two and three.

Blair:
Oh there's like 20 steps.

Chris:
20 steps okay. I think that's a good kind of way to start looking at this. I just want to let you guys know, Ben Burns is also in the room and Jona is cutting this, and they're reading your comments, guys. Just hang in there. I got a couple more questions. We have 399-ish people watching live, and I expect this number to grow as we continue on in our dialogue here.

Chris:
So let me ask you this next one. I was just doing a livestream earlier, that's why I kind of just barely got here in time, which is this, is that creative people have difficulty talking about money. We know what one of the rules are, it's we will address issues of money early.

Blair:
Yeah.

Chris:
Can you get into the psychology of maybe why people have a hard time talking about money and maybe some tips that you can give to help people?

Blair:
A lot of it's cultural. Probably in most cultures in the world we're taught that it's impolite to talk about money.

Chris:
Yeah.

Blair:
So there's two kind of universal mistakes around the idea of talking about money. The first mistake is the extrapolation of that kind of personal mores I suppose it is, or rule, this idea that we don't talk about money in a personal context, extrapolating that to business. The second one is, well, it's a corollary of the first, it's the idea that in business around the world, regardless of the culture, it's seen as a lack of business acumen, an inability to talk about money is seen as a lack of business acumen. So first of all, we confuse the things that our mothers taught us about not talking about money, we confused that personal context with the business context, and we don't appreciate that. If you're sitting in a meeting and it's time to talk about money, and you can't do it, you lose a little bit of face, a little bit of authority, and perhaps a little bit of respect from the client. At the end of the day you're in business, you have to make money, you have to earn a profit beyond the salary that you pay yourself because it's proof that the world needs what you do.

Blair:
So, if you can't talk about it, this is the Win Without Pitching rule of money, if you can't talk about it, you won't make it.

Chris:
Okay, okay. So money culturally bad, maybe, and we can't talk about it. But in business if you don't talk about it you're seen as not a very savvy business person.

Blair:
Yeah.

Chris:
You hem and haw and you kind of beat around the bush, when it's like, well what's this going to cost?

Blair:
Yeah, and if you can talk about it, even your client is a little bit uncomfortable talking about money sometimes. So if you can be the party who puts the subject on the table, it's not all a power play in these situations, but sometimes these little things count. So, you being the party more comfortable talking about money in a situation like that, that's worth something, right? There's a lot of signaling. They say economists use the term signaling. All of the message that's communicated in a price, and there's a lot of signaling around just the ability to speak confidently about money. If I think of the best business development people that I know, one of their traits is just the ability to say $5 million the same way they would say $5,000. The size of the number coming out of their mouth does not affect how they behave, it doesn't affect their tone, their emotions, their heart rate doesn't go up. Nobody's born being able to do that, that's something that you have to master over time. You just have to get comfortable with it.

Blair:
So, the reason we avoid money conversations is well, we've talked about kind of the reasons we think it's culturally wrong, it's also difficult, but we find money conversations stressful and it's important to remember what the source of stress is. Stress is caused by the things that you don't do, or the things that are out of your control, and these money conversations aren't out of your control. So the reason we find money conversations stressful is because we're avoiding them. So, if you want to learn to not be stressed out by money conversation, then you train yourself to just speak about money as early as possible, early and often.

Chris:
Okay. You're from a small town in Canada. Canadians are known for being super polite. How is it that this guy from Canada, this gentleman from Canada can talk about money and teach others to talk about money? Did you have to overcome certain things yourself, and what tools did you develop?

Blair:
Yeah. First of all, I don't understand why Canadians are thought to be more ... I believe Americans, in my experience, I think Americans are far more polite than Canadians.

Chris:
Really?

Blair:
Yeah.

Chris:
Okay, let's go down this path.

Blair:
Yeah.

Chris:
I have some observations. Let's [crosstalk 00:17:37].

Blair:
Sir, ma'am. When I come to the United States and the border crossing, I have a visa that allows me to work here. I'm completely grateful to be in your country and to be allowed to work in this country, and it's always just from the moment I hit the border we call each other sir and ma'am, and I think it's a wonderful thing. Nobody would ever call you sir or ma'am in Canada, ever. So the nicety, the politeness of the initial exchange when people meet in America are far nicer, are far more polite ... Water down. Far more polite in America than they are in Canada. I think Canadians get a reputation for being nice just because maybe we're a little bit ... We're not so much nicer, we're not politer, we might even be more cynical. Maybe we're just meeker, I don't know.

Chris:
Okay, okay. This is not congruent with my own experience, I have to say, I have to say.

Blair:
Okay.

Chris:
So let me just share from the outsider's perspective, and maybe I just meet all the nice, polite Canadians.

Blair:
[crosstalk 00:18:40].

Chris:
There's the image of Justin Trudeau, right? Who is very sensitive, thoughtful in the way he talks, and then there's Trump who's blasting things out, and if that's a representation.

Blair:
That's not a fair comparison.

Chris:
Okay, that's not fair, but I'll say this. I remember one time I was in Toronto going to the bathroom, just running in and running out, even the homeless guy was like, "Hey, I'm sorry, excuse me." It's like, "What? Okay."

Blair:
We say sorry a lot, that's the Canadian thing.

Chris:
Yes.

Blair:
And people confuse that with politeness.

Chris:
Okay.

Blair:
I think it's just the lack of vocabulary. We don't know what else to say. So how did I learn to do this?

Chris:
Yes, how did you do it?

Blair:
There are some little tricks. I'm fond of saying I think the single biggest little thing that you can do to become a better salesperson is to embrace silence, is to kind of win the battle for silence. I used to say master silence. You don't have to master it because you just have to be better, more comfortable at silence than your partner, the person you're talking to, because nature really truly does abhor a vacuum. It really does when you look into the physics of it, you create a vacuum. Matter starts to appear from nowhere, so it truly abhors a vacuum, and the same is true in a social or a business conversation. So if you deliver an objection or a price, a really big price, let's say you drop the price bomb, it's a really big number and the client can't hear what you say next because he just hears this ringing in his ears, that's a good thing. What you want to do in that moment is just not save the client from themself, just let him recover and sit there comfortably because when you deliver a big price or an objection that you ask the client to overcome, or an obstacle of any kind, or you say no in a certain situation, and if you can just stop and let the client fill the space instead of you, you will gain so much information about where you stand with that client.

Blair:
In the sales world, if it's us on the selling side who fills the void, the uncomfortable void of silence, we typically fill it with words like, but we could do it for less, right? So just bite your tongue, admire your cuticles, admire the color of the walls, count to 10 under your breath, whatever you have to do, recite baseball statistics to yourself, whatever you have to do. Just be quiet and let the client speak first. If you can just do that, and I say it's the single biggest little thing you can do because it's actually really easy to learn to do. It's uncomfortable the first time, it's less uncomfortable the second time. By the fourth or fifth time you're going to love it, and you will save yourself from yourself by learning to just state the number and shut up.

Chris:
Fantastic. Everyone's like creeping out on the internet. They're like, "What happened?" The livestream has frozen. Okay.

Blair:
That silence.

Chris:
Who's going to blink first? I can be uncomfortable in the silence or comfortable in it. We've now shot up to 534 people watching the live, so we picked up another 130, Blair, so something must be happening here.

Blair:
That's over half of my hometown is watching this now.

Chris:
They're on support right now.

Blair:
Yeah.

Chris:
Okay, here we go. This is a question from Slido. I've not even read it before, but too many people have voted this up. This comes from Stephan. Excuse me. He's asking, "In the value conversation, how do you measure the success you are promising? Which are the safe guarantees you can make in order to convince the client?" So, it's a two parter.

Blair:
Oh, that's a complex question, Stephan. Thank you very much for starting off with an easy one. So, there's a lot to unpack here. So in the value conversation, the value conversation is the part of the sale where you are endeavoring to uncover how much value you might create for the client, and then what your fair share of that value creation might be in the form of compensation. So, tell me again what the two questions are around the value conversation.

Chris:
The first one is how do you measure the success you're promising?

Blair:
So, there's no one answer or easy answer to that question, and as part of the value conversation framework there are some steps that you go through, to you should be uncovering the KPIs, right? So the first step of the value conversation is to find out what it is that the client wants. We call it the desired future state. So what desired future state should include? What are the corporate needs and also what are the wants of the individual? So you find that, you determine that, and then the second step is to try to put metric around that. So you would say to the client, "Okay, if we were to help you accomplish these things, let's talk about the KPIs, key performance indicators, or metrics of success. What are the things that we'll measure that will prove that you have achieved what it is that you want?" So, there's no universal answer to your question because in each value conversation you should be uncovering those KPIs, and essentially if you make bullet points of everything that the client wants to be true in the future after the engagement, not every one of those items will translate to a KPI. You won't be able to get to a quantifiable metric for every one of them, but you try your best.

Blair:
So again, there's no one answer to that question, but you should be uncovering essentially your own answer to the question in every value conversation. And there was a second part, what was that?

Chris:
Yeah, the second part is, what are the safe guarantees that you can make in order to convince the client? This comes up a lot. So, conceptually I think people do understand value-based pricing. They don't know how to go about it, but the thing that they fear the most is well, once we say we're held accountable to something, uh-oh, what can we do in terms of the promise?

Blair:
So, safe guarantees, that's an oxymoron, right? If you are offering guarantees, inherent in that concept is the idea of you taking on risk. You are taking risk away from the client, that's through the guarantee, and you're taking it on yourself. So Peter Drucker, the father of management consulting, has written 60 books, and he's a vertebral quote machine. He's no longer with us, but his best quote that I drop every time I speak is, "In business all profit comes from risk." So, if you really want to get that next level of profitability, beyond being kind of an efficient firm where you hit a certain utilization rate where you're billing as many of your hours as possible, if you want to get to the next level you really need to structure the odd engagement, where you are taking some risk. So, the idea of safe guarantee, you need to let go of that, because the very nature of guarantees mean they're not safe for you.

Blair:
So, how do you ... And again, maybe we didn't hit this point. So, for the first time, pricing in a customized services firm, so like Win Without Pitching is a training company, The Futur is a training company, we have a kind of menu for our pricing, right? Whether it's on the website or not, somebody's interested in something, there's a price that everybody pays for the most part, and those prices are public, and that's the nature of a product or a productized services business that is built for scale. Most of you listening and watching, your business is a customized services firm, it's not built for scale, therefore you should see yourself working with a small number of clients at any one time. Each of those engagements should be unique to the client and not built on your standard processes or the standard packages that you sell, and each of those engagements, the pricing of each of those engagements, the structuring on the proposal and the pricing, that is a creative act. It is a unique creative act that you will not recreate for another client. That's the way you should think about it.

Blair:
So, the answer is always different, and again, so the KPIs are always different, and the idea of a safe guarantee, you need to let go of it, but you would never put forward ... If you wanted to guarantee your anchor option, your most expensive option, you would never put forward a guarantee that you weren't comfortable with, that represented a level of risk for you and your business that you weren't comfortable with, and you would never put forward a guarantee where the conditions did not allow you some oversight or transparency into the client's business, or the ability to affect certain variables.

Blair:
So, as an example, let's say you're thinking of putting forward a digital marketing proposal to a prospective client, and you're thinking, "Oh, if it all goes well we could create a couple million dollars in profit." So maybe your most expensive anchor option is going to have some level of guaranteed, and you're going to propose to get paid on the basis of a profit share essentially. You might tie the ultimate, your payment to the ultimate lagging indicator, which is the indicator where you look back to see if you were successful, rather than a leading indicator, which is a predictor. So lagging indicators are always financial, so you might tie them to sales, but if you're being hired to generate leads and you have no ability to impact conversion rate, closing rate of the sales people, et cetera, and you're worried that your good work is going to go down in flames because a variable is out of your control, then it would not make sense to offer a guarantee based on that KPI of sales. You would build your performance pay and you would take risk around the number of leads generated or something that you did have the opportunity to control.

Greg:
Time for a quick break, but we'll be right back with more from Blair Enns.

Speaker 5:
Hey there, you're up for getting down with low prices, right? Well, Fred Meyer goes lower than low on food that's fresher than fresh. So when you're crushing on clementines, seeking a savory salad, or choosy about your chicken, just open the Fred Meyer app. You'll get more ways to save on the fresh you love with personalized coupons, weekly sales and rewards like fuel points, all for prices that are even lower than the everyday low. So, go where you know it's lower than low, Fred Meyer, fresh for everyone.

Greg:
Welcome back to our conversation with Blair Enns.

Chris:
Well, let's see what our internet friends say. Ben, how are they receiving this message right now? I'm just curious.

Ben:
They're loving it, but they are really hang up on that profit comes from risk.

Chris:
Oh, okay, they want more of that.

Blair:
Yeah.

Ben:
They really liked that, yeah.

Chris:
Yeah, okay.

Blair:
Well, you think about it, okay. So, I'm going to quote my friend David C. Baker again. He says, "You get paid for three things in your business. You get paid for what you do, and that should really be your salary." Right? Essentially you start a business, you've got the job of CEO, you pay yourself with the CEO salary, what you imagine it should be. So you earn that through your effort, through showing up to work, through doing the things that you do, through making the decisions that you do. The idea is if you were to shut your business and go work for somebody else, you would earn roughly that amount somewhere else because you're getting paid for what you do, but you also get paid for what you own, and let's just put that aside. The third more meaningful one is you get paid for the risk that you take. So you imagine that, back to Drucker's idea, and the profit comes from the risk that you take.

Blair:
So back to Drucker's idea, you imagine that your client is sitting there and they're looking at the market and they've come up with an idea for a new product or service, and they're thinking of investing all of this money and taking a whole bunch of risk to try to make money by going to the market and going after this opportunity that they've identified in the market. So they're about to take a whole bunch of risk, and then they decide they need to hire a firm like yours, and part of what you ...

Blair:
One way to think about this is they are hiring you to help take away some of the risk of actually capitalizing on the market, actually succeeding in the market. They are taking on all of this risk, and if they're successful they'll make this money, and the risk they're taking on is they're investing their time, they're investing their money in this situation. They've got the risk of opportunity cost, the other things that they could do with this money. So they are taking this risk in the market, then they hire you, and you need to imagine that, or understand, that part of what they want you to do is take some of that risk away, and they're willing to pay you some more money in order for you to take some of that risk away, and some of those clients want you to take as much risk away as possible and they will pay you a lot of money. Another clients really want you to perform a service, and they don't need you to take very much risk away, and they want to pay you less money. So we tend to think of those as price buyers and the first group as value buyers. It's not a direct correlation, but it's pretty close. Profit comes from risk, it's about ... I know I'm speaking fast, I'm trying to cover a lot here.

Chris:
No, no, you're doing great.

Blair:
Let me back up, another concept. I tweeted this the other day, I bastardized this from a few different sources, but it's a really powerful idea. There are two levels of success in business. The first level you get there through the tools of hard work and saying yes to everything. So when you're young, back to positioning, you should work really hard and you should say yes to every opportunity that comes your way, and that will get you to the first level of success, where you've got validation from the market, people are paying you to do what you do, you're earning a profit beyond what you would've earned in just a salary. The second level of success requires you to let go of those tools of hard work and saying yes, because those tools not only don't get you to the second level, they become the barrier to the second level, and the longer you're at the first level, the harder it is, the more these habits of hard work and saying yes to everything get ingrained, the harder it is to let go of these.

Blair:
So the second level is about ... Well, I'll simplify it, it's really about taking risk. I wrote about this in pricing creativity, my wife who is my business partner will say, "Oh, look at so and so, she's very successful, she must work very hard." And I immediately say, "No, she must take a lot of risk. Hard work gets you at some point." You know building The Futur at some point you work hard in the beginning, but at some point you've got to decide, am I going for it, right? Am I going to invest a whole bunch of time and money? Am I going to keep pouring money back into the business? And that risk is going to pay off or it's not going to pay off. So you get to the second level through risk, or I sometimes say innovation, which I see as the combination of creativity, the ability to see opportunity, and risk, the willingness to go for it.

Blair:
So, that replaces hard work, and then you replace saying yes to everything with saying no to almost everything, and that's a Warren Buffett quote is, "The difference between successful people and really successful people is really successful people say no to almost everything."

Chris:
Woo, okay. So, the two levels of success in other words is like what got you to the first level of success is the exact opposite of what you need. So what got you here won't get you there.

Blair:
Yeah.

Chris:
It's almost an inversion of the two principles. So when we're young and we're starting out we should work really hard, we should say yes to just about everything because that's where we're going to experience things and we start to develop profit, and we establish our name and our reputation and market validation, all those kinds of things. But this is where the big struggle comes in I think, Blair, we hold on to that.

Blair:
Yeah.

Chris:
Those previous patterns of success are the things that doom us from taking the risk.

Blair:
Yeah, you got it.

Chris:
How do you help people with that?

Blair:
Well, some of us are hardwired for saying yes and working hard. I'm fortunate that I'm not hardwired for either of those things. So, the first level of success was harder for me than the second levels perhaps. Oh, I don't know how you ... You just keep hitting people, confronting people with the issue then. One of the principles I talk about in Pricing Creativity is the idea that the pursuit of efficiency comes at the cost of extraordinary profit. So, as you try to become more efficient, efficiency is about not wasting resources. So you work harder and harder and you don't waste time. You're usually tracking time, if you're pursuing efficiencies in your firm you're almost always doing time sheets, you're almost tracking time, you're almost always trying to hit this threshold of billable efficiency where you're billing 60%, some people use 65, but the threshold of respectability is about 60% of all of the time available from everybody in the firm, knowing that only some people will be billable and others won't, but you add up all their time, use 1,600 or 1,800 hours per year per person, add it all up and see how much you're billing and try to increase that amount.

Blair:
Now, the longer you play that game, the harder it becomes to make real money, because as you pursue efficiencies what you're doing is you're squeezing the waste out of the business, and the other end of the spectrum from efficiencies is innovation. So, efficiencies is the elimination of waste, and innovation is inherently messy and wasteful. So, as you eliminate waste you eliminate kind of the freedom for people to put their feet up on the desk. Innovative new approach is something you're doing for a client that you've never done before. You need the freedom to fail, you need the room to iterate, and when you're running an efficient shop your people don't have that kind of room.

Chris:
We must be one of the most innovative companies on the plant because there's a lot of failure going on, Ben Burns.

Blair:
Fail forward.

Chris:
Yes we are, yes we are. I want to say thank you to Chris from This Design Life from doing the Super Chat. He's saying, "Excellent information. Thank you The Futur..." So, there's something nice going on there. We are now up to 642.

Blair:
Wow.

Chris:
Can we exceed the population of your town by the end of this streaming, guys?

Blair:
So it's 876.

Chris:
876 is the number we're looking for, ladies and gentlemen, let's get there. Now, I'm going to go back to Slido here. I'm writing so fast, so I'm having a hard time, Blair, I got to admit. Having a hard time managing the comments, reading them, writing notes so I can do the summary, and listening to you at the same time. This is really testing me right now.

Blair:
All right.

Chris:
Okay. So here's a question from Jordan that got 16 up votes on Slido. "How do I estimate the value created for a client? Parentheses, client will increase revenue by $1 million per year. Do we ask for 20% of that $1 million? How do I estimate this particular?"

Blair:
So you've estimated the value, you're trying to determine what your share of that value should be in the form of pricing and compensation.

Chris:
Yes.

Blair:
So, that's a really good question, and I do not have a satisfactory answer to you. It's asked all the time.

Chris:
Okay.

Blair:
So, I'll give you a little bit of framework to think about the answer and then I'll give you a tool that you can use to try to get the theoretical maximum. So, as an example of just of how different people think about that problem. Alan Weiss, who wrote Million Dollar Consulting and Value-Based Fees, he's got his chapter on the value conversation, I think it's chapter five, he says, "If you only read one chapter, read this." He says he gets asked that question all the time. Okay, you've uncovered the value that you might create for the client. What should your cut of that value be? And his response, I'm going by memory here, so I might be getting it a little bit wrong, but his response is there's no right answer, there's no right answer, there's no right answer, there's no right answer, start at 20% and work from there. He basically says you don't need a number, but pick 20% and start from there. So if it's two million in profit, 400,000. Now, that's so rudimentary, that is just a starting point because every price, and if you're following the model in Pricing Creativity, you're putting forward options, so you're putting forward three or four different options, and every price you put forward to your client will have an uncertainty discount built in. So, the higher the level of certainty that you will deliver on the value, generally speaking, the higher the price.

Blair:
So, it's not enough to say start at 20%, and Alan Weiss knows this, he just wanted to give people a place to start from and then move from there. So, you can think of 20%. Another example I'll give you is some boutique consulting firms, like some offices of McKinsey, will if they uncover in a value conversation that they can create $2 million a year in recurring net profit, their fee they generally propose would be half of the first year's gains, revenue gains cost reductions, the value creation, so a million dollars. So that's a bit of a generalization, I'm not saying everybody at McKinsey does this all the time, but I've seen examples of it and heard of many examples of it. Others follow that lead.

Blair:
So now you have two examples, one says 20% for maybe the guaranteed or the high anchor option that's got some level of a guarantee, and the other would be 50%, and then I said I would give you a tool, and I talk about this in Pricing Creativity as well, it's a technique known as anchoring against guaranteed value, and it's not a mandatory step. It's a tool that you might use to see if you can't uncover the theoretical maximum that the client might pay. So, after you uncover the client's desired future state, the metrics of success, the value that might be created, then you move to the fourth and final step, which is to set pricing guidance. If you use ... You're really looking to set a range, and the client might set the low end of the range by giving you a stated budget, and if not you just ask them what do you want on the low end, but you always start with the high end.

Blair:
So, you can use this technique known as anchoring against guaranteed value, and it might sound something like this. Listen, if I could guarantee you that we created $2 million in net new profit year over year, the open-ended question is, what would you be willing to pay for that? But I think you should use a closed-ended question and say, pick at 50% of the gains, "Would you be willing to pay us a million dollars?" Silence, right? And that question, if I could guarantee results, would you pay X, begs a question, doesn't it? If you are the client you're sitting there thinking, "Well, are you saying you're going to guarantee this, Blair?" And my answer is no, I'm not saying that. In fact, I haven't even thought about solutions yet, just a hypothetical question. It's possible that when I go back to the studio and we start putting together solutions, it's possible that I might see an opportunity for a guaranteed solutions, and I would feel comfortable about it, and if I did I'll put it forward. So, if we did arrive at a guaranteed solution, would you pay a million dollars? And the client might say, "Yeah, if you could guarantee it I'd pay you a million dollars." Okay, great.

Blair:
You've served a few purposes here. You've anchored the high end of the range, and the client is thinking, "Okay, you're probably not going to guarantee this." And you're thinking, "I'm probably not going to fully guarantee this." But you've set a theoretical maximum, right? So any price that you come up with afterwards, you just work back from that million and ask yourself kind of subjectively, how close to a guarantee or how close to absolute certainty do we think this solution that we've come up with gets? Are we 75% of the way there? Maybe price it at 750. Makes sense?

Chris:
Yeah, makes a lot of sense. I guess in my experience working with most entrepreneurs, they too are comfortable with some level of risk, therefore they're not going to pay you 90 to 100% of the value gained, so 20 to 40, or 50% seems pretty reasonable, relatively speaking, because they too own some of the risk and therefore won't give you all the money.

Blair:
Yeah, and you make a good point. Some of your clients will be entrepreneurs and some will be at the other end of the spectrum, they'll be bureaucrats and they won't want to take any risk at all. So, when you're putting together your options and your proposal you really want to think about what the client's level of risk is.

Chris:
So, have you found in your experience in consulting for people that if they work with government agencies and bureaucrats that they can actually ask for more of the ... What is it? The guaranteed value, anchoring against the guaranteed value?

Blair:
No.

Chris:
Oh, okay.

Blair:
No. We talk about the value conversation and then I've talked about the four step framework.

Chris:
Yes.

Blair:
It's really hard to have a value conversation, still worth trying, but it's hard to have a meaningful value conversation with somebody whose remit does not include value creation. So if you're dealing with a bureaucrat or a manager, managers manage people processes and budgets, and they're not really in charge of the future, right? So they're not in charge of ... It's only executives who are in charge of future value creation, so executives and entrepreneurs love being on the receiving end of a value conversation. Bureaucrats, you might get them talking about value, but the whole time they're saying, "But my budget is $15,000." Right? So they won't really be drawn on that conversation because they think, "Value? Who cares about value? I deliver this project on time, on budget, or I'm in trouble." So, you need to recognize that it's a more valuable tool when you're dealing with a more senior decision maker or an entrepreneur.

Chris:
So, I know the answer to this. So, the person that you need to talk to if you're going to have the value-based conversation is somebody who's got skin in the game, an executive.

Blair:
Skin in the game or who is in charge of future value creation, yeah.

Chris:
Okay. Fantastic. There's a lot of people loving this. We're at 675 right now, we're going to keep pushing this up. Ben Burns.

Blair:
200 more.

Chris:
200 more is all we need you guys, come on. Our short guy is getting on this right now. Ben Burns, I'm going to turn it back to you because you're monitoring YouTube. What's hot?

Ben:
Yeah, so there's a couple of questions about providing the value that you promised. I sense that there is a limiting belief here in the comment section about hey, we might not be able to provide the value that we promise. Can you guys address that?

Chris:
I know Blair can.

Blair:
Well, if you can't provide the value that you promised maybe you should do something else for a living. That's the glimpse.

Chris:
Where's my zinger sound effect here? I'm looking for it.

Blair:
So, if you're in the early part of your career or practice and you're listening to this stuff, you might just want to temper this down a little bit, right? The idea of if you're still trying to get to the first level of success, go ahead and have the value conversations and then go back with your multiple option proposals, but don't put yourself in a situation where you're taking more risk than you're comfortable with, okay? It's not like selling time is going to consign you to hell or it makes you a lesser person or a lesser business person. This idea comes from Ron Baker, who's written a few books on value-based pricing, this idea that you should view your client base as an investment portfolio. If you have an investment portfolio and if you're working with a financial advisor, that financial advisor in most jurisdictions, certainly in North America, they have a legal obligation to discern, map out your risk profile before they sell you any investments. So they might decide through some sort of assessment that you have a moderate risk profile, a medium propensity for risk. Now, they're free to sell you high risk investments and low risk investments, but what their obligation is is to make sure that the total package of investments balances out to meet your risk profile, and you want to think of your client base the same way.

Blair:
So, you might be in a place where either it's the early stages of your business or the last stages of your business and you're winding down, and for whatever reason the reasons are all your own and they're completely valid, but you might be in a place where you just do not have the appetite to take any extra risk. So never put forward an option in a proposal that would see you taking more risk than you're comfortable with. They're not going to get chosen, those high anchor options with skin in the game aren't going to get chosen very often. There's a lot of signaling in that option too, it communicates a lot of confidence that you're willing to be kind of a business partner. So, it says a lot of good things about you that you're just putting that option forward, but never put forward an option that you wouldn't be happy delivering on.

Blair:
So, at times when you're feeling flushed, you've got money in the bank, you've got all kinds of opportunities, you are feeling good about your ability to win new business and an engagement comes along where you think, "Wow, this is in our sweet spot. I know we can really move the needle here." Those are the ones where you would think about putting some skin in the game, but it's not necessary to always have skin in the game, even on your highest price anchor option.

Chris:
Perfect. Mr. Burns.

Ben:
Yeah, I got another question.

Chris:
Yeah, and you got another mic.

Ben:
Yeah, another mic.

Chris:
Okay, we weren't hearing you very clearly in the other one.

Ben:
Sorry about that. So, this question comes from the pro group, her name's [Mushky 00:49:17] and she asked, "What are some of the other ways that you assume risk as the service provider in value-based pricing?"

Blair:
Yeah, what are some of ... Well, the big risk, and there are books on this, there's this idea that there are seven types of risk, not all of them apply in your business, physical risk doesn't apply in your business. The biggest one is performance risk, which is related to the client's financial risk. Those are seen as two different types of risk, but it's essentially performance risk that you won't perform and therefore you won't earn everything that you hoped to earn, and if it's a contingency payment where you said, "You don't pay us anything until we hit these metrics." That's the most risky option you can put forward, therefore you should get rich if the client selects that, then you lose everything. So, I'm not saying you ... Yeah, so choose contingency payment at your discretion and at your risk, I think that goes without saying. But another form of risk that you take is opportunity cost. The idea that if you ...

Blair:
So, when you value price and you have skin in the game, one of the things the client is not buying from you is a package of time. There is no conversation between you and the client around how much time it will take you. Now, you've probably done some math around how long this will take you to deliver and create the value, but you're no longer in a position to go back to the client if they've bought value rather than time, time and materials, or even deliverables. If they're paying you to hit the value of a certain number of leads or a certain amount of profit, then all of that ... You let go of the ability to go back and say, "Well, this is taking longer." You can't do that, you have to eat it. So there's this opportunity cost of ... Opportunity cost is what are the other things you could do with that time or money? So, all these other projects that you could've been working on with this time because it's taking you so much longer. So, those are the two main ones.

Blair:
There's performance risk. You're not going to get the results, therefore not get paid. There's the opportunity cost, and then there's also financial risk because in certain scenarios you might actually end up investing a bunch of money in outside costs or even just inside costs. So those are the three main types of risks that you need to look out for.

Chris:
Great. I want to just do this thing here. In case you guys are joining us midstream and you don't want to rewind, you want to stay current with what's happening right now so you can participate in the live chat, on the show today is Mr. Blair Enns and he's written two books that I think are amazing and game changing for you guys. You definitely need to pick up the book, the Win Without Pitching Manifesto and Pricing Creativity, the followup to that. If you want to join the conversation that's happening online you can either comment on YouTube, but the more kind of democratic way to do it is join us on Slido.com, use the #H256. Love having Blair on the show. In a way, Blair, I didn't want to have you on the show, I'll just admit it, because I've been using your ideas so often that people credit me with your ideas, and now here you are just saying almost exactly what I would've told them. So now they're like, "Oh my god, that's where you got [crosstalk 00:52:36]."

Blair:
I have the same problem with Ron Baker.

Chris:
That's where the source is. You guys have to go to the source. Blair, can you tell us some ways that people can interact with you? They're loving the content, how do they engage with you besides buying the two books?

Blair:
Yeah, so winwithoutpitching.com. We're a training company, we do some public workshops, we do private training and coaching, similar to The Futur. So, you can find us there. I'm @BlairEnns on Twitter. I'm not on Facebook. Track me down [crosstalk 00:53:07].

Chris:
Every time I mention you on Facebook I get no love.

Blair:
Yeah, no. Are you mentioning me on Facebook?

Chris:
I do, sometimes I do, yeah, but the Win Without Pitching logo shows up. Guys, just for the hard of hearing, there we go. Thank you Jona, he's missing the cue there.

Blair:
Where is the Communist Manifesto Blair?

Chris:
I dialed it down a little bit. I'll bring that up in a second.

Blair:
There we go.

Chris:
They had that ready to go no matter what. We should do that with the split screen. The communist Blair and the capitalist Blair. Anyways.

Blair:
It's time for a new photo shoot.

Chris:
Winwithoutpitching.com, go there, check it out, and he's @BlairEnns, there's two Ns in that Blair Enns, and he's only going to respond to you on Twitter apparently. I've been wasting all my energy on Facebook, okay.

Chris:
Now, I'm going to ask you this question. People struggle with this so much. They're so used to doing hourly based pricing, they are intrigued by the value-based thing, but they feel guilty, they feel it's unethical to charge in orders of magnitude more than what it costs to make something. I would love for you to just definitively just answer this one and just put this one to bed.

Blair:
Yeah, get over it.

Chris:
Okay, so Canadians are not that polite, guys. Here it comes.

Blair:
Let's just extrapolate. Okay, so at the beginning of your career you get hired to do X and it takes you Y number of hours to do X, and you charge ... Are we a zed country or a zee country? Letter of the alphabet.

Chris:
Zee.

Blair:
Zee, I can never remember, okay. So I'm a zed country, you're a zee country. So zee price per hour. So, in the beginning you're a generalist or you're not very experienced and it takes you a certain amount of time. As you get better what you're saying here is by inference you're saying that it's okay for me to raise my hourly rate, but I think we all agree that as you get better at what you do you can do it faster. So what you're saying is you should be punished for getting better at what you do. That is absolutely ridiculous. It's absolutely absurd. So, we need to appreciate what value is. Value is entirely subjective, and different people value things differently.

Blair:
How value is created in the world is through trade. How people are lifted out of poverty, the world over, is through trade, and trade, at the heart of trade is this idea of the double thank you moment where you hand over the work to the client, the client hands over the money, you both shake hands and say thank you, you both mean it, you are both better off, you would both do that transaction again. Your costs have nothing to do with that transaction. Your obligation is for ... You want to strive for that double thank you moment, where you have created this ... You want to be focused on extraordinary value creation for your client, you want to create extraordinary value, you want to get paid an incredible amount of money for it, but not so much that the client resents you, right?

Blair:
So where that line is, here's value creation and here's your share of it in the form of compensation. At some point your price will get so high and it's going to vary client by client, that there'll be some pushback. You don't want to be where they'll say, "Okay, thanks, but next time I'm going with somebody else." If you can hit that sweet spot of thank you, I'm paying you a lot of money but it was worth it, I would do it again, that's all that matters. This idea of time isn't even real, right? Let's not put a price on time. It is a human construct outside of ... I always tell myself, "Don't talk about the basics of time."

Chris:
I know where you're going with this.

Blair:
It's not even real. So, the idea that you're trying to capture it and build for it, et cetera, the only reason we do this is it's the easiest thing to count, and it's so highly flawed. Now, I'm not trying to talk people out of selling time, those who are selling time, but the idea, and I see this argument all the time when people move to value-based pricing, there's always somebody in the firm who says, "It's unethical for us to charge that because it didn't take us that long." You need to let go of that ridiculous idea. If your client's willing to pay for it, and you are creating value well beyond that, it really doesn't matter what that number is and it doesn't matter how long it took you to arrive at it.

Chris:
Okay, this brings up so many issues, so I'm going to dig in here because I've had this conversation online with lots of people. So they say, "Okay, fine. You get better with time, just charge more per hour." What's wrong with that? Isn't that the same?

Blair:
It's the same, but it's so limiting. You think of ... I don't want to be overly harsh, but I have been a few times already.

Chris:
I think you got to just go for it. I'm going to get the shotgun ready. Let me find where that sound is.

Blair:
If you think of your very best clients. So the client's sitting there and says, "Chris, I have this problem. I'm thinking of hiring a firm to help me capitalize in this [crosstalk 00:58:14]."

Chris:
Fantastic.

Blair:
"And my problem is sales are going down and I don't know what to do, and I'm worried about the survivability of the business, et cetera." And you say, "Okay, I'm going to sell you a lead generation plan and we're going to put these four people on and we're going to sell you X number of sprints, or we're going to sell you a certain amount of time." The client, any right thinking, especially an entrepreneurial client, is going to look back at you and go, "I don't think you heard what I said. I'm not interested in buying a bunch of hours of your time. I have a very serious business problem and if I don't solve this problem, I'm out of business." So, there are three things you can price and sell, and therefore three things your client can buy from you. You can sell the inputs of time and materials, you can sell the outputs or the deliverable, or you can sell the outcomes or the value created. In a situation like that where you have a client who has a real problem, they're really worried about the consequences of this problem, they don't want to buy your time. They don't even want to buy your deliverables. They want a partner, and we use this term all the time and it's just bullshit. We talk about partnering with our clients.

Blair:
You only partner with your clients if you put some skin in the game compensation wise, but in this situation, that client wants a partner, wants somebody who is going to sit down and not be thinking about time, and not be constrained by deliverables, but who is going to come to the table with them and help them solve this problem and turn this business around. So the idea that there's some sort of ethics around how long it takes you to do it, it's just so wrong, it's so bad. It's so limiting. You're never really truly going to help people if you keep thinking that way. I'm not trying to beat up the question, because I get that question a lot. I'm just trying to, as forcibly as I can while still being loving and supportive, make the point that you really need to let go of this archaic idea. It is not helping you, it is not helping your clients.

Blair:
Now, some clients just want to buy time from you, and if you're okay selling time then just sell them some time. But this idea that it's unethical, no, it's crazy.

Chris:
Okay. So let's say we've moved beyond this and say I have a team, and I estimate the time it's going to take to do it, and there's say four or five people, so we're advancing here, we're not the freelancer selling hours anymore. By my best guesstimate it's going to be anywhere between 20 to 30,000, and if I'm not familiar with this value-based pricing thing, then I'm going to think to myself, what's a reasonable amount of profit? So you might say 30%, 40%, and that's their mindset, and how do you deal with that?

Blair:
Yeah, and that's tied to the issue that we just talked about.

Chris:
Yes.

Blair:
So, some people think that there's an ethical level of profit, a level beyond which isn't really ethical. So, it's kind of understood in the creative professions that in an efficient firm the threshold of respectability is kind of 15 to 20% profit margin pre tax profit margin, but there are firms out there doing 40 and 50% and on some engagements doing 90%, 95%. I remember when I was a solo consultant way back in the early days the most profitable engagement I ever had is I had a client pay me $3,500 to get to an outcome, and I got it in 20 minutes. So, $10,000 an hour, is that ethical? He was happy, I was happy.

Chris:
You got the double thank you.

Blair:
Yep.

Chris:
Okay.

Blair:
He never did hire me again though, that's interesting.

Chris:
Another question for you is this, is that I think creative people aren't so excited about this value-based thing because I think we're uncomfortable with you mean the aesthetic decisions that I make can actually have a measurable impact, and I think that's where people get tripped up because in school, for the most part, designers, creatives are trained to be good craftspeople and make amazing things, many hours are spent refining and perfecting something. So it gets really scary for them to say I'm going to go out of business if we don't do something drastic. They're way out of their element at that point.

Blair:
Yeah, and I completely sympathize. I mean, that's why I do what I'm do, and I'm sure you tap into a similar sense of purpose. I always think that the individual artist who's made his or her calling his or her business, and you didn't really sign up for this, right?

Chris:
Right.

Blair:
When you go to design school there's no business education in design school.

Chris:
No.

Blair:
Why is the future your business exploding all over the world? You are everywhere I go in the world, people are talking about the training that they're getting from your YouTube channel and other sources. I speak at design schools, as I know you do, and it's like they keep saying like, "How come we're not being taught this in school?" So, I mean, just shout out to you for filling it out. There is such a massive demand for this in the world, and to this day I don't know why design schools aren't stepping up, but you know what? They don't need to. They don't need to. The future is here, right? Design schools can focus on design and these guys can get their business education elsewhere. What was your question? I was just busy blowing smoke up your ass.

Chris:
I'm going to hit the bell for that. It got hot in here. It got hot on my backside, you guys. I love it. You can blow all day long, Blair. We'll make time for that.

Blair:
No, but I mean it. I hear about it everywhere. There's this massive unmet need in the world.

Chris:
Yes, there is.

Blair:
So, the creative person, back to value, they're so vulnerable in that moment, right?

Chris:
Yes, they are.

Blair:
Especially in the early days of their practice. Your solution is so personal. It's your creation, it's your baby, therefore rejection is entirely personal, therefore you're so vulnerable in this moment. So what I would say is if you're really struggling with this idea of value-based pricing, just take it in baby steps. There are three rules, or six rules in the book. If you just follow the first three rules very quickly, generally wherever you can, price the client not the service. So don't have a standard price for whatever service, right? Because the price should differ from client to client. Just reserve the right to charge more to different clients and less to other clients, so that's rule number one. Rule number two is offer options. So always put forward three or four different ways that the client can hire you, and you might think about you can buy time from us, you can buy the deliverable, or you can pay for the value that we create and we'll take some risk there. But you don't have to do it that way. You can put three different options together that are based on price, the inputs of time ... Sorry, based on the inputs of time and materials.

Blair:
Then the third one is anchor high. So, in simple terms, when you're presenting your options just start with the most expensive one, and know that they're probably not going to buy it, they'll probably end up in the middle. Just follow those three rules and you will get to the next level of pricing success, and then one day you'll be ready for true value-based pricing.

Chris:
Now you guys-

Ben:
That was amazing. I'm tweeting away over here.

Chris:
It's getting insane. I can't keep up. I'm on my seventh page of notes right here, and everybody is loving the conversation. We seem to be somewhere around 670 number of people. Come on, guys, we need-

Blair:
We're not going to make it.

Chris:
We're not going to make it, people. Come on, we're almost running out of time here. Okay, so I got to ask you this question. This is a personal question, I believe this, and doctor, please tell me if I'm okay. I believe this, that no matter what amount the client agrees to pay me, I will deliver an excess of value so I'm okay charging whatever amount. To me there is no limit. Today is the discounted rate for tomorrow. So if tomorrow they pay me a million dollars, I will deliver one and a half million dollars worth of value. Am I messed up in my head?

Blair:
No, you're not. You should, you should probably be delivering two million or more in value. In fact, you're robbing your clients, Chris.

Chris:
I'm on the American scale.

Blair:
But related to that is the idea that creative people tend to over-deliver. That's something that you should learn to, and I'm not saying you specifically, Chris, because that wasn't exactly the question, but if that's you listening and watching, if you're proud of the fact that you over-deliver, if you're selling deliverables and you deliver more than what the client paid for, okay, that's nice, and in the early days of your business that's helpful to maybe help build reputation, client loyalty, et cetera, but if you put forward three options and the client chooses the middle option, you should not be delivering for free some of the options that were outlined in the most expensive option that the client chose not to take. So be careful about over-delivering. I've seen so many scenarios. I remember being in an edit suite, a client of mine in New York, he's doing a corporate film and he's one of these guys who does six figure corporate films for the Fortune 100.

Blair:
He's proudly showing me a film, and then he makes some comments to the editor about hey, can you change this, can you change that? And I don't know how much work it was, maybe it was another hour of work, and I said to my client, the agency principal, I said, "Is the client going to notice those things." And he said, "No, they won't notice at all." And I didn't say anything, but my thought was then don't do it, right? Yeah, you have an obligation to deliver a high level of work, but your client's only paid you so much. You've already met that bar, going beyond is just now eroding your own profitability. [crosstalk 01:08:25] trying-

Chris:
Makes perfect sense.

Blair:
Makes perfect sense but I'm not sure I agree.

Chris:
No, I agree. No, it's super logical, it's just I'm trying to channel the creative people who are listening to this, where they're going to push back. It's like they pay you to do the details they don't care about, the undercarriage of the car that nobody sees, and they want to make sure that that's perfect.

Blair:
You'll get over that too. You will.

Chris:
Okay.

Blair:
In the early days of your business, your business is like a rock and roll tour bus, right? You hire your friends, everybody is working late, it's like you've got the shared sense of purpose. I think I talk about this in the manifesto, it's just the feeling is when you're all young and working hard, and just barely making enough money, and you're kind of winning the battles, you're celebrating the wins and commiserating over the losses together. It's so much fun in the early days, but at some point you're going to ... So you tell yourself, "Oh, that's fun, and we're achieving all these other benefits, but the money is not quite there, but the money will come one day." And you kind of lie to yourself as the years go by. Yeah, it's not really about the ... You listen to your art school professor saying, "It's not about the money, it's about the art." It has to be about the money too. So you kind of lie to yourself for a while, and then one day you wake up, you look in the mirror and you have an honest conversation with yourself and you say to yourself, "I'm tired of having fun, I finally want to make some money." I promise you, you young people who are watching this, you will get these. So, all these things who you think well oh, I'm challenging these really conventions-

Chris:
Yes, you are.

Blair:
... that were embedded in you in art school, you will see that I'm right. I'm old enough, right? I'm a few seasons ahead on this show that you're watching that's called life, you will get there. You will see that I'm right.

Chris:
So, what can we do to help to get them there, or is it just a matter of everybody is on their own journey?

Blair:
I think we just did.

Chris:
Okay.

Blair:
Right?

Chris:
I hope so.

Blair:
You keep doing what you're doing.

Chris:
Yes.

Blair:
I keep doing what I'm doing. There are other people out there doing great work too. You had Jonathan Stark on your podcast recently. There's just so much demand and there's a lot of great work being done out there. It's a great time to be running your own creative practice. You've got YouTube, you've got all these other resources available to you. Just imagine the people in the pre-internet, like people my age in the pre-internet era. We had to go to a library and take out books.

Chris:
Blair, what's a library?

Blair:
It's a good question.

Chris:
I'm there with you, Blair. I have my library card.

Blair:
It's a thing before Amazon.

Chris:
Okay, actually we're at 763 now, Blair.

Blair:
Wow.

Chris:
My screen wasn't refreshing. The YouTube audience was telling me hit refresh, so we're at 762. How much more time do we have with you? I know you have a soccer game to watch.

Blair:
I have a very serious engagement.

Chris:
You do.

Blair:
My team, Liverpool, is about to play Barcelona in the first leg of the Champions League semi final.

Chris:
When it's kick off?

Blair:
12 noon.

Chris:
12 noon, okay. And where are you going to watch it, a pub or something?

Blair:
Yeah.

Chris:
You're going to do it proper.

Blair:
I'm going to the Los Angeles branch of the Liverpool supporters club has a pub where they watch these things.

Chris:
Where is that?

Blair:
It's in Culver City.

Chris:
Oh, okay, so we need to wrap up pretty soon because LA traffic, I don't want you to miss this. We were able to get Blair in before the most important thing that's going to happen today. So Ben, is there a fantastic question that we've been sitting on or should I go back to Slido?

Ben:
No, let's go to Slido.

Chris:
Okay, Slido. My brother from another mother, Slido. Here we go. This is from anonymous, it has 22 votes up. I think we might have answered this, but I'm going to ask it so you guys feel like I'm reading your comments here. How do I estimate the value-based pricing for a product where the client is launching a new product but doesn't know yet how much money it will generate?

Blair:
So, there are a lot of questions like this about how do I, how do I, how do I. Your job is really to uncover, right? You facilitate the conversation, you ask the client. So you learn to ask the right questions, and it could be a little bit awkward at first, and you get better at it as time goes by. So, let go of the need that you might feel to be the person with the answers when you're conducting a value conversation. You really need to be the person with the questions, and you just bring a blank slate with no presuppositions of any kind. Bring curiosity and bring empathy, and do your best, and you don't have to be a slick polished sales person, just do your best, human to human having a conversation. You're trying to find out how you can best help, you're not even thinking about solutions in this moment, you're just navigating this framework. Ask whatever question that comes to you.

Blair:
If you have to back up and ask it differently later, if you have to call back later and ask it differently, do it. Just be a comfortable human who fumbles and searches for the right words and you'll be fine. Let go of the need to be the subject matter expert in that moment. Just be focused on the client. What do you want? What will we measure? How much value might we create? What would you be willing to pay for this?

Chris:
That was very healing, Blair. You came in hot at the beginning and now we're toning it down.

Blair:
I did Communist Manifesto Blair, and that was kind and loving Blair, yeah.

Chris:
After he drops bombs on your face he's like, "You'll be okay, we're not perfect, you're on your journey, don't be an expert, everything is cool."

Blair:
Yeah.

Chris:
So those of you guys that have a hard time with the rest of this, just cut that audio track down, put it against some classical music and then just let it play on repeat.

Blair:
Is the reason why I don't coach anymore. I had a client say to me once, as he was quitting the program he said, "Blair, there's a fine line between coaching and abuse." And it's kind of funny, but he was right. I had crossed the line.

Chris:
Wait, what do you mean you don't coach anymore? Don't you have a whole business on coaching?

Blair:
Yeah, so I do onsite training and some public workshops, but I have a coaching staff who does the coaching. My director of coaching, Shannyn Lee, is the most empathetic supportive person that you will ever meet. So when people are exposed to me and to her, they just immediately gravitate to her.

Chris:
She has a little bit more of that healing energy.

Blair:
Yeah, she's the human.

Chris:
Yeah. Okay, excellent. Ben, I have my wrap up, I need like two minutes to wrap up.

Ben:
Sure, I got another kind of question for Blair.

Chris:
An easy one.

Ben:
Yeah.

Chris:
Or maybe Blair, is there anything you want to say?

Blair:
Yeah, no, hit me with the question. Let's do it.

Chris:
Okay, there we go. Let's do it.

Ben:
All right. So tons of our audience are just kind of starting out, and there is this sentiment that value-based pricing might be too much for them at an early stage. Can you address that? Do you agree, disagree?

Blair:
I agree, and so ignore almost everything I said. I think I attempted to address that in the second to last question.

Chris:
You said that already.

Blair:
It's just don't take more risk than you're comfortable with. One step at a time, start with the first three rules of price the client where you can, offer options, and anchor high. That'll get you to the next level of success, and then one day you'll be ready for moving into proper full-on value-based pricing, and maybe you won't, and your world is not going to end, and it doesn't mean you're not going to be successful. I just spent a couple of days with a whole bunch of agencies from around the world, and they're people in their 60s there who've been running their agency for 35 years and they have never priced on value, and they've made boatloads of money and had a lot of fun along the way, and done a lot of really cool work. So, it's not like if you don't price based on value your world is going to end.

Chris:
There are many ways to get to the end game and this is just one of them, right?

Blair:
You got it.

Chris:
Okay, before we say goodbye to Blair I'm going to attempt, and I admit I was writing frantically, I might have screwed some of these up. Here we go, we're launching the summary and then I'm going to tell you how to get in touch with Blair right afterwards, and then we're going to say goodbye so he can make his game. All right, so here's what we know.

Chris:
By specializing, you're more able to recognize patterns, and this is a very important thing that you need to do. This is expertise demonstrated. By going broad you invite competition, and nobody wants more competition because then it becomes an issue. Price. Specialization allows you to go deeper, and unlike what you think you're not going to die of boredom, it's actually going to open more doors.

Blair:
Not Mordor.

Chris:
Not Mordor. So the fast track way of figuring out your positioning and specialization is to get a rough working definition of what discipline for what market, and if you're reading it back to yourself and it doesn't make you scared, you're not doing it right, because you have to let go of things, you have to make some sacrifices.

Chris:
When talking about money you have to learn how to be unemotional. This is a learned behavior. So whether you're saying five million or 5,000, do it without changing your state. Say a number and be comfortable in the silence. If you have to, count to 10 under your breath, see what happens, otherwise you're going to undermine your own efforts to price.

Chris:
The value conversation is about uncovering KPIs, or in Pricing Creativity it's described as desired future state, and finding out what the metrics are. All profit comes from risk, that's a quote from Peter Drucker, who's written a gazillion books. There are two levels of success, hard work, especially in the very beginning of your career, and saying yes to almost everything gets you there. The second level requires you to let go of everything that you learned from the first level and to take on risk. Innovation is defined by either creativity where you have the ability to see an opportunity. You take on risk and then, conversely to stage one, you say no to almost everything. Efficiency is about squeezing out the waste, whereas innovation is inherently messy and wasteful. You have to learn to fail, fail forward and fail often. Coming up to the home stretch here because people couldn't catch it, Alan Weiss I believe wrote the book Million Dollar Consulting and Value-Based Fees. Somewhere in there, you remember the exact chapter, read chapter five. When pricing, try this technique, anchor against guaranteed value. The what if I could guarantee the outcome, would it be worth this? And then you can figure it out later on.

Chris:
The three models of pricing. Price on inputs, which is time and materials, outputs, which is deliverables, and then outcomes. That's where the value-based pricing comes from, and your job is to uncover and facilitate the questions through curiosity and empathy. Blair's key three things. Forget everything else in this entire discussion. If you can do these three things you can generate more value for yourself. Price the client and not the service, provide options, and anchor high.

Chris:
Blair, it's been a pleasure to have you on the show, you guys. Blair Enns, let's give him a round of applause everybody. Winwithoutpitching.com, @BlairEnns on Twitter. Thank you very much.

Blair:
Thank you very much, Chris. That was an awesome summary. I just want to say I love what you're doing and I'm so appreciative. I know there's so many people out there in the world who are benefiting from everything you're doing here at The Futur, so keep going.

Chris:
Thank you so much, Blair.

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 Barro for editing and mixing this episode, and thank you to Adam Sanborne 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 this show and invest in yourself while you're at it, visit thefutur.com to find video courses, digital products and a bunch of helpful resources about design and creative business. Thanks again for listening and we'll see you next time.

More episodes like this