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Dan Mall

When you think of a design agency you might imagine a large, bustling office, with an open floor plan, teaming with creative people.And most of the time, reality would meet your expectations. But not all of the time. Because that's not what Philadelphia based agency, Superfriendly, is. It’s not even close.

How to start your own design agency
How to start your own design agency

How to start your own design agency

Ep
139
Jun
23
With
Dan Mall
Or Listen On:

What is a distributed design collaborative?

When you think of a design agency you might imagine a large, bustling office, with an open floor plan, teaming with creative people.

And most of the time, reality would meet your expectations. But not all of the time.

Because that's not what Philadelphia based agency, Superfriendly, is. It’s not even close.

Superfriendly is a distributed design collaborative. Which means their team members reside all over the world. Like specialized creative agents, they are tapped to collaborate on projects that maximize both their skill and their personal experience.

Our guest in this episode—Dan Mall—is the founder and sole employee of Superfriendly.

Dan shares how and why he structured his agency the way he did and why having the right people in the room is how you win.

You will also hear how Dan reverse engineered his entire career. From entry level designer to agency strategist and the double-edged sword of youthful arrogance.

But the most compelling part of this conversation is how Dan and Chris discuss pricing.

You’re probably familiar with the various pricing models. Like hourly, value-based, cost plus, etc. But have you ever thought about the ethics involved in each?

Some may think value-based pricing is unethical. Others might argue that charging hourly is. Who’s right? And what’s the most important part of the equation?

We’ll let you decide, but we suggest you listen to this episode first.

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Episode Transcript

Dan:
We pitched Crayola, and in the pitch, we went around doing intros and one of the team members, my friend, Vic, he introduced himself as the senior strategist. He said, "I'm the senior strategist. I used to be an elementary school teacher." And the client stopped us and said, "Well, hang on a second. You're going to be the strategist on this project and you used to be an elementary school teacher?" And he's like, "Yeah." Crayola does a lot of stuff for schools and teachers and parents and kids. And he said, "Well, then you win." And we're like, "Well, what do you mean?" He's like, "You in the pitch, we're going with you."

Greg:
Welcome to the Futur Podcast. The show that explores the interesting overlap between design, marketing and business. I'm Greg Gunn. When you think of a design agency, you might imagine a large bustling office with an open floor plan teaming with creative people. And most of the time reality would meet your expectations, but not all of the time. Because that's not what Philadelphia based agency SuperFriendly is. In fact, it's not even close.
SuperFriendly is a distributed design collaborative, which means their team members reside all over the world and like specialized creative agents, they're tapped to collaborate on projects that maximize both their skill and their personal experience. Like what you heard in the opening for this episode. Our guest today is the founder and sole employee of SuperFriendly. You'll hear how and why he structured his agency the way he did and why having the right people in the room is how you win.
You will also hear how he reversed engineered his entire career from entry-level designer to agency strategist. And he'll talk about the double edged sword of youthful arrogance. But the most interesting part of this conversation to be at least is how he and Chris talk about pricing. Now we're all familiar with the various pricing models like hourly, value based, cost-plus, et cetera, but rarely do we stop and think about the ethics involved. Some people may think value-based pricing is unethical. Others may argue that charging hourly is. So who's right and what's the most important part of the equation anyway? I will let you decide, but I suggest you listen to this episode first. Please enjoy our conversation with Dan Mall.

Chris:
All right, Dan, I'm super excited to have this conversation with you. I don't know why it took so long for me to figure out. I just reached out. I don't know. I also imagine you being much, much older. So there was that age thing where I'm like, "Okay, let me just get my act together before I reach out to you." And then I see you and I'm like, "Damn. Okay. We can have a conversation." Why not.

Dan:
Yes. Don't be intimidated by my old age because it doesn't exist.

Chris:
The wisdom is like beyond your years.

Dan:
That's right. [crosstalk 00:03:07]

Chris:
Yeah. For people who don't know who you are, can you introduce yourself please?

Dan:
Yeah, sure. My name is Dan Mall. I run a distributed design collaborative called SuperFriendly. I'm just outside of Philadelphia. Our team is all around the world. I wrote some books on pricing. I talk about design. I've been doing design for awhile. I don't know. How's that?

Chris:
That's beautiful. Tell me a little bit about the name SuperFriendly. I read about it in your LinkedIn profile, but tell the people why SuperFriendly.

Dan:
Yeah. Cool. I mean, as with all good things in my life, it came from my wife. When I started my agency, I had a name picked out. I did the branding, I did everything. And then she was like, "Eh." And I was like, "Well, what don't you like about it?" She was like, "I don't know, it just seems dark. You just need something that is SuperFriendly." Yep. And then as soon as she said that, it just tied. I've always loved superheroes as kids. I grew up watching the super friends. I'm a big Superman fan. I love superhero mythology. So it just all clicked from there.

Chris:
Okay. We already have a lot in common. I think you wrote on, I think it was LinkedIn about the concept of... I think what some people might know as a fluid agency, where there's you and you clearly state you're an employee of one. That's how big your company is. And then you work with this big network of super stars, superheroes, right?

Dan:
Super friends. Yeah.

Chris:
Okay. Now, why did you decide to take that route versus say, start to grow and have permanent team members?

Dan:
A couple of reasons. I've been lucky in that when I started SuperFriendly, I had worked at other agencies for, I think, 12 years or 13 years at that point. So I got a chance to look at how other folks grow agencies and grow teams on their dime. So I got to see how that went. And I saw the stress that having payroll has for some agency owners. So I'm like, "Oh, if I ever run my own thing, I never want to be in that position where..." I've seen one of my bosses lose £20 in two weeks because he couldn't make payroll. He had to refinance his house. All these things happened and I was like, "I wonder if there's a way to be more fluid to ride the ebb and flow of client work." Like, how do you ride the feast or famine in a way that you're not dipping below a certain amount or how do you normalize that a little bit more?
So that was part of it. That was the big thing. And then the other thing was I remember the last agency I worked for was Big Spaceship in New York. I remember we pitched Crayola and that was one of the accounts that we had in the pitch. We went around doing intros. So I went, I said, "Hey, I'm Dan. I'm design director." And we had all the people on our team and one of the team members, my friend Vic, he introduced himself as the senior strategist. And he said, "I'm the senior strategist. I used to be an elementary school teacher." And the client stopped us and said, "Well, hang on a second. You're going to be the strategist on this project and used to be an elementary school teacher?" And he's like, "Yeah." Crayola does a lot of stuff for schools and teachers and parents and kids. And he said, "Well, then you win." And we're like, "Well, what do you mean?" He's like, "You in the pitch. We're going with you." And that was it.
And it dawned on me that if you just have the right people in the room, sometimes that's where you win. Just off of that. I was like, "I wonder if there's a model that when we have the right people at the table, then we win." And it dawned on me, like, "I can't employ all of those people, but maybe if I could have them as part of a network and incentivize them for a period of time, maybe there's something worthwhile there." So that's a lot of where the roots came from.

Chris:
That makes a lot of sense. You're a very common sense, like very approachable human being. I've watched the other videos that you've made and there's an energy about you that I think is really cool. So I'm going to ask you a dark question, because maybe that's not where your mind goes. Are there those moments when you're like, "Dang it. If I had two other people do this other job, my life would be a little bit easier. I don't have to constantly rotate people in and out." Tell us a little bit about the downsides of being a one person operation.

Dan:
Every day, every day I have that.

Chris:
[crosstalk 00:07:04] the wheel.

Dan:
Yeah. Every time we construct a team, there is an element of reinventing the wheel and there's some parts I like about that. Some parts are like, when we reinvent the wheel, it forces us to go, "Well, what's the process we're going to use on this one. And what's the team we're going to use on this one? But we never get the benefit of shorthand. Maybe that's a better way to put it. Like we can't say, "Oh, let's do this one like we did that other one." Because the people on the team are like, "Well, I wasn't on that other one though. So how did it go?" And you have to end up doing that. So there's just a lot of inefficiency to the model. I think we get more benefit than drawback, but it is a lot of reinventing the wheel. Sometimes good and sometimes bad.

Chris:
Okay. Has there ever been a problem when some clients raise an eyebrow, like, "We're going to give you this really big project and it's just you?" People get nervous about stuff like that.

Dan:
Yeah, totally. That was definitely a problem in the beginning of SuperFriendly. Now almost nobody comes to SuperFriendly for me. I get a lot of people who are surprised when they don't even know about me, which is weird to me, because that's how clients first started coming to SuperFriendly was off of my reputation. But as SuperFriendly has grown over the years, it's going to be, I think, 10 years as of next year, folks come to SuperFriendly for the work, which I'm proud about and I'm happy about that. And so that's the thing is people come for the work and they come for the expertise that we have. I know this will resonate with you. I've seen you talk and teach about this stuff a lot, which is that the clients that rubs them the wrong way, they self-select out very early on in the sales process.
We don't get to signing an agreement stage and then they're like, "Wait, what's the model that you have?" So we don't even want those people to contact us. From a positioning standpoint, there are people who are like, "Well, that model is weird." And I'm like, "Cool. You should probably go and work with an agency that doesn't have that model because you would probably like it better. It would probably be easier for you." And then the clients that do work with us are the ones that generally go, "Well, that model makes a lot of sense. Why don't other people do that more?" I'm like, "Right. Exactly. We're going to be good fits."

Chris:
Okay. You just said something that I'm having a hard time conceptually wrestling with my mind, which is, you're a company of one, you're the main contact point person, right? And then you bring together a team. So how can people come to SuperFriendly and not even know who you are? This is like what? That's impossible.

Dan:
I think part of the misconception is that I'm not the contact person. And so even though I'm the only full-time employee, I'm the only W2 employee of the company, we have lots of people that have worked on SuperFriendly things for many years. And then we have lots of people who have worked on only one thing and probably will only work on one thing. So we have the whole range. So we have six or seven people. We call it our back of house. We use a restaurant metaphor where there's front of house and then there's back of house.
We have six or seven people that are SuperFriendly back of house. We have a business development person, we have a head of operations, we have an admin, we have an accountant, we have legal. So we have all of these folks that work on landing the projects, working on them. My job really is just to assemble teams. It's figuring out what our super friends' motivations are, what their incentives are, and then matchmaking them to projects themselves. So a lot of clients will never interact with me from the course of first contact, all the way to the project shipping that we're doing. A couple of clients, I tend to be an executive sponsor for those clients, our important accounts and things like that. But for most of our clients, they have no idea who I am and will never talk to me.

Chris:
Okay. This is fascinating to me. There's more layers to this and I promise our listeners, it won't be all about me trying to understand Dan's business model. There's pricing stuff here. We'll talk about some other ideas, but okay. Okay. Take me through this. Somebody reaches out for a potential gig. Your content marketing is working. Your sales team is working. Everything's working for you. Who are they reaching out to then? Your Biz Dev person?

Dan:
Yep. Usually they'll come in through an email address. We have info@superfriend.ly. Joe, who is our head of business development, he's the one that generally handles that email address. Even though all of us get that email, Joe is usually the first point of contact. So they talk to Joe. Joe usually talks to them about what they need to help to diagnose what they need. Does the typical sales conversation and value conversation and all of that stuff to assess that. He'll update me on that and Krystal, who's our head of operations. And then we'll talk about, when do we need a team? What team do we need for it? What's the value of the project generally? What could we do it for then against that value? How could we do it profitably? So all of that comes in that way through Joe.
There are some times where I'll say, "Hey, I think I need you to join a call with this client." Either because it's an important account or because there's something that I can do in that conversation to help land it better. And then other times he goes, "I'll take it from here. Let's read in a producer and then give me a producer as part of the sales conversation that can help transition that to a project once we've done it." Once all of that stuff is taken care of, it moves over into our operation side and admin side. We'll write up agreements, we'll write up subcontractor agreements for our super friends. So all of that happens in parallel between our legal who's Matt and our admin who's Nicki, the team producer. So there's a lot of handoff that happens. From there going into, we land a project then a team is there to do.

Chris:
Okay. So these are all independent contractors, AKA freelancers, who presumably also do other things besides doing SuperFriendly things, right?

Dan:
Yup. That's right. Joe has his own business development consultancy called Clutch. Nikki is the admin for multiple agencies. Matt is the legal counsel for lots of other agencies. Krystal does operations for a bunch of other folks too. So SuperFriendly is not their dedicated full-time thing. They're doing that among others things.

Chris:
Okay. So how do they make money then? Are they paid some kind of pro-rata salary or how toes that work?

Dan:
Yeah, so each person is paid a little bit differently based on their preference. So we adopt the headache of that which is like that is a headache. It'd be easier if all of them were paid at the same way. Some are on a retainer basis. So that just comes out of SuperFriendly overhead, and then some are on a commission structure, or some sort of profit sharing model where as we get paid by clients, they get paid out of that too. So it's different for each person depending on their preference and honestly, their season of life. So sometimes we change it based on somebody goes, "I want to take time off," or "I want to spend more time with my kids," or "I want to devote most of my time to SuperFriendly for the next year." So it depends really on the person.

Chris:
I see. Okay. I think there's a last question for this. The natural question is then are you fearful, I mean, this is the question that people are asking. I don't think you are obviously, that your Biz Dev person is the main contact point and that at some point, this person is like, "You know what, I'm not content with taking a percentage of this gig. I should just take 100% of this gig and I'll run it myself since that's pretty much what I'm doing for Dan." So how do you prevent that from happening or what's your take on that?

Dan:
So fearful. I'm so scared. Absolutely.

Chris:
It's okay.

Dan:
But it's something that he... Joe and I are friends. We've been working on this stuff, working together for many years. I talked to him about this and I'd say to him like, "Look, man, I'm terrified that you would do this." And I've even recommended to him, "Why don't you do this? You should do this." I see my job as, I just have to give him more upside in SuperFriendly and what I've learned about working with super friends, especially in this capacity is some of them want just security and a full-time thing and I say to them, "That's not what you're going to get a SuperFriendly." Most people get something else out of it, too, whether that's the ability to mentor or be mentored, the ability to work on things they wouldn't have to do otherwise. So for Joe, I'm like, there are other upsides to why he works with SuperFriendly than just the cash.
So part of my job is to go, let me make sure I can check all the boxes for him and for Krystal and for Nicky and for all of our super friends, because if we're doing that, it's not always about money. It's about the combination of those things. And each person has a different dial on all of those. So I tend to look for people's incentives and I go, "Can we provide that?" Yes or no. And that's aligned with SuperFriendly's mission. The way that we talk about it is it's to create better opportunities for those who wouldn't have had it otherwise. So if there's something that you can get at SuperFriendly that you couldn't get anywhere else, I'm going to try to dial that up for you.
If not, if it's like you could make the same money or the same connections or the same clients or the same teams at somewhere else, you probably should. You'd probably be better paid somewhere else. It would suck for you to be here if you could get all that stuff somewhere else. We just do a more difficult version of that. So why would you want to do that? So a lot of it is about alignments and a lot of it is about, if there's something here that's good for you that you won't get anywhere else, my part and the thing that I try to promise to our super friends is I will do the most that I can do to dial that up to the highest level for you that you want. And if we can't do that, I'll be honest about that too.

Chris:
Yeah. Okay. So pre-pandemic, were you all working remotely and has anything changed post pandemic?

Dan:
Yeah. Definitely the style of work hasn't changed that much, although there's a couple of nuances. So we've always been distributed. I started SuperFriendly in 2012 and it was just me and then everybody else was distributed. So we have super friends around the world. The thing that has changed as a scale, but everybody works remotely and asynchronously and all that stuff. The thing that's different though, is everybody else is home too.
So like my kids are home and everybody else's kids are home and spouses are home and trying to work on the same Zoom link for two different calls at the same time for two different rooms. So that has become more complicated, and that's just been a thing where we've been like, "Well, let's just be more forgiving about that." Let's just have more grace for that as we can. If your partner is trying to call at the same time, we will move that call so that your partner can have the call at that time.
So how can we bend a little bit more, especially because we've been doing this longer than everybody else. The whole world figured out how to do Zoom in the last year, but we've been doing it for the last five years. The whole world's figured out remote working, but we've been doing it for the last 10 years. So because we have that privilege, maybe we could bend a little bit more because we can accommodate it better than probably other folks can. So we try to do that. It doesn't always work, but that's the general stance, I think.

Chris:
Do you ever wake up in a cold sweat at night and think, "Oh my God, did the team deliver the right files? Did they cover that one client note?" Because you're not as involved maybe, or maybe you are? I don't know.

Dan:
I am not very involved. I don't wake up in a cold sweat, but because the work that I do, this is very hard for me is to trust the team. If I didn't, then I have no business running a company like this. I think that's the thing where I sleep pretty well. I don't wake up going, "Oh my gosh, did they deliver that?" Because I assume that they either did or they didn't. And I'm like, "Either way, It's cool. We can figure that out." I'm pretty collected on that. If that stuff stresses you out, this is not the right model for you. There's gotta be trust in the team.

Chris:
Okay. That's good to know because people are listening to this and they're going to be thinking, "Man, I'm going to let everybody go. I'm going to go to this model SuperFriendly style. But it requires a certain personality and way of being and mindset for this to work because I have a full-time team and I sometimes sit there and think, "Did the producer pass this along to the designer? And did the designer give this to the developer? Is this all in check?" And sometimes I just wake up like, "Oh my God, I'm not sure that's right." And every once in a while I'll do one of those spot checks. And every once in a while it's like, "Oh my God, the ball would have been dropped. Thank God I asked that question." And it's sometimes really basic things.
Like for example, our team doesn't do a lot of print work. And then I'm sitting there thinking, "I wonder if all the images and everything they did with CMYK because sometimes they don't know that. And of course, that's the time I check and I'm like, "Oh my God. How could we do this?" Everybody should know this, but they don't and that's why I asked you that question.

Dan:
Yeah. I mean, if you run a full-time thing and you're this sounds better, don't do that. Part of how I feel about agency owners is that for better or worse, I forget the name of... There's a law, Conway's law, I think. The idea that for better or worse agencies, organizations adopt the personality of their founder, right? SuperFriendly is more or less me because I started it and so it capitalizes on my superpowers. My superpowers is even before friendly, long before that I collected a network of people. I love meeting people. I love knowing what they're up to. I've always done that even before I had the idea to start an agency this way.
So it's easy for me to run a network-based agency because that's what I do anyway. So my agency capitalize on the things that I do well. If you don't do those things well, you would suck at this job in the same way that I would suck at running a full-time agency. I have no idea how to do that. And my skills don't put me in a place where I could do that successfully, which is why I don't run that agency. I think I would do a poor job of that. So I really feel like I run the agency that I feel very equipped to run. And that means I do things differently than others and sometimes that's more difficult for me, but I adopt that cost because it's actually easy for me to do that.
So definitely don't throw in the towel if you're on a full-time company for anybody listening because hopefully that is capitalizing on the stuff that you do really well which is maybe providing security for your team or providing opportunities for them or any of that stuff. The other thing, and I find myself saying this a lot to our team is we can't eliminate make mistakes. So if our quality control is to check things over and over again, before they go out, because they're used to eliminate mistakes, I think that sets up the wrong culture. It basically says we don't tolerate mistakes here. I would rather work on the opposite, which is everybody's going to make mistakes. So what do we do about those? Let's just accept that mistakes are going to go out.
Yes, it's going to go to the printer RGB, like it's going to happen no matter what. So let's put a process in place for what we do about that and then hopefully that never comes up. But I would rather spend the work on that. I'd rather spend the work going like, "How do we make it okay for people to screw up?" Because that's the thing that cripples most super friends, especially new ones. They come in and they are so worried about doing things really well. So what do they do? They eliminate risks. They do only the things that they know how to do and have done before. And I'm like, "Well, where are you being creative? Where are you taking risks?" And they're like, "Oh no, no. I don't want to do that because I don't want to mess up."
And I'm like, "Yeah, but in order for you to do something really cool, I need you to have the ability to mess up because otherwise, how do we know if we did something really cool or something really new?" So I'd rather encourage that culture rather than trying to quality control the mistakes out of the process.

Chris:
So one of the solutions is to have great insurance, like errors and emissions and just general insurance, because that's usually like your safety net.

Dan:
Absolutely. We have that, We pay for it. It's well worth. Luckily, in the 10 years we haven't had to use it. We got close once but we haven't had to use it, but that's definitely a good safety net. And then the other thing is knowing that there's a support system around you. So everyone at SuperFriendly has a support system, has at least one person that is in charge of them. And everybody knows that. They know who they can go to. And so we try to set that to go like, anything that happens it's okay. If it went out the wrong way, we'll deal with it. We'll adopt the cost.
So a lot of that is us having enough margin to go, "Ah, we'll get that reprinted." Those 100,000 copies are down the drain, but we can do it again and we'll eat the cost of that as a way to support our super friends. There's no penalty to that. It's not like, "Ah, we're going to add a waste to our margin on this now." It's like, no, that's why we have it. We have it so that you learn now. Next time you're not going to send an RGB thing to press.

Chris:
Okay. I think you said this before, this model is highly inefficient. Inefficiency built into the business model and it's that's okay. Because on the opposite of inefficiency is innovation, and you can't have one and the other. You can't be efficient and innovative.

Dan:
100%. Yes.

Chris:
Okay. All right. Let's let's do a pivot here. This takes me to, I think it's 2016 when you published the book Pricing Design, which is an ebook I believe. And I'm just looking at the chronology of your timeline, your education. I think you graduated from Drexel in 2006. So that's only 10 years after getting out of school. What is a young man who just graduated from school, writing a book on pricing? What business do you have writing a book on pricing just 10 years out?

Dan:
Yeah. I have no business doing that. I had no business teaching at the time, I had no business starting a business. I had no business running big accounts, but yet people me in those positions. So I'm like, "All right. I'll try it." I think one of the things I've learned is I don't really try to teach too much. I just try to share because I think there's a difference between saying to someone you should do it this way and saying, here's the way that I did it. Because people can glean from either of those things. I'm less comfortable honestly saying, "This is what you should do." Because I don't know what you should do. I don't know you. So how can I give you advice about that?
So to me I wrote a book about pricing, less to say to someone you should value price. Do I think people should value price? I think so. I think it'd be more helpful for them, but I don't know that. But instead it was me saying, "Let me tell you how I've been able to make a lot more money than I thought I could. This is how I did it. If that works for you, great. If you need help with that, here's some techniques." So it's less about trying to convince someone of something or doing something a different way than sharing my experience. And that's what I tried to do in writing the book. It's all right, in my 10 years of working at companies and freelancing on the side, here's some things that I've learned.
Now, five years later, are there some things that I would rewrite in the book? Absolutely. If I were to do a V2, I would change a bunch of sections and I would update a bunch of things and I would change a lot. But at that time, that reflected my moment in time of what I learned so far in my career. And that's what I tried to do with that book and I feel pretty good that I was able to accomplish that.

Chris:
This is fascinating to me because you're 10 years out of school, you're sharing. You're not necessarily teaching. You're saying, "Here's how I've done it and it just helps you go for it." Whatever makes sense. So you felt a pain point out there and you're just doing this because obviously if there wasn't a pain point, there would be no need, right?

Dan:
Totally. Yeah.

Chris:
So you do this in its imperfect version, but it encapsulates what you knew at that point in time. Here's what strikes me is really fascinating about you. I go to the resources. I'm going to ask you this question. I hope I'm not putting you on the spot. On page 47, there's a list of like 10 books here that you presumably have read. Implementing value pricing management challenges. There's a whole bunch on here. Have you read all those books when you wrote this?

Dan:
Yes.

Chris:
Okay. This is where I want to get into your mindset here. I've been running my business now for 25 years. I've read one of those books and yours because yours is not on the list. You can't reference yourself. So what's in the mind of a young Dan where you're like, "you know what, instead of reading about design typography, user experience comic books. I'm just going to dive in and read all these books on business, financing, and pricing." What is going on with you?

Dan:
Okay, cool. So a flashback to my agency days. I started as a developer. I did start as a designer. So when I was at Drexel, in school the program that I was in, I initially went to be an animator because I wanted to make Pixar movies. And then I realized, "Oh, I suck at that." I'm actually not very good at that when I was in school. And I was lucky that the program I was in it's called digital media, it was half 3D animation modeling, and then the other half was interactivity. So we learned Director and Flash and HTML and, all sorts of stuff like that. So I had as much of a coding skill set as I did a design skill set. So I thought I was going to be a developer coming out of school.
And so I got the first couple of agency jobs as a developer and I remember being handed comps by designers and they would be like, "Build this." And I'm like, "Cool. I have an idea." And they're like, "No, no, no, no. We're past the idea stage." And I was like what? That seems dumb. There's a time where ideas are done. That's seems weird. So I just kept hitting my head against the wall, like trying to implement ideas. I have ideas. I think I have good ideas or at least I want to talk about them, but I was being censored in that way. Not maliciously by anybody, but it was just like, "Well, this is the wrong time in the process." So my thought was, "Well, let me get farther up in the process then."
So what I did was I took my portfolio down. I took every design gig that I could, freelancing, agency. And then a year later, I had enough work to put up a new portfolio as a designer. And so I got hired as a designer. And so now as a designer, I'm like, "All right. Well, I've got ideas." And even at that point, it's like, "Well, no, no, no. We're done with the ideas." The information architect came up with the ideas for the site and you just have to skin it. I'm like, "Well, that's dumb too." So I just kept working my way up the chain. "Well, let me learn information architecture." Okay. So I learned that. "Let me learn strategy." And even then, we start the project and I'm okay, "I have some ideas of how we could do this project." "Oh no, no. We already sold the project to the client. So it's already in the statement of work that we have to do two rounds of wireframes." I'm like, "But what if we shouldn't do wireframes though?"
Well, I don't know. That's what we sold the client. I'm like, "Well, that's dumb." So then I'm like, "Okay, well, how do I even get farther up in the process?" So that's when I started asking my boss, "Can I see the agreement?" And he was like, "Why?" I'm like, "Well, I just want to see what we've agreed to." And he's like, "Yeah. Okay." So he shared them with me and I looked through them and I go, "Well, why are we charging them this much? And why are we charging them that much for this thing?" So it was just reverse engineering all the way up the chain to me.
And then what I realized was, "Oh, the place to influence the project or the work is in the sales cycle." Like that's where you have real influence. And so now I'm a sales person because of all of that. So that was in the mind of young Dan young, Dan, the designer is where can I have influence? And I realized on an agency side or in a service business, you have influence in the sales process because that's where you get the ability to shape. I didn't have any of these words then, but I had the instincts of like, I want to be able to shape the work.
I want to be able to have impact on it and have influence on it. And that was the place that I looked. So then I started reading about economics and about well, so how do we price this? $150 an hour, where did we get that number from? Did we make that up? Did someone else charge that. So it just started a whole flurry of research for me into, well, how do we shape it at that level, and what are all the things that I need to know to be educated there?

Chris:
How old were you at that point, when you were like, "Can I see the bids? Can I see the scope of work?"

Dan:
23.

Chris:
23. Okay. There's something about a 23-year-old who has these kinds of questions, this mind, this brain that you have. If I were to rewind the tape and say, what student were you in high school? How would you answer that question?

Dan:
I was an average student because I felt like school was about memorization to me. And I was like, "But I don't memorize things." I've never been good at memorization stuff. So like history, I did really poorly. All the things where I have to memorize something. I did really poorly at that. All the things where I had to invent something or be creative about something, those were where I came alive. And this is all in hindsight. I didn't know that then. As I reflect on it now, I'm like, "Those are the things that I was really interested in." And I was also very arrogant.
So that comes with this too, is like for better or worse, I was very arrogant. I remember a time where at work, a colleague said this to me, also my wife now, and my girlfriend at the time said this to me and my brother. All at the same week, they said to me, "You're really difficult to be around." Like, "You just think that everything." If it was just one of them that had said that to me, I'd be like, "Ah, whatever I don't." But the fact that all three of them are people that I care about and people whose opinions mean something to me, said that to me, I was like well, maybe I should think about how I actually relate to people in the world a little bit more than I do.
I remember in a review with my boss, I said to him at one point. I said, "You know, I write the best CSS on the planet. So this is why I think that I deserve that raise." And he's like, "Dan, the amount of hubris that you have to have to say that to me. Even if it was true, just to say that is like man." I was definitely very, very arrogant. I think I still have a touch of that now. I try to be a little bit  more humble about it now. I think I've learned to be softer about that, but it still definitely is there, but 22-year-old Dan, 18-year-old, Dan was firing on all cylinders and pretty brazen about stuff like that. "Can I see the contract?" Kicking doors in, in that way.

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

Chris:
You call it arrogance, but maybe there's two parts to this, which is youth. It's like you're too dumb to know that you don't know you can't say, so you say anyways, right? So there's ignorance. I think ignorance actually when it's used the right way, can actually be very powerful because you don't know the rules. You didn't know that you were breaking the rules, but you just wind up inventing something new. And the other part to it is there's a level of self-awareness in terms of self-confidence. And did that come from a childhood? Did that come from one or both of your parents or a mentor or a sibling in your life that gave you this?

Dan:
I credit my parents a lot for that. So my parents are both immigrants. My dad is from Pakistan, my mom's from the Philippines. And both of them came from very, very poor families, came to the US with nothing. They met in New York. But both of them came to the US on full ride scholarships, because that was the only way that they could get in school. And my mom was in a nursing program. My dad's an accountant and a CFO now. Both of them they're family. So my dad has seven brothers and sisters. My mom has three sisters. All of their families pooled their money together to send them to the US, to make something of themselves. "You go make something of yourself. We will all work manual labor jobs here and raise the money to support you."
And then the unstated expectation was you be successful, then you help us back home. Whether it's sending money back home or bringing us to the US and things like that. So my parents are very self-made from the beginning. I grew up in north Philly, we didn't have a lot of money. I think just the... I don't know if I would call it this. I don't know if my parents would call it this, but the confidence to be able to come from nothing and then make something of it, there's a tremendous amount of, you just got to grind on some of this stuff. So I observed that my whole life without knowing that that's what I was observing. I observed my parents. I mean, my dad is wealthy now, like just straight up wealthy and he made that wealth for himself.
He had mentors, and he had teachers, and he had people to help them, but not a lot, not as many as I had. So seeing that growing up was like, well, that's how you work. That's how you start very humble and make something of yourself. So I think a lot of that came from them, just seeing that. My mom has immigrant confidence. I remember going to stores and having a bunch of old white ladies yell at her for me and my brother, messing around in the Isles and her just not skipping a beat and really just giving it back to them. That confidence I only recognize in hindsight as I'm older, but I grew up around that. So seeing my parents do that, I think really gave me, "All right. "Well, if they made something of themselves, I could probably make something of myself too."

Chris:
So in a way, this immigrant mentality, because there's two ways that immigrants, I think at least two ways, exists. One is they're scared and they're always flying under the radar. They're considered meek and they don't speak up for themselves and that's why a lot of Asians will deal with a lot of social injustice because it's like keep your head low. Don't make a lot of noise. And there's the other immigrants like, "I have a right to be here, just like every single other person. I've sacrificed too much. Too many people are counting on me for me to be tiptoeing through this." And you saw that, that was a part of the blueprint. That's just normal reality for you. It's not until your girlfriend, your boss and somebody else, or your friend tells you, "Yo, dude, you just chill on the arrogant sauce a little bit. You're a little too high on that.

New Speaker:
Yes. Totally right.

Chris:
Okay. All right. So you go in and you start reading these books. I didn't realize this because, like new media, that just means a thousand things depending on who you talk to. So this mindset of yours thinking that you're going to be a developer, I think is... Like my older brother, he and I are exact opposites in some ways. He's a software engineer. He's super logical, very binary things either make sense or they do not. He's highly educated. I am not. I'm the exact opposite. So he's very a systematic thinker, like system thinking and system design. And I can see, I guess, and tell me if I'm wrong here, a young Dan saying, "This should be the way, therefore I will just do it and I'm going to read these books, although you can't stop me." You're just like the Terminator, you go and crush these books.

Dan:
Totally. A very astute like. Young Dan was a very black and white kind of person. It's this way or it's that way. I learned this and I know it. Older Dan is a bit more nuanced in his approach now. I think, that comes with some age, it comes with being married. It comes with having kids, I think. So I'm a bit more soft on that. I'm a bit more shades of gray on it, but, young Dan was like, it's either logical or you should not talk to me. That kind of attitude.

Chris:
It's like, it has to make sense or it doesn't make sense at all.

Dan:
Exactly.

Chris:
There's no middle ground. Okay. All right. Maybe this is me outing myself a little bit, nonfiction books, books that are like textbooks, theory, things that I tried to escape normal school from used to not appeal to me. Now that's all I read. So I have some catching up to do, and I'm surrounded by books that have yet to read, but I'm just fascinated by the title and the ideas in them, but you've actually read them. And then you go and write your book. And I have to say it's around 50 pages-ish, right?

Dan:
Yeah.

Chris:
Something like that. It's funny because now I know you a little bit better by watching your videos. Your personality is sprinkled in there, but you can't tell at the beginning, because it's all right, this is a book on pricing, it's called Pricing Design. And then you sprinkle these little stories and these jokes and it's like, okay, I get who you are in this and it's a wonderful read. So if you're a creative person and you're sitting there scratching your head and you've not been able to escape hourly based pricing, you feel like you're working harder for less money, I highly recommend that you pick up this book.
You can read it in a few hours. You really can because it's just 50 pages. There isn't a lot of fat in there and I like books like this. You're not messing around. Okay. I'm just going to set you up here. There's a story in there about Esther, not her real name and what you learned about using the saving the date and what that taught you and where that led you.

Dan:
Yeah. Totally. So I remember when I was first freelancing and, the context of this is, I'd always have a full-time job. I worked at agencies and then I would always work. I would always freelance outside of that. I started freelancing and I wrote an article about this too. I started freelancing to get things. Where like, okay, I had a full-time job, but I want a new camera. So, okay. I'd freelance for a new camera. And what would the price of the freelance job be? Well, the price of a new camera. So if a new camera was a thousand bucks, I would do that next freelance gig for a thousand bucks because that was my camera gig. If I wanted a new TV, if I wanted to go on vacation, if I wanted to put a down payment on a car, that's what I freelanced for.
So I call it object to value pricing, which is like, the value of this gig is whatever object I want to get. So that's how I started. I was freelancing on the side of agency work, which meant I had a lot of leverage because of a client said no to me, then I would just go like, "That's fine. I don't need the cash. I'm getting paid well at the agency already." So a ton of leverage that I could experiment with and I could take a lot of risks because it actually wasn't that risky. So there was this one client that I was freelancing this is on the side of a full-time agency work. And this client wanted to book me six months out because I was already booked six months out on the side. And I was like, "I don't want to be booked out six months from now because what if I turn away a bunch of gigs and then five months from now, this person drops out?"
Esther says, "Oh no, nevermind. I don't want to work with you anymore." So I just sent her like a go away price. The one that you just send to clients is just astronomical and you go yeah, they're never going to say yes to this. So I basically said to her, "Look, it's March now, if you want a book me out on October, you have to pay me an additional $10,000 to hold the time. It's not a deposit. That's not like taking the initial $10,000. I think the project was $10,000. It's not a deposit. It is an additional fee to just hold my time for that amount. And mostly I expected her to be like, "Ridiculous. No way."
I didn't hear back from her, but then one day I opened my mailbox and there was a check for $10,000. It just broke my brain and how it defined reason because if I tried to rationalize it like, "Wait, but if I break that down as an hourly rate, but I'm not even doing any work here." So how do I rationalize this? And the only way that I could rationalize it is people pay for things that are important to them. That's it and that's the thing that turned me on to value pricing. It's like well, if I could just make every project something that's important to the client, wouldn't they pay a lot of money for that? And here's an example of that. Here's at least one piece of evidence toward that idea. So that opened my mind to the idea of value pricing is, if I could hunt for what's important to the client, rather than trying to do it input wise, Like, "Oh, here's so many hours I have, and here's my made up hourly rate."
Instead, what's important to you? And then what's it worth to you? And then is it worth it to me to do it for that too? Great. Well, we're in business then. What I also realized from that experience is with her paying that $10,000, that additional $10,000, I was like, "Well, she really wants to work with me." And now I really want to work with her and I crushed that project. I did such a good job because she put that trust in me, like literally put her money where her mouth was. Gave to me and I was I'm going to over-deliver on every single thing on this because you know why? Because I want to do a good job for someone who believes in me.
So it just created all of these good things that came from the idea that we just focused on what was important. I did it by accident in that version, but it made me go well, what happens if I do that on purpose next time? And that opened the door to I'm getting out of hourly rates, I'm getting out of time-based billing and all that stuff, and instead, really just hunting for value in every client conversation.

Chris:
So that moment with Esther was like an epiphany for you. You were thinking, "I'm trying my best to kill this thing because I don't want a six month commitment because who knows what you'll be doing? You might want to go on vacation. Who knows? And then the unexpected happened, which is Esther sends you a check. And now I think at your post rationalizing, it's how does this make sense? I'm going to just construct a narrative and here's the thing about narratives. It could have been anything you wanted.
Your narrative was what the hell is going on? Why would somebody do this? And the narrative that you told yourself is if it's valuable enough to someone, it doesn't really matter what the terms and conditions are. They will pay and you bumped into it and then you went on this journey to figure this stuff out, right? And it changes your life. Okay. That's the catalyst for this. So in the book you write, there are primarily three pricing methods. Can you talk to us what the three primary pricing methods are?

Dan:
Yeah. I forget what they are off the top of my head, but hourly...

Chris:
Okay. I can tell you.

Dan:
Yeah. Please tell me.

Chris:
Yeah. It's been awhile, right? So you're talking about the industry standard, the cost plus or the opportunity cost.

Dan:
Yeah. Got you. Okay. The general gist there is what a lot of people do, how they price and this is not necessarily a bad thing. Let me preface this to say, when people ask me, how should I price? I don't say value pricing. What I say first is whichever method you understand best and then it works for you. Because I think if you try to do value pricing and you don't get it, you will mess it up. You won't do a good job. If you try to do hourly pricing and you don't understand it, you will mess that up too. So I know tons of agencies and freelancers that are very profitable doing hourly billing. A lot of people say like, this saved my agency doing hourly. Great. Continue on with that then.
And then I know a bunch of people who are like hourly sunk us. We cannot run a business on that. So if you don't get it, cool. What I try to do is go well, let me help you get all of these things and then you can pick. So hourly in our industry standard is usually the one that lots of students start with, lots of new freelancers. They go like, "I don't know what to charge." And they ask a friend, "What do you charge?" "I charge to 70 bucks an hour." Okay, cool. You ask another friend. "I charge 80 bucks an hour. And you ask another friend, "I charge 90 bucks an hour." And you go, "All right, I'm going to split the difference. I'm going to charge 80 bucks an hour because that's the average of what I asked all the friends for."
And that's fine. If that works for you and you're profitable doing that, go for it. I think the problem with that is the term industry standard. It means that you are just doing the standard stuff. It means that every client that comes to you will be able to price up. So if you're in the middle of that set, sucks for you. Because if you're the lowest in that set, you actually could win on price because they're cheaper than everybody else. If you're at the top of that set, maybe the client will go like, "Well, maybe this person is a little more premium or does something a little bit different than everybody else." If you're right in the middle, sucks because there's no reason to pick you other than like, "I don't know. I like that person. Or I like the way that they write emails." Or something that's different. So that kind of pricing breaks down pretty quickly.
So then you get into cost plus, and that's what most agencies do. Is they go, "What is our cost to do this?" And the calculate, the salary of their team and all this kind of stuff and they go, "Well, we can't just charge that because will it break-even. So we'll just add a little bit of margin to that. That's the plus part. And so the the cost plus is like you figure out your cost, you add a little bit margin to that, and then that's what you come up with. So on average, we cost $40 an hour for a developer, for a designer and we don't want to just charge $40 an hour. So add a little bit margin on that. Let's say we'll add 100% margin on that. So $80 an hour is what we'll charge. We have a $40 margin an hour, and then we'll charge the client $80 an hour.
Well, the problem with that is what if the client can't pay $80 now hour, they can only pay $60 an hour. So what do you do now? And what most agencies do is they cut their margin. They go, all right, instead of taking $40 of margin, we'll take $20 of margin. And then that's where you reduce your profit before you even started the gig. So that breaks down at some point too. Again, lots of folks, who've made a good business doing cost plus, but it's hard to negotiate and it's hard to find value with your clients. It's hard to connect with your clients because cost plus is kind of a take it or leave it price, unless you are compromising the price. In which case you might as well just tell your client, well, you tell us what you want to pay? And then we'll just do that, right?
It either is the client at your mercy, or you are at the client's mercy. It's win, lose cost plus generally. And then opportunity cost is what I talked about before, which is what's worth it for both parties? Is it worth it to you and worth it to me? Is it worth it to you to spend $10,000? And is it worth it to me to do the job for $10,000 or $1000 or $100,000 or whatever the amount is? If it's worth it to you and worth it to me, it's win-win. And so that's the thing about value pricing and this is the thing that I didn't write about in the book. Had I written it now, I would have tried to add this idea and this concept is that a value price is always a win-win price. It has to be a win-win price.
It means you are getting some value out of doing the work and the client is getting some value out of you doing the work, because then both parties are profitable and the combination of profits use me is what we call value. That's what value means. It means all of the profit that has been generated from this transaction, whether it's financial profit or some other form of profit. People are happier, or they get more time back or whatever, those count as profit too. So all of the profit that's created in the transaction is value and that's usually based on opportunity. So there are some folks, I have some friends who are excellent consultants and excellent agency owners, and they will get a great project from a great client. The client says, "I'll spend $100,000 on this." And they go, "I'm sorry, not worth my time." Not worth my effort, not worth my energy, not worth my weekend, not worth whatever, which seems like an incredibly privileged thing to do.
But that doesn't mean it's not true. For some folks, $100,000 is not worth their effort. For some, a $10,000 project is not worth their effort or a $1,000 project is not worth their effort. So that's the thing is like for a good transaction, it has to be win-win for every person. So I'm going to dive too deeply into that, but those are generally the three kind of methods that I described then.

Chris:
Okay. So I've been talking about this for some time. So naturally I have a reservoir of challenges, objections you just said. Not because I believe it, but because people believe this. Here's what people say, "Chris, you just putting a fancy label on something to make yourself feel superior and some people to feel inferior." I'm like, "No, trust me, I'm not doing that." Right. And maybe how you feel about it, I'm not going to deny your feelings, but okay. So what they say is, if you value base a client at $10,000, let's just say that you're able to have the money conversation and it's $10,000, and then you wind up working on it for 100 hours, then your effective hourly rate is 100 bucks an hour. Why don't you just call it that you're charging 100 bucks an hour, Chris. How would you respond to that, Dan?

Dan:
Yeah, sure. I mean, it's a good objection. It's a common objection too. So I think there's a couple of things that go into that. But the first thing is there's a misnomer or misconception about value pricing. That value pricing just means you charge the client as much as you can. And that is not value pricing. Value pricing means that you are trying to ascertain the value of the work objectively, not gut feeling, not as much as I can charge, not any of that stuff. So objectively, you have to come to the number of the value of the work. How did you get to $10,000? Not because it felt like it, but because you did some calculation, then you said based on your whatever, your current revenue, based on what I think my work would add. And there's some amount of speculation to this, but it's got to be based in some reality. I think I can get you about $10,000 more.
So the value of the work is $10,000. That doesn't mean you should charge $10,000, right? Because who would spend $10,000 to lose $10,000? I don't know that a lot of companies would. So you're charging a portion of that. So if the value of the work is $10,000. Maybe you would charge $5,000 or $2,000 or $1,000. Some percentage of that probably. And so when somebody says, "Yeah, but then I have to work 100 hours on it." I'm like, well, and this is one of the things I learned from what book was this? I Think, Implementing Value Pricing by Ron Baker. Is the idea that value drives cost, not the other way around. If you're doing it the other way around, you're just cost plus again, you're not value pricing anymore. So what does that mean? It means your job then as the expert is to find a way to not do it in 100 hours to do it in 10 instead or five or one. Can you do that? Right?
You as a service provider, that's your job to figure out can I do it in less than 100 hours? If your answer is, "Oh, I don't know the work takes what it takes." I have an unpopular response to that. I'll preface to say, maybe you're not as good at your work as you think you are. Because that's what experts do. Experts are really good at their work and they go, "I know how I can create this value." Confidently, not arrogantly. Young Dan would have been arrogant about it. Older nuanced. Dan is a little bit more yeah, "I believe that I can do this. And why, because I have a track record of doing it in the past. I've good inclinations. I have good launches, client, trust me on that or don't. If you don't, that's fine. We can walk."
So I think those are all the things that go into that is if you are shackled by the fact that you can only do this in 100 hours, hopefully you know that in advance and you would turn down the gig in advance because you know, you're not going to be profitable. If the only way that you can figure out if you're profitable is during the work, you're probably not as good at the work as you thought and there's probably more work that you can do upfront to actually identify some of that stuff. Now, that's not easy for people to hear but that's my honest answer to that.

Chris:
But if the person that I'm imagining was saying this to you is still not buying it, their second pushback to you is like, "Dan, Chris, I don't care. Again, you're just using labels. You're just using some trickery here. If at the end of the day, it takes you five or 30 hours or 100 hours to finish the work, if you divide the amount of money you charge in this case, 10,000, by the hours that you work, that's your effective, hourly rate." They still say, "You're just trying to call this something else." And to that you would respond by saying?

Dan:
Yes, I am. Yes, I am trying to call it something else because you know why? Because when I say to a client... Let me tell you what my effectively hourly rate is and I do that by, I track my time. I know how much time I work on everything and I also know how much money I've made. Dan's effective hourly rate right now is $814. So let's call it that. Let's call it an $814 hourly rate. So if I say to the next client, "My effective hourly rate is $814." I lose the gig immediately. Done. Like we're done. That's it. I'm not a doctor. I'm not a lawyer. I'm not anyone that they perceive to be able to make that amount of money. Now, if you ask my former clients and you ask them like, "Was the money worth it?"
They would go, "Yeah. It was because we got this amount of return or we got this conversion." Whatever the goals were. Yes. Money well spent. But now trying to sell it with that framing, my hourly rate is this, it doesn't work. So what you need is a new frame on it. Right? An analogy that I always talk about is, a painting that you put on the wall, depending on the frame that you put on it, it looks terrible or it looks great. Has nothing to do with the value of the painting itself. It's how you frame it. Literally how you frame it. So same thing is true in the sales process. How you frame it to the client is the work. So, am I trying to put a fancy label on it?
I don't know about the word fancy. You're just being insulted by Saint fancy. I'm trying to put a different label on it because they don't get it if I frame it one way, but they totally get it if I frame it another way. That's called being a good communicator. Right? And it's on you to do that ethically because if you're not doing that ethically, then you're just being a sleazy salesperson. If you're doing that ethically, because you know you can create value for the client, I call that being helpful.

Chris:
Okay. I'm glad you brought up this word, ethics and unethical. How does one do this unethically?

Dan:
Okay. So this is a contentious response that I have this, right? This is usually let some people on fire when I say this, and I'm not the only one to have said this. I know that Jonathan Stark has said this in a bunch of stuff. I think that you might've said it too, Chris, but I've heard this in a bunch of places. Charging hourly is unethical. Right. Okay. Let's break that down. Well, why is that unethical? Because, and maybe unethical is too strong of word there, but ethics basically means what is right to do within a given group or a given set of circumstances. What is acceptable as correct. So, within our given group, if I say to a client, "Well, I just charge $814. That's my hourly rate." And they go, "Okay, we'll work with you."
Should I take their money? Is it ethical for me to take the... I mean, that's my rate. They agreed to it. This is a bit of a caricature, but usually when you give a client an hourly rate, usually you're not having value conversations. You're just saying, "This is what I do." And so you're not talking about how you can deliver value to them. And to me, that's the ethical part. The ethical part is if you're a service provider, you should actually be providing a service, not just charging for what you do. And there's a lot of people that put stock into their effort as opposed to the outcome. Well, I don't know, I'm going to work 100 hours on this. So do you deserve to get paid for your 100 hours that you put on this if you didn't actually achieve good outcomes?
'Well, I did the work." And here's where it gets even more contentious. That's a pretty Marxist idea, right? That gets into the labor theory of value. That style, the work itself has value, not the outcome of the work. And maybe that's what you believe. I've found it hard to understand that, which is why I don't do it that way, because I'm like, "I don't think that my work has... I don't think the fact that I did the work has value. I think that the outcome that the work brings has value." And so that's what I try to sell, because I understand that and I can be honest about that. The other way, I can't do that.

Chris:
Yeah. Okay. So a couple of things for people to take note of here is when you're pricing based on hourly, you are literally selling your time. And when you do that, you have no connection to the outcome or the results. Oh, you want to use more time? If I'm inefficient, if I'm slow, I'm distracted, if I'm new, I would just continue to charge you more. Now I know some people who their business depends on them, charging hourly, and I've talked to them and they have like 500 people work for them. And the reason why they have to do that is they work in a creative space where the client changes their mind all the time. And if they were to do fixed based pricing, value based pricing, they would be screwed because there's no telling. So this way there's no tension and the client just continues to buy more time because they want more stuff done, more versions and they're completely content doing that.
But I think one of the other reasons why creative people, especially this is a broad statement here, prefer hourly-based pricing is because it's easy. It's no headaches. And you know what? I don't actually want to be tied to any business objectives because I just want to do my thing. I want to draw a logo all day long. I want to make motion graphics all day long and I just don't really care about the other stuff. So there's that idea of accountability and understanding the larger business goal. And so you had said this at the onset, don't do value based pricing, and that's not how you operate in the world. If you don't think like that, if you are not curious about their business and the larger business goals, don't go there because you're probably going to fail and vice versa.
If you, if you only think about value creation maybe hourly pricing isn't for you either. You got to find the model that fits for you, right? Okay. Now, I think you and I are aligned in this cause in which we want to help create a people, have a more meaningful conversation about the value of the work with the client and within themselves. I just want to know what are your top Dan Mall, two or three tips, somebody is listening to this, they're like, "You know what, I was on the fence before. I'm ready. I want to learn. What are the two or three tips that they can do to increase their value in the world?

Dan:
Ooh, that's a good one. That's a tough question. Okay. Let's see. One of them that I would say is what I like about value pricing and the methodology that comes with it, right? The culture that comes with value pricing. If you read a bunch of value pricing books, or you talk to folks who have done it well, there are rituals and ceremonies and all this stuff that comes with it, right? A lot of people who value price will send options. It's not just one price, right? Because if you have an hourly rate, it's one price. The only thing that changes is the amount of time you're working on it, but your hourly rate doesn't change. So options come with it. So if you think about this value pricing thing, one of the things I love about it is as a designer, it allows me to be creative, right?
Because yeah, there's the obvious option where my hourly rate is 100 dollars an hour. I think it's going to take 10 hours. So the price is 1,000 bucks. Cool. That's option one. What else you got? And I'm like, "Oh yeah, I don't know." And so it's a forcing function for you to be creative about that and that's one of the things I love about the idea of value pricing. Whether or not you end up value pricing, just the idea of thinking of different things that you could do for the client. I see a lot of designers not even get to that point. They go like, "Oh, well, they asked for a poster, so I'm going to make a poster." I'm like, "Yeah. But if you would asked what they're trying to do, they're trying to sell out shows."
Could you run an Instagram campaign for them too? Maybe that would help them sell out shows better than your poster would. And that would be 10% of the work that you were going to put into making the poster. You don't have to do anything printing. And the cost would be lower for you too. So you'd become more profitable. That's a small example of just a slightly different option. I think that we, as an industry are so tied to, well, the client asks for that. So I have to provide that. Who's who said? Who made that rule? Part of our job especially for designers is to go why is that thing like that and how could I make it better? What are different ways that I could do that?
So I'm like, "Why not apply that to pricing?" So I think that's tip number one is encourage yourself to be creative about this stuff. Cool. If you want to do an hourly, make hourly one of your options. All right. What are the other two? So I think that's a good gateway to going, "Well, what else could I think of?" Even if you price those other two hourly, fine, but what are two other things that maybe the client didn't ask for, or didn't ask for specifically that you could also price hourly. And one of the exercises that I've seen a lot of folks do. I think Chris, you do it and I've seen Jonathan do it. I used to teach this when I taught value pricing is, you come up with your price, however you want option one, and then you double it and you half it and you go, what could we do for double that? Or what can we do for half of that?
And it's just like a really fun exercise to do. Just to think about it. You don't even have to sell it, but just getting in the mind space of that. I think that's the gateway to value pricing is it makes you explore, how could I do this differently? And so I think that's tip number one. Tip number two is create some leverage for yourself, right? So if you are depending on this to eat, maybe don't take risks there. Maybe that's not the first time that you should try value pricing something. If you are like, this is the only gig that I have on the table and I cannot lose this otherwise I'm not going to be able to buy groceries next month. Probably trying to do something new there is not a great option.
So maybe what you do, if you really want to try value pricing is you create some sort of nest egg for yourself where you go, "I'm going to price this thing hourly because I know it can be profitable. And now I'm sitting on an extra 2,500 bucks because that's the profit I made on. Now I can pitch the next thing I can value price it, because if it doesn't work, I still have the 2,500 bucks to rely on." So my second tip is maybe you can create some leverage for yourself to be able to take some risks. If value pricing is new to you. If you're sold on the idea, but you're like, I don't really know how to do it and I want to test it out. Don't test it out in a high risk scenario, test it out in a low risk scenario.
The third thing I think is and this is what works for me is just learn more about it. There's so many good resources. All of the stuff Chris, that you do in the future and all of that. There's great videos, Jonathan Stark has an awesome newsletter. Ron Baker and Blair Enns has a great book. There's just so many good resources now for value pricing. And part of the reason that I wrote my book was that there wasn't enough good resources at the time. And now there's just so much more so educate yourself on value pricing on how to do it, all the different things. Because again, if you don't understand it well enough, you won't be able to do it well. So I think those are my three off the cuff. Those are my three tips.

Chris:
Or go and read 10 books on economics pricing theory.

Dan:
Totally. Yeah. The study of economics.

Chris:
Yeah. That's the other way to do it. Okay. This is wonderful. Have a couple of questions for you before I wrap up here and I think that to myself, in the larger design world, when people think the name Dan Mall, what's the first two things that they think of? And I'm curious if you're intentionally shaping that or not.

Dan:
Yeah. I think it would depend when, so right now I think it's design systems. So SuperFriendly specialize in design systems. That's how I am trying to position both myself and SuperFriendly is that's what we do. We say, that's what we do. That is what we do. Do we do other stuff? Yeah, of course we do. Everybody does zoo position narrowly, but that's what we want to do more of. And so the more we say it, the more we do it. So I have to play that too. At different points in my life and career, I used to coach agencies and freelancers. I talked about pricing a lot. I used to talk about creative direction. I used to talk about Flash and how it works with web stamps.
I had all these experiments on what do I want to be known for? What do I want to be my thing? And honestly, I think it probably will change in five years. So I'll probably have to reposition myself, but right now I think it's designed systems. I think that's the thing.

Chris:
All right. This is fantastic. Before I asked you the last little bit and say goodbye to you, I want to just prompt everybody. If you are enjoying this conversation, we're going to include some links and some resources in the show notes. So make sure you track us back down to the future sites so that you can see these things. I saw a talk that you gave to, I think it was last year, AIGA Jacksonville, where you gave these five tips and one of them was a brilliant way of explaining positioning to people that are job seeking.
Now, I think you were talking to students, but I think that the way that you did that was such a beautiful exercise in positioning. How you said that it's like writing a love letter. Your portfolio should be a love letter to who it is that you want to get a job from or an opportunity. I loved how you went through the whole process and you kept diving deeper and deeper and how tailored you make it. So I'm going to include that video in the link. And if you want to share other videos with me, Dan, I'll be sure to add those in the show notes. So my producer guy can do that as well.
And definitely pick up this book. It's called Pricing Design. It's 10 bucks you guys. It's 50 pages and I think in the opening bits, Mike Montero says, "You'll make more money from reading this book, then you will have spent easily because Dan is a guy who creates value for other people." So Dan, if people want to find out more about you, where's the best place they can find more about you?

Dan:
Yeah. So I have a personal website, danmall.me. I write on there infrequently. I write much more frequently and randomly on Twitter. So @danmall on Twitter and the official biz stuff, if you're interested in design systems or things like that is @superfriendlyco on Twitter or superfriendlydesign.systems on the web. So any one of those four places usually.

Chris:
Beautiful, thank you so much. I love that I could talk to probably 100 different people who know things about pricing models and pricing strategies, and you all have a different way of approaching it. I like your approach. It's very friendly. I guess you live up to your name, SuperFriendly. SuperFriendly guide to pricing and value based pricing and it's very inclusive in its language. It's funny, it's personable. So can't say enough good things about it. So guys, check that out.

Dan:
I'm Dan Mall, 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 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 reading and reviewing our show on Apple Podcasts. It'll help us grow the show and make future episodes that much better.


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