Pricing is one of the most important levers in our business.
Because when you make the right pricing changes, it has a domino effect.
Higher fees bring a higher income… which boosts your confidence… which helps you see your value… which translates into bolder pricing… which leads to higher income….
And so the cycle goes.
Today I’m joined by Mike McDerment, co-founder and CEO of FreshBooks, the number two small business accounting software in America.
Mike used to be one of us. Before starting FreshBooks he did freelance work. And pricing is a topic he’s very passionate about.
His message is something we all need to hear — especially during this difficult time in the world.
The notes that follow are a very basic, unedited summary of the show. There’s a lot more detail in the audio version. You can listen to the show using the audio player below. Or you can subscribe in iTunes to get this show delivered straight to the Podcasts app on your smart phone, tablet or iPod.
Tell us about FreshBooks and how it got started
Mike started out building websites for himself and then others. He got into internet marketing because he wanted to learn how to draw traffic. He got into conversion consulting when he realized needed to persuade people to purchase.
Throughout, he used Word and Excel for invoicing, and he thought there had to be a better way.
Today, FreshBooks has grown to 400 people. Over 20 million people use the software, and they’re number two in America for accounting software.
Why should creative professionals charge for the value of the services they deliver rather than their time or other factors?
Around 2010, Mike wrote a book called Breaking the Time Barrier. You can download it for free.
The book is about shifting pricing from time-based to value-based.
When you charge by the hour, you pit yourself against the client. The client wants you to charge less. You want to earn more.
The client wants you to work fewer hours, because that costs them less.
You want to work more hours, to make more money. That’s a broken relationship.
Value pricing shifts the narrative and puts you in alignment with your client.
But how do we determine our value when what we create doesn’t have an immediate result in terms of sales or profit?
At the heart of this approach is a mindset shift. You have to think more like a consultant.
Consultants do work up front to understand the client’s history, needs, problems and objectives. They step into the problems the client is trying to solve instead of going right to a solution.
You may find you’re not able to solve your client’s problems. In that case, you shouldn’t work together.
If you can’t solve the problem of your prospective client, you shouldn’t work together.
Once you have a target market, you will better understand what your work achieves for clients and have a better grasp of their problems and develop solutions. This gives you credibility to charge higher prices.
Some things you can quantify, such as a white paper attracting X number of new leads.
Others are harder to quantify but still have some impact.
It helps to understand where your piece of content fits into the selling process. This will open up other opportunities and help you understand the context of the deliverable.
You can also talk about yourself as the low risk option when results are difficult to measure.
What if a client and prospects just doesn’t get value pricing?
Some prospective clients will always look for the lowest cost option. Some are suspicious of the consulting model. That’s fine. It’s not your job to convince them.
When you stick to your pricing model, some people will come back to you after trying other options. Play the long game.
How can freelancers bump up their rates confidently in the time of Covid-19?
Focus on where and how you deliver value. Right now, people are looking for security. If you can deliver a service with less risk than the next person, even if it costs a little more, then the price difference is worth it to the client.
In a pre–Covid world, the focus was growth. Today, it’s about reducing risk and cost predictability.
Build your client relationships for the long term. Get on the phone and talk to your clients — with no agenda — to see what problems they’re experiencing as a result of the pandemic. Think about how you can help them.
And when things start to improve, they’ll think of you.
How can people muster the confidence they need to move in this direction?
Mindset lies at the heart of all this. Read Breaking the Time Barrier.
When he’s feeling spooked about the future, Mike imagines himself having totally failed and all his worst fears coming true. It helps him realize that even if the worst happens, he’ll survive. He can pick and move in a different direction.
Progress isn’t easy. It’s painful. And it’s probably you and your mindset that’s holding you back.
Don’t be upset by that because it means it’s within your control.
When you make changes, you might not get the results you want at first. The process is messy. But if you stay on the path, you will get there.
You mentioned a free trial of FreshBooks?
Sign up to get a free trial of FreshBooks to create invoices, track hours and expenses, run reports and get reminders.
You can find the free trial at FreshBooks.com
By the way… whenever you’re ready, here are 4 ways I can help you grow your freelance business:
1. Grab a copy of my book for ESTABLISHED writers.
You’ll discover a different way to think about your challenges during this crisis. Plus you’ll get clear recommendations to get you through the storm safely … and to come out the other side stronger than ever. — Click Here
2. Download a free copy of my book for writers who are NEW TO FREELANCING.
I’ll show you the 3 things you need to do to get your business off the ground safely and land your first paying client faster. — Click Here
3. Join my implementation program and be a case study.
I’m putting together a new implementation group this month. If you’d like to work with me to grow your income quickly with better clients (and become one of my new success stories) … just hit reply and put “Case Study” in the subject line.
4. Work with me privately.
If you’re a 6-figure writer who’s trying to earn more in less time, with less stress, I might be able to help you get there faster than you think. Just hit reply, put “Breakthrough” in the subject line, and I’ll back to you with more details.