Money, money, money, MONAAYYYY! (Monay!) Everyone wants money, but not all of us know the best way to make it or keep it. Cue, Jason Blumer—Jason is a Creative Accountant (not sure you’d ever hear those two words together in a sentence? Us either), co-owner of Blumer & Associates, CPAs, a Top 100 Most Influential People In Accounting, and an overall good guy. On August 8th, he stopped by Free Range Brewing to talk economics with us…. And it was a lot more fun than you’d think!
Jason dove into the ins and outs of pricing your clients, gave us the rundown on the pricing structure his firm swears by (value pricing: how to get the maximum price for the value you’re promising.), and he even gave us some insight on how to value price your family…. (hint – you really can’t).
Want to hear more? We’ve pulled out eight takeaways we feel every creative should know in order to make sure their price is right.
1. The difference between pricing and billing.
Let’s ease our way into this with some basics—we’re creatives after all, numbers, price, and money talk is scary!
Pricing: Always offered before a service or sale (up front). It is strategic looking forward and requires trust and understanding from the client. Price measures value—you’re selling the expectations of your results. It is a slow process.
Billing: Always given after a sale or service. It is reactionary. It measures time, hours, and performance.
2. Value is subjective.
Value is created in whatever a human values—and clients subjectively apply value to the work you do for them. Because every client perceives value in a different way, it’s safe to say that services we offer don’t actually have fixed prices. A logo or a design does not have an inherent value—it has whatever value a single human applies to it. So, it’s our job as creatives to create value for our clients. The fact that the value lies with us gives us a lot of power.
The more value we create, the more value we get to capture in the form of a price. As I’ll later explain, everything of value has a price.
3. Differences between a client’s want vs. a need.
If you took the time to sit down with your client and ask them what they value, there’s a good chance they’ll draw a blank. Heck, try posing the question to yourself, and the same may happen to you. The truth is, often times a client doesn’t know what they value or want. Typically, humans don’t know what they value—but they know what they need.
In value pricing, humans put a lot more value on the things they want than what they need. Their “need” may be a logo or a social campaign, but it is their “want” that holds the higher value—this is the outcome they are hoping for, or a future perception of what they want to become. It is our job to unlock that want for our client.
4. Anything with a value has a price.
Not so surprisingly, as value increases, price increases. So typically, when we sit down to sell our services to a client, we aren’t trying to increase our price, but rather we’re trying to help them perceive our value in a different (and greater) way. This is where being a good conversationalist comes into play! When you’re able to talk to a client and help them truly understand the significance of your value, your price naturally and significantly increases. Time to start working on those communication skills people!
5. People value what they don’t have, more than what they do.
Enter, up-front pricing. Offering your clients a price up front gives them the opportunity to make value judgments, and have you both agree to the value and price before you even get started (they don’t yet have it, so they value it more).
On the other hand, when you don’t engage in up-front pricing, you completely lose the opportunity of helping your client understand the value of what you do. Once a client has the thing they want (like the logo you put countless hours of blood, sweat, and tears into) it loses value, and when it comes time to pay for the service, they feel they can say whether or not your work is worth the price you’re now charging.
So let’s all agree to up-front pricing and skip this type of nightmare situation altogether, shall we?
6. Don’t let your perceptions of yourself get in the way of your value!
How do we create more value? What is one thing that is sure to get in the way of it? Surprisingly enough, our perceptions of our own value can get in the way.
Unfortunately, a lot of people don’t believe in themselves, and that struggle with “am I valuable?” is going to lower your price. If you’re unsure of your value, how are you going to convince your client of it? You’ve got to believe in yourself and know your value in order to get others to do the same.
Confidence is key in selling yourself and your services.
7. Always offer three options.
When presenting work to a client, always offer three options(leading with the lowest-priced, least value and increasing in price and value as you go). This simple tip will make you more $$$ (and if you say you don’t want more $$$, you’re lying).
By offering the client three options, you have the chance to sell things they never asked for, but that you know could bring their company added value (how do you know? You’re the expert of course!).
Example: You go to the movies and ask for popcorn. They in-turn offer you three different popcorn options.
- Option 1 – Medium Popcorn ($6.99): Includes a medium popcorn…and well, that’s it.
- Option 2 – Popcorn Combo ($8.99): Includes a medium popcorn and a medium drink.
- Option 3 – Movie Lovers Bundle ($12.99): Includes a large popcorn (with free refills of course), chocolate candies, and a large soda.
While you only asked for a popcorn, you were presented with three options to get what you asked for and more (does anyone really order a popcorn without a drink!?). And when presented with three options that show an increased value, people often walk away with more than they initially asked for, but exactly what they really need.
Note: You can differentiate your options with just about anything—time, control, deliverables, risk, prices, etc.
8. If and when working with family or friends, throw this all out the window.
Value pricing only works with people you have the right to be objective with and influence the subjectivity.
You just can’t value price your mom, you love your mom! For mom, you’ll do anything for free. And that’s ok.
Thank you, Jason Blumer, for being awesome and teaching us a thing or two (or eight), thank you to our amazing sponsors Free Range Brewing, Metrographics, the Dunhill Hotel, Advent Coworking, and The Creative Group, thank you Eric Parks for taking these awesome photos, and thank you to all of YOU who came out to nerd out with us!