Ditching Hourly

By Jonathan StarkBusiness

Ditching Hourly episodes

July 14, 2017The Goldilocks Problem with guest Josh Robbs
Finding the overlap between your target market's problems and the solutions your expertise can provide.
Ditching Hourly 028: The Goldilocks Problem with guest Josh Robbs
I'm joined by listener Josh Robbs who asks:
I'm stuck and it might be a problem that other beginners (or people changing their positioning) have. Seriously, this is my ultimate positioning / expensive problem frustration. Might be some newsletter or podcast fodder.
I'm supposed to find people with a problem I can solve. They need to know that they have a problem. They need to be able to pay for the problem to be fixed. They need to be interested in solving the problem. The problem needs to be expensive.
If they're interested in and able to fix the problem, wouldn't they have fixed it?
Smart enough to know they have a problem, not smart enough to fix it.
Funded enough to afford the solution, not well off enough that they don't care.
Ambitious enough to want the problem fixed, not ambitious enough to take care of it.
The porridge can't be too hot, but it can't be too cold.
I know that people who need, in my case, web design exist. But when I try to define them, they end up sounding... impossible. And if they were real, how would you find the right people since they all look the same. The "too rich to care", the "too broke to pay", and the Goldilocks clients all look the same.
Something I can't get past.
—Josh
In our conversation we cover topics including:
How to find a target market that is the right fit.
How to spider a conference website to build market intelligence.
How to your network the tools they need to help you.
Finding the overlap between your target market's problems and the solutions your expertise can provide.
Enjoy!
—J

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
29 min
July 13, 2017 My Squirrel Guy
Focus on outcomes, not activities.
Ditching Hourly 027: My Squirrel Guy
Why you should focus your sales conversation more on your client’s desired outcomes than the activities you will undertake on their behalf (and how my squirrel guy got it wrong).

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
8 min
June 29, 2017Why You Should Be Offering Guarantees
Why you should be offering guarantees.
Ditching Hourly 026: Why You Should Be Offering Guarantees
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm going to talk about offering guarantees.
One of the tactics I advocate for increasing your fees is to offer some sort of guarantee.
This typically horrifies developers.
They immediately have visions of an unreasonable client demanding a 100% refund after six months of work.
Yikes, right?
Still, I think you should consider offering guarantees.
And here's the thing... you probably already guarantee your work!
Ask yourself this:
Have you ever eaten an hour to mollify a disgruntled client?
Have you ever done some work for free because you screwed something up?
Have you ever issued a refund because you ended up being a bad fit for a client?
If you answered YES to any of these, then you ALREADY guarantee your work.
So...
Why not make your guarantee explicit instead of implicit?
How and when to offer guarantees for the kinds of work that software developers typically do is a touchy subject.
Over the years, I have offered different sorts of guarantees for different sorts of products and services.
The type that I choose in a given situation depends on a variety of factors like:
the type of product/service
the level or risk involved
the scope of work
For example:
Software projects - Case by case, but usually my guarantee is along the lines of “I’ll keep working until we’ve reached the stated goals” or “If at any point in the next 12 months a bug crops up, I’ll fix it for free.” rather than “I’ll refund your money for the entire project.” (This only works if you give a fixed price for the project, of course.)
Monthly retainers - I offer full refund at any time during the first month to make sure we’re a good fit. No refunds after that.
Private speaking gigs - I do not offer refunds, even if client cancels prior to the event. They are allowed to reschedule at no charge, however.
Online training classes - No refunds, but student can retake for free.
For fairly fixed scope dev work (e.g., a productized service) that I can finish quickly, I’d offer a 100% money back guarantee on my sales page.
(I’d also price the service accordingly, but that’s another story.)
So, for something like a half day of SQL performance tuning, I’d offer a 100% money back guarantee if the client was unhappy with the outcome.
I see this type of service as analogous to bringing my car to a mechanic to have it tuned up... if the car is still running rough when I leave, I’d expect them to either redo the work or refund my money.
Here's the key point about guarantees:
Explicitily stating up front how you will “make things right” if things go wrong will differentiate you from the vast majority of your competitors.
And remember: if you can’t differentiate yourself from your competitors, you’ll probably end up competing on price.
That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening.
The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
4 min
May 22, 2017The Ethics of Hourly Billing with special guest Ron Baker
Special guest Ron Baker and I discuss the ethical challenges of hourly billing.
The Ethics of Hourly Billing with special guest Ron Baker
Special guest Ron Baker and I discuss the ethical challenges of hourly billing.
Today I’ve got a very special episode of Ditching Hourly for you. I'm joined by value pricing pioneer, Ron Baker to discuss the ethical challenges of hourly billing.
Ron is a recovering CPA who began value pricing in 1989. He’s the author of seven best-selling books, including: Pricing on Purpose; Measure What Matters to Customers; and Implementing Value Pricing. He’s the founder of pricing think-tank VeraSage Institute and a radio talk-show host on the VoiceAmerica.com show: The Soul of Enterprise.
Just to give you a taste, here are some of the killer quotes Ron shares:
“A service that’s guaranteed is worth more than a service that’s not.”
“Would you want to get on a plane and be charged $4/min retroactively?”
“Prescription without diagnosis is malpractice.”
“If we don’t think we’re worth it, how will our customers ever believe we’re worth it?”
LINKS
Ron Baker on Twitter
Implementing Value Pricing
Pricing On Purpose
Verasage Institute
Extraordinary Guarantees : A New Way to Build Quality Throughout Your Company & Ensure Satisfaction for Your Customers
"Bugs" Burger Bug Killers, Inc.
The Backwards Bicycle
The Soul Of Enterprise
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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
34 min
May 19, 2017Value Pricing Cuts Both Ways
Value pricing is not a license to print money.
Ditching Hourly 024: Value Pricing Cuts Both Ways
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm going to dispel the misconception that value pricing is a license to print money.
Value pricing cuts both ways. It is not a magic wand that you wave and suddenly poof! you get to charge more for projects.
value pricing - as the name indicates - is the practice of setting a price for a project based on the value that the project delivers.
In this model, the price that you set has to be lower than the perceived value in the client's mind. Otherwise, they will have received a negative ROI.
Here's an example:
Alice from Domino's Pizza approaches you to design and build an event micro-site for their upcoming super bowl promotion. It's a basically a fancy web page. You have a Why Conversation with Alice, and agree to an objective for the project, metrics to gauge progress toward the goal, and a rough value to the organization for the success of the project.
In a situation like this, it's conceivable that value to Domino's might be in the seven figures (or, that failure would cost them seven figures). If that's the case, you could almost certainly sell the project - i.e., building a single web page - for $100k. Even if it took you 100 hours, you'd be making an effective hourly rate of $1000
Here's the counter example:
Bob from Bob's Pizza approaches you to design and build a website for his single location pizza place. He wants all the usual restaurant stuff: online menu with pictures, info about the restaurant, contact info for calling in an order over the phone, location of the restaurant with a fancy interactive map, and oh by the way, online ordering that accepts all major credit cards, apple pay, google wallet and paypal. And while you're at it, could you also do one of those pizza trackers like dominos has that sends updates to the customer as their pizza is prepared and delivered?
You have a Why Conversation with Bob. The objective, metrics, and value of the project are hazy ("my brother in law told me we should get a website, so I called you"). Bob has no idea how much the website might increase sales, never mind other intangibles like brand or goodwill. You push him on it and has guesses that the site might increase his sales by a few hundred bucks a month. And to be honest, Bob says, if it did much more than that, he wouldn't be able to keep up with demand because they're already crazy busy keeping up with walk-in traffic from the local college.
Would Bob agree to $100k for the project? Heck no. He prolly would not even agree to $10k. The trouble is, Bob's perception of the project value is very low. If he paid more than a few thousand bucks for all that work, he'd feel like he was losing money on it.
So...
For the Domino's project - where the labor intensity is low, but the perceived value of the project is high - value pricing is a perfect fit.
For Bob's Pizza - where the labor intensity is high, but the perceived value of the project is low - value pricing doesn't work.
What do you do for Bob? Bill him hourly? NO!
HE DOESN'T NEED THE WEBSITE HE DESCRIBED.
You either
reject the work and spend more time try to attract clients like Dominos
OR
prescribe something else for Bob where the labor intensity for you and the perceived value for him are not out of whack. Maybe something like a facebook page, or a simple single page landing page for the business so at least they have some basic online presence.
That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening.
The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
5 min
April 13, 2017Converting Hourly Clients To Value Pricing
Ditching Hourly 023: Converting Hourly Clients To Value Pricing
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm going to talk about how to transition your existing hourly clients over to value pricing.
It's wicked hard
They don't think of you the way you want them to
It'd kind of like being in the friend zone
Probably easier to find new clients who don't have you pigeonholed in the wrong place
BUT if you love the client or whatever, and want to give it a try, here are some tactics for you
Quietly lay the ground work while still billing hourly
Try to gain more access to business people (e.g., founder, president, ceo, sales director) vs tech people (dev lead, dev manager, project manager, cto, even cio)
Start probing for business cases behind specific requests
Politely offer alternative solution when they occur to you
Wait for an opportunity to quote a new chunk of work
Pull your business contacts into the "scope" meeting
Have a Why Conversation to get at the desired business outcomes
Present a proposal with both and hourly estimate and a fixed price
What you SHOULD NOT do:
Don't barge into their office a say "so, we're going to do value pricing from now on!"
Don't try to explain what value pricing even is
How you price is none of their business
But if they ask, say "based on past experience with this sort of thing"
That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening.
The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com
The next time a client asks you to justify an entry on your timesheet, go to http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
12 min
April 06, 2017 How To Grow Your Business Without Hiring
Ditching Hourly 022: How To Grow Your Business Without Hiring
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today I talk about how to grow your business without hiring junior employees or farming out work to contractors.
The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
10 min
March 08, 2017 Value Pricing in the Enterprise with guest Jeff Scornavacca
Ditching Hourly 021: Value Pricing in the Enterprise with guest Jeff Scornavacca
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm joined by guest Jeff Scornavacca. Jeff is a business consultant who helps companies improve their contracting and offer development processes. He's worked with clients like Johnson & Johnson, Ocean Spray Cranberries, Reebok, and many others. Jeff has been value pricing enterprise clients for years which is what we focus on in this episode.
The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
30 min
February 24, 2017 Is Value Pricing Immoral?
Ditching Hourly 020: Is Value Pricing Immoral?
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm going to answer the question: Is value pricing immoral?
The next time a client questions one of your hours entries, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
7 min
February 17, 2017 Can Any Type Of Project Be Value Priced?
Ditching Hourly 019: Can Any Type Of Project Be Value Priced?
Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.
Today, I'm going to talk about what sorts of projects can be value priced and which can't.
Any kind of project can be value priced. BUT... not every kind of project can be value priced profitably.

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Before you go!
The next time someone asks you for your hourly rate, I want you to stop what you're doing and head on over to valuepricingbootcamp.com to sign up for my free value pricing email course.
Hope to see you there!
8 min