Stop Pricing Like A Big Dumb Stupid Idiot

Brian Hood (0:00)

This is the Six Figure Creative Podcast, episode 366

Welcome to the Six Figure Creative Podcast, where our mission is to help you turn your creative passions into a stable, reliable income. If you're in audio, video, design, photography, or really any other creative field, and you just want to learn from other successful creatives, you're in the right place. Pricing is one of the few things that can drastically change your business, both in a good and a bad way. The problem is, it's almost always a bad way, and that's because we have so much junk running around in our heads about pricing, because we use emotion instead of logic. So we end up doing really, really dumb things with our pricing, and we work for years chronically undercompensated for what we do, and we end up forcing our clients to take advantage of us. And notice I say force, not let our clients take advantage of us. Usually our clients don't want to take advantage of us, but when you do stupid things to your pricing, you're essentially forcing your clients to take advantage of you. So let's talk about the six things that you're doing that prove to me, beyond a shadow of a doubt, that you're pricing your services like a big dumb stupid idiot. Because we continue this ridiculous series, as stupid as this is. Remember this, I want you to win. This is tongue in cheek, you're not an actually big dumb stupid idiot. We just got junk in our heads. I've pulled these issues from this episode and from the rest of the series, from either things that I've done myself, or from what I've seen, some of our hundreds of clients that we coach doing themselves. Any one of these things, especially when we're talking about pricing, any one of these things can reduce your income by $10,000 or $50,000 or more for you higher earners. So my goal is for you to take an honest look at yourself and answer two questions. Question one, am I doing any of these things? And if you are, answer question two, and that is, do I want to keep pricing my services like a big dumb stupid idiot, or would I rather be making more money? I think we know the answer to that. So if you haven't heard of me, hi, I'm Brian Hood. This is 6 Figure Creative Podcast. This is a podcast for creative freelancers who want to earn more money without selling their souls. I take a ton of influence from a lot of outside industries, from a lot of different industries within the freelance world, and I want to pull the best practices from everyone that I see and bring them to you so that you can learn from others' mistakes, others' failures, and what works in other markets, other industries. Because I promise you, there's a lot smarter people out there than you. There's a lot smarter people out there than me. Those are people that I learned from, and I want you to learn from them as well. Let's talk about mistake number one, big dumb stupid thing number one, and that is offering hourly slash daily pricing when you offer outcome-based work or strategic work. And I've beat this horse to death in this podcast. Hourly pricing simply punishes you for speed and efficiency. The more efficient you are, the less you make. Over time, you're going to naturally get faster at things. Every single piece of software you use, every single skill that you acquire, every single tool that you start using, every single technique that you start utilizing, it follows the four stages of competency. Stage one is unconscious incompetence. That's where you are wasting tons of time, experimenting, testing, you don't really know what you don't know, and you're just kind of fumbling around in the dark. Again, every single software, every single tool, every single skill, everything you do, it starts there. Stage two is conscious incompetence. That means you are conscious of how bad you are at something. There's tons of wasted time, but you know, you're trying to get better and you are making small strides towards getting better at this. Still tons of wasted time. Stage three is conscious competence. That means you're actually good at something, but it takes conscious effort. You have to concentrate over it. You're faster, but you're still inefficient. And eventually you graduate to the fourth stage, and that is unconscious competence. That means you've basically mastered something. You just do it without thinking. You're great at it. You don't have to think about it. Just like tying your shoe. Now, when you were like five years old, it was such a struggle. You had to think about it and cross over this and do that. And now you just tie your damn shoe. You're a master of tying your own shoe. Why do I bring this up? It's because every single thing you do in your business, you're going through those four stages. And most things in your business, you're in stage three or stage four. And over time, more and more things you become a master at. You have unconscious competence. You can just do it. You can just do it without thinking. You can do it better than anyone else. And that means you make decisions faster. You complete things faster. But when you charge with day rates or hourly rates, you make less money. On top of all that, when we talk about the thing we around here, we call the easy eights. That's automate, delegate, eliminate, and mitigate. Those are the four of the easy eights. Don't know why there's only four of them, but you get what I mean. When you employ those easy eights in your business and reduce the amount of time it takes to do things, especially delegation, when you hire out help, you are hurting your business. And hiring out help is just taking out of your income. So there's like a net negative there. Not only are you becoming more efficient with things and you bring people in, so you can spend less time on it. Now you're paying those people out of your dime per hour. So you're disincentivized to build a team. So that's the financial thing. Really dumb, really stupid. Big dumb idiots price this way still today. There's a few edge cases that I'll talk about before we move on to the next section, because three of you on the podcast that listen to this, out of the thousands that listen, are screaming at me right now, I'm gonna keep charging daily prices, maybe. But on top of all that, it's training your clients to care about the wrong thing. They're caring about hours instead of outcomes. And so what this means is, this can quickly lead to clients micromanaging how you do things or complaining about how long it takes you to do something. Remember, you're charging per hour, like a big dumb idiot. And clients rarely understand how long it takes to reach your standard. Remember, you built a name for yourself. You got great at doing something. And sometimes, no matter what stage you're at, it takes a lot longer than people understand to get the outcome that they want. For me, it was in the recording studio. I produced bands for a decade, if you don't know my background. And over the years, I built a name for myself, and people would fly from other countries and other states to come record with me because I had a certain sound that people wanted. It was in demand, and I worked with a lot of cool bands. The problem is, many artists did not understand how much work it was to reach that level of quality. So I'd have bands reaching out to me that wanted to do 10 songs in two days, or bands that would complain because it took me so long to edit drums or to record guitars or whatever. Insert thing here. And they didn't understand that this is simply how long it takes to reach excellence, and that if I try to rush this to save you money, because by the way, back then, I charged per day, so clients were really stressed when it took this long, two and a half days per song to record and produce a song, they were stressed because they saw how much money that was costing them. And yes, I educated them, I said, this is how long it takes to reach that level of excellence. You came to me for the specific sound. This is the process it takes to reach that sound. But many people don't do that. They've been over backwards to speed things up, cut corners so they can charge their clients less because their clients are so concerned about how much it's going to cost them because they're focused on hours or days, not outcomes. So instead of day rates, instead of hourly rates, just charge flat rates. Set that rate based on the outcome and the value to the client. Now I know there's a bunch of unknowns for some of you, and there can be things where you don't know how long it's going to take someone to do something or if the client can take forever. It's in the client's hands, and the client may take 10 times longer than this other client who's way better. Again, this was me in the studio because I had bands come in and they were of different varying levels of musicianship so it could take them three times longer to record guitars because they're just a bad guitar player. How do you account for that? Well, that's where we come up with up to language. I'm putting the quotes on up to. When you give a quote out, a flat rate for someone, it's going to include up to something, up to three days of recording time, up to three revisions, up to X, Y, and Z. And that alone helps mitigate those overages where clients come in and they waste a bunch of time because they're unprepared, or it's just a slight difference from what you typically do because they want something unique, and so you have no idea how to scope that out, and you put those essentially guardrails in place, like you're playing bumper bowling where they put the little bumper pins up. If your service is so complex that you cannot come up with a flat rate relatively quickly, then chances are you need to productize your services more. You are offering something way too bespoke, and the only exception I have to this, the only exception is if you're in the tens of thousands of dollars range. I have a few clients, they're working in something that's like very bespoke, and they're charging 50, 100 grand for that. And in that case, they do charge a day rate because there's so many unknowns and so many moving parts, but that is the rare exception. And even then, for some of these clients that I'm working with, we're shifting their entire model to something more stable because that model has so many ups and downs. One of my clients does big commercials, he's a videographer, he's moving away from that because even though he gets $1,500 day rate, maybe more, maybe 2 or 2,500, I don't remember the exact numbers, it gets a very high day rate, but the projects just come in peaks and valleys. And when you look at his client list, we have essentially a well client scenario where just a handful of clients bring him so much of his income, he's had a liability that if one of those clients starts cutting back on budgets for commercials, he's screwed. So we're shifting him to an area where each client is worth low 10,000, maybe 10,000, 15,000. He can work with a lot more clients and it's all recurring revenue. So that's the first big dumb stupid idiot mistake, and that's offering daily or hourly pricing for outcome-based work. Some of you freelancers offer very strategic work, so I wanted to throw that in, but it's a really small minority. Big dumb stupid mistake number two is sending three tiers just because you saw someone else do it. I already talked about this on episode 363, where I said if you're giving your clients options, you're losing gigs, and here's what to do instead. So I've already beat this to death. But that's where I kind of compared it to our spa pricing menu, where you just have a ton of different options that they can choose from, and you've literally given them a PDF. But a lot of you have tiered pricing, you have the good, better, best. You said, oh, look, bronze, silver, gold, because that's what this $5,000 problem needs is a menu. And you've seen it on SaaS sites, software as a service, or you've seen other creatives and you thought, if it works for them, if I give them three options, they're gonna pick the middle option, and the middle option is the price that I want them to choose, and they're gonna feel like they're in control, and that's pricing psychology, right? And so you put your three services together, you slap prices arbitrarily on there, there's no thought put in between what the three different prices are, other than you basically want them to choose the middle pricing tier, and you know people won't choose the cheapest most likely, they probably won't choose the most expensive, and maybe they will, but that's just crazy if they do. But the problem is, you don't actually know what problem each tier is solving. And worse, all three tiers are solving the same problems, or worst of all, two of the three tiers don't even fully solve the problem at all. They just give the client a cheaper way to get away with spending less money, to try to solve the problem, but it doesn't really solve it, it just partially solves it, or a really expensive, overpriced way of solving the problem, it has a few extra perks that sound cool. And neither you nor your client actually understand how the scope changes between each tier, or how the outcome even changes between each tier. So you're giving the client the reign of how they want the problem solved, which kind of sounds logical, unless you listen to the episode I had from a few weeks ago. But remember, they are not the experts here. You are the expert. You're just simply making it more complicated for them. They're gonna have more questions about the packages, about the services, about how this works, about why one is different than the other, which one should they take? And all of those questions brings confusion, and confused people don't buy. So what should you do instead? Same thing I recommended several episodes ago, simply diagnose and then prescribe. Remember, you're the expert. So when a client comes to you and they want your services, you talk to them, you ask a series of questions, it's called a discovery call, you figure out what they need, you figure out where they are now, that's point A, where they want to be, that's point B. What's the gap between point A and point B? How does your service bridge that gap? If there's certain things you need to build on that bridge in order to make it a full, viable, safe bridge for them to cross so they're guaranteed to get the other side, you add that. If there's certain things that you don't need to add because it's not really going to help the service and it's just going to add bloat to the service and make it more complicated and harder to do, you take those things away and then you prescribe. You say, hey, Mr. Client or Mrs. Client, here's what I think we should be doing. Here's why I think we should be doing this. This is how much it would cost. Would you like to pay or not? Is that cash or card? Notice how different that is than giving your client a good, better, best, a bronze, silver, gold kind of pricing tier list. The reason software as a service does good, better, best is because they have data scientists, they have teams dedicated to this. They know what they're doing. They're pricing with logic, not emotion. And they're infinitely scalable because it's software. And then when you get to the B2B SaaS world, they offer services on top of the software itself. And when they do that, you get on a call, they figure out what the client needs, and then they prescribe the services they need on top of the software to get to the outcome that they want. They do exactly what I'm saying here. So you can't just blindly look to other industries and pull them into your world without understanding what's happening, why they're doing it this way. So that's mistake number two is that's again, sending three tiered pricing, trying to be too much like a SaaS company without actually putting thought behind it. Big dumb stupid mistake number three is discounting your pricing before the client even flinches. So this is a self sabotage classic. You say, hello, Mr. or Mrs. Client, the price would be $5,000, but I can do it for $4,000 if that helps. You just talk them down without even trying. This is what I mean when I say negotiate against yourself. There was no one negotiating with you. No one's even pushing back. You simply gave a price and before a word came out of their mouth, instantly took $1,000 off the price point. You essentially told them your rate is made up. It screams that you have low confidence about yourself, about your services, and it's a really, really stupid thing. I've seen people do this. And truth be told, I've likely done it myself. I can't remember specific situations, but the scenario is this usually. This is the scenarios when you're talking to a client you really want to work with and then you give your price out and you instantly take a discount off because you really want to work with them. That's the situation when you do this. And the irony is the best fit clients, the ones you want to work with the most are generally the ones that will be most willing to pay your full rate. So instead, simple thing here, say your price and shut the f**k up. This is where I make my editor work for his pay. Shut the f**k up, shut the f**k up, shut the f**k up. Say your price and shut the f**k up. Now seriously, I had a client last week tell me that he sat there for a full 60 seconds in silence after dropping his price. That sounds ridiculous, 60 full seconds. He counted it because we make it a point to our clients that when you say the price, you shut the f**k up and let them process it. Because at that point, the client is processing. Anything you say here will largely be forgotten or worse. You will cave to the awkward silence and start negotiating against yourself, lowering your price. Or what a lot of people do is you start going on that three-minute monologue after you drop your price. Instead of waiting for an answer, waiting for silence, be quiet, let the client process. Instead of that, you go on for three minutes, five minutes straight, attempting to justify your rates and your price, and they're not even listening. This is more of a sales mistake, it's not really a pricing mistake. But just say the price and shut the f**k up. You don't actually have to wait for 60 seconds, by the way. In the case of this client, after 60 seconds, he eventually said, do you have any questions? Or what are you thinking? Or what's on your mind? You can say that after 30 seconds. But generally, 15, 20, 30 seconds in, just be okay with the silence. Because generally, the client's just processing, thinking through. If they're gonna move money around, they gotta hit up somebody for some extra cash. They gotta follow up with the client. They need to get that invoice closed out, liquidate some investments, sell some gear, whatever it might be. So when you drop your price, if the client cannot afford you, I have two pieces of advice for you, especially if they have tried to negotiate with you. The first is, no is a complete answer. It's a complete sentence. It's okay. If it's not a good fit, it's not a good fit. You should be rejected by at least 40% of your clients.