The #1 Reason Why Clients Say No to Value Based Pricing of Creative Services
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- čas přidán 10. 09. 2024
- Although value based pricing is the ideal as you move away from cost based pricing, you have to accept not every client is willing to pay based on value.
In this episode of Ask Me Anything, Blair reveals the best time and strategy to offer value based pricing for your creative services.
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Time Stamps
00:54 Question: How to defend the client question, "Why are you charging a percentage of the outcome?" Understanding the value-based pricing model.
02:07 Blair clarifies that value-based Pricing doesn't mean putting compensation at risk
02:38 Recognizing that practicing value-based pPricing instead of cost-based pricing is not acceptable to all clients so always introduce options
03:15 Value Price the opportunities where you can create the biggest impact
03:31 Uncover opportunities to create extraordinary value in the value conversation by bundling services and price accordingly
I think this is the model Blair explains:
1. Value pricing: Offer transformational value, and ask for a percentage of the impact.
2. This will not work if your value is framed as a commodity.
3. You will need to change your value proposition. For example, you are no longer a video producer selling video production, you are a strategist that guarantees business impact, and video is one tool you use.
That's hilarious
@YOUPIMatin123 why 😂😂
@@YOUPIMatin123lol
Classic price/value conundrum of entrepreneurs. All too often they/we fail to recognize that value is at least 50% in the eye of the buyer/beholder. Entrepreneurs often fail when trying to connect their offers to the specific results a buyer wants.
Oh my!! This is Samuel from Nigeria. (Go super Eagles!! 💥)
Thank you for answering the question. This makes it a lot clearer in my head now!!! I'd put it to practise right away!
And we'd love to have you in Nigeria! 🤓🤓
I hear you are a Liverpool Fan! Congrats on the win! Next season's for Arsenal!! 💪🏾💪🏾💪🏾
Thanks again Mr Blair!
So happy it helped Samuel. Thanks for the question!
Go super Eagles. 😂😂😂😂✊
Well dome brother
Too often people are told to "find their niche" they end up pigeonholing themselves into delivering commodities without actually delivering value.
Hey Blair the music that plays when the logo animates is waaaay too loud compared to the volume when you are talking. Just wanted to let you know so maybe you can fix it in future videos.
Sometimes clients like to say things like (oh you can do it fast and easy, its a simple task and shouldnt take much effort [thus hoping also to nudge the price lower because well its such an easy task right]) You should always counter it like this: if this is such an easy/small task then I understand it is not very important, feel free to contact me again when you have something really important in mind, that I can help you with :) remember, the trick is that they will try to convince you that it is actually an easy fast thing and you can do it quickly and then carry on with your other important stuff, they try to take the load off, what they dont undestand is, that these kind of tasks are actually the last things that we care to do, because when does anyone pay good money for something easy.. we want big and important projects. in this instance when the video plays such a small role, like Chris Do said: why do it at all, dont waste your money on it, when its basically unimportant.
Hi Blair,
nice podcast and good question you address. I would like to hear you on the following question: As far as my experience teaches me, the video production must be oriented to the competitive price situation for videos and the value that he creates, not the value his customer is creating. If the producer does not have a differentiating value proposition, defining his additive value that could cause a higher price for him to realize, he must meet the price given by the market for video production. He must attach his price to his value, not his inputs or his outputs. Here he is mixing up his value with the customers value. It is only the differentiation, maybe USP that can bring you out of market pressure. Dont you agree?
Best and many tnx
Olaf
I always thought it was hard enough getting a client to agree to CREDITS on the video & or a web link....which could provide further returns.
Makes sense. Good advice.
so does experience mark a difference in approach ? i love your channel but sometimes i get the sense that it feels to so ideal and theoretical to what many other creatives are doing that i just wonder. rejections and competitions are the common starting point.... so im often curious of when to turn away from a counteroffer or just take it..... can you elaborate sometime on this ?? make sense i hope....
Hello Blair! My name is Sérgio and I'm from Brazil. I read your Manifesto twice and am reading the third one as I apply the twelve proclamations.
This is my channel and I work with interactive archviz with Unreal Engine. I am racking my brains in the process to adapt my work to the value model. Your teachings are very valuable and I hope to get the twelve proclamations to work. If you have any tips for me I would appreciate it.
Thank you very much.
Thanks for the note Sergio. Feel free to record a question for us and we'll respond via CZcams.
I love that you are a soccer fan. I support #United though..lol
I find this to be an interesting conflict. If you begin to bundle services to be a bigger part of the value chain, don't you end up moving away from being the expert/specialist? I can see it becoming a slippery slope. As you expand outward don't you become just another "full service" company that does all things for all clients?
The idea around true value pricing is not to bundle or add more to each options, but to create three distinct options.
@@WinWithoutPitching Could you please elaborate on this? I don't understand the distinction
If I could expand I would, personally. Hire someone else to do what you don't know how to and make a cut. $$$. You're not a do it all company but you can do it all if needed, for a price.
@@mxfe I think I can chime in from a little bit of experience (Blair would probably know a lot more), but what I understand is, what he calls the "marketing component" is ultimately limited in scope, so you wouldn't become entirely full service anyway. But what I think he means is: if the project includes 3 types of service (e.g. A: video, B: website, C: print deliverables), you aren't making a bundle with "A", then "A+B" and then "A+B+C", but instead are making 3 distinct versions of each of those (e.g.: 3 versionf for A: 2D video, 3D animated video, motion graphics video).
If you present a bundle with A+B+C, you're not giving your client real options. They know they can hire you for just A, but they also know they'll need someone to do B and C, which is what negates value-based pricing in his mind in the first place, and also means they'll have to go out looking for someone else to do the rest (which is time consuming, and thus costly). If you create differently priced versions of A for them, they'll not only understand the project itself is remarkably complex (and thus, expensive) but also, most importantly, feel some degree of control in the final investment they're making, which helps _a lot_ in closing the deal.
Obviously, that works a lot better if you can deliver all the components yourself, but then even if they're just hiring you for A, you can still charge 3 value-based options using different percentages of the total outcome because by now, they're already a lot more "in" on the project than they would have been with only a big bundle. It also helps to know people who can deliver on the other components so you can offer to, for instance, art-direct or direct the team as a whole and come out as the expert, even if you're only really doing the one thing you're selling.
Sorry, this came out longer than expected, but I hope it helps. I also hope Blair would agree and not tell me I've been doing it wrong for years hehehe.
@@auranimm Thanks for explaining how you see it. So, if I understand correctly, what is suggested is that, instead of pricing the deliverable as a monolith, one should figure out ways to package it into various pricing tiers to give the client some flexibility. This I get and agree with (although, in practice, splitting some projects into tiers felt like splitting hairs, so I think only larger types of projects are suitable for this).
What I am not understanding is this idea of being a director/overseer of several creative experts executing different deliverables under your guidance if you offer to the client to manage the creative execution of their entire range of deliverables. At this point you are no longer a specialist craftsman. You are a manager, a leader, a creative director. In other words you become the head of a modular agency of sorts. In my view, the skills necessary to succeed in this role could not be further from the skills needed to succeed in your specialist role. Instead of dealing with materials and technologies you are now dealing with recruiting, negotiation, schedules, meetings, feedback, people, budgets, etc. All this will distract you from working on your deliverables, affecting the quality of your specialist work. And "We will specialize" is one of the principles in the WWP Manifesto.
So I don't quite see why Blair et al. suggest to offer A+B+C, even if it's not you doing the creative work B and C yourself. When I go to buy a computer I might also want to buy a mouse and a printer. I can buy all three (each from a different specialist brand) at a computer _store_ but it's unlikely that my computer _manufacturer_ sells printers or offers to link me up with someone who does. So I don't understand why as a computer manufacturer I would tell my clients that I can also find someone who can sell them a printer, unless my intention is to take time away from my computer manufacturing expertise to become a general computing store. If the goal is really to specialize, then wouldn't it make sense to team up with a specialist agent/manager who could excel at being a store (full-service agency) while I would deliver the state-of-the-art computing tech (specialist creative work)?
If clients want someone to do A+B+C because it is convenient for them, then why is there a problem marketing a full-service agency? If they are asking for A+B+C, why are we offering them A but then lean forward and say that we can also make B+C happen if they really need it? Isn't that the same thing as A+B+C, but stated in a much more convoluted way? Shouldn't creative agencies just figure out from experience what the ABCs of their industry are, and then hire and oversee the specialists who can make ABC happen at a high level, and then just market themselves as exactly ABC, no more no less, with sensible pricing structures to their clients? Without even entertaining the idea of also delivering D and E, because it's not their specialty and not their problem?
Sorry for all the analogies. I am just trying to visualize all this. I hope this makes sense. Thanks again, this is an interesting discussion.
P.S. Perhaps my confusion is because Blair's advice is aimed exactly at agency heads, and not individual specialist creatives. As an agency owner it makes sense to promise a wider scope of deliverables and then hire capable talent to cover it. I think I got this mixed up after watching videos by The Futur, which seem to be aimed more at individual freelance creatives.
Greetings from Germany i love your Projects hope we work together soon i am just rumping up and rolling out the next Microsoft / Apple / Google / Alibaba and i will send all my Product Creators to you. As i created a total new way of Computation and Networking and this way tackled all issues at the root cause we can recreate near everything existing but better :) see you soon buddy !!!!
A Samuel, if you're seeing this, let's talk!
So the number one reason clients say no to value-based pricing is because you're not providing enough value!
I've just watched Chris Do's video of 3 designers pitching to you (czcams.com/video/zMVayexyVlU/video.html) and it was baller. I did have a question which I asked him in the comments, but I'd also like to take a look at your point of view. Here's what I asked: when asked whether you saw monetary value in hiring someone to fix up your documents, if you weren't able to put a price tag on it (or said there wasn't any, for that matter, and it was just a matter of personal pride), how do I extract and present value (and thus my price) to you?
What price a man's pride? A deep question indeed.
the nigerian guy talks very well without even accent just like my real ngls
Nigerians was under the British until October 1st,1960, We therefore speak Queens English, which is the very best of the English language. Accent is a matter of which school and which country you studied or grew up in.
Value pricing is a truly moronic approach. In an instant bidding world, the price/quality equation is NOT determined by value creation....it's determined by competition. If you use this guy's logic, Bill Gates would pay $100 Million dollars for his Porsche because the proportion of enjoyment he derives from it relative to his net worth is worth the $100 Million expense to him. Bullshit!
Can you compare a Royce Rolls with a Toyota?
Words never said in this order before "I'm hoping to get to nigeria someday".