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Website Pricing 101: Don’t Be a Commodity

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WordCamp Waukesha 2017

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Website Pricing 101: Don’t Be a Commodity

  1. 1. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101:
 DON’T BE A COMMODITY GEOFF MYERS PRESENTS
  2. 2. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 BEFORE WE BEGIN… THIS PRESENTATION IS AVAILABLE ONLINE: simdex.org/pricing More Presentations by Geoff:
 simdex.org/talks Get In Touch:
 geoff@simdex.org
 simdex.org
 414.455.6675
  3. 3. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 BEFORE WE BEGIN… ABOUT GEOFF MYERS ▸ Co-organizer of WordCamp Waukesha 2017 ▸ Co-organizer of Milwaukee WordPress Meetup ▸ Speaker at WordCamp Milwaukee 2016 ▸ Founder and CEO of SimDex LLC (Est. 2004) ▸ Custom WordPress + PHP Web Application Development ▸ Digital Marketing Consulting + Strategy for Small Businesses ▸ 100+ Websites Designed, Developed, Marketed + Maintained ▸ Get In Touch: geoff@simdex.org or simdex.org or 414.455.6675
  4. 4. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY WHO IS THIS TALK FOR? ▸ Agencies ▸ Consultants ▸ Copywriters ▸ Designers ▸ Developers ▸ Entrepreneurs ▸ Freelancers ▸ Marketing and sales professionals ▸ Search engine optimizers ▸ Small business owners ▸ Any company or individual who provides unique, high value services
  5. 5. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY WHAT WE’RE GOING TO COVER TODAY… ▸ Why pricing matters ▸ Common pricing challenges ▸ Pricing goals ▸ Why the hourly rate must die ▸ Comparison of pricing models and strategies ▸ How to change the way you position and sell your services
  6. 6. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY WHY PRICING STRATEGY MATTERS ▸ Business revenue and profitability ▸ Effective hourly rate (money/time ratio) ▸ Marketing and sales performance ▸ Quality and type of clients and projects you attract ▸ Time management and efficiency ▸ Work/life balance (quality of life)
  7. 7. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY COMMON PRICING CHALLENGES ▸ Commoditization, lack of differentiation ▸ High risk, high variability projects ▸ Low effective hourly rate ▸ Low profitability ▸ Low quality clients and projects ▸ Poor work/life balance (low quality of life) ▸ Stagnating income (limited by time)
  8. 8. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY PRICING GOALS ▸ Make more money ▸ Work fewer hours ▸ Deliver more value ▸ Higher quality clients and projects ▸ Better work/life balance (quality of life) ▸ Ultimate: Passive recurring income
  9. 9. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY PRICING MODELS AND STRATEGIES ▸ Hourly, daily, weekly, monthly rates ▸ Fixed price, fixed scope projects ▸ Productized services, bundles, packages ▸ Retainers, subscriptions ▸ Value based, pay per performance ▸ Commissions, profit sharing ▸ Equity, ownership, partnerships
  10. 10. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES FOR TIME (HOUR, DAY, WEEK, OR MONTH)? DON’T BE SHY…
  11. 11. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY HOURLY, DAILY, WEEKLY, MONTHLY RATES ▸ Trade time for money ▸ Rate * time = price
  12. 12. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY HOURLY, DAILY, WEEKLY, MONTHLY RATES ▸ PROS ▸ Simple, easy to understand ▸ Universal, industry standard ▸ CONS ▸ Encourages unfair comparisons between different providers ▸ High risk for clients ▸ Hours are very difficult to predict and estimate ▸ Incentivizes laziness and inefficiency ▸ Poor correlation with value and results ▸ Severely limits potential revenue and profitability ▸ Commoditization
  13. 13. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES BY THE PROJECT (FIXED PRICE, FIXED SCOPE)? DON’T BE SHY…
  14. 14. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY FIXED PRICE, FIXED SCOPE PROJECTS ▸ Requires project exploration and discovery ▸ Define scope of work, milestones, and deliverables ▸ Fixed scope ▸ Fixed price basis: ▸ Budget ▸ Cost plus ▸ Experimental ▸ Market ▸ Value
  15. 15. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY FIXED PRICE, FIXED SCOPE PROJECTS ▸ PROS ▸ Lower risk for client ▸ Ensures definition and alignment of client and provider expectations ▸ Well-defined project scope of work and specific deliverables ▸ Protects well against scope creep and additional requests ▸ CONS ▸ Higher risk for provider if scope and deliverables are not well defined ▸ Less flexibility if goals or requirements change mid- project ▸ Requires more upfront investment to discover and clearly define project scope
  16. 16. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES FOR PRODUCTIZED SERVICES, BUNDLES, OR PACKAGES? DON’T BE SHY…
  17. 17. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY PRODUCTIZED SERVICES, BUNDLES, PACKAGES ▸ Services treated like products ▸ Predefined set of services and deliverables ▸ Client selects one or more services ▸ Bundles and packages ▸ Scope is not personalized or customized for the client ▸ Usage of templates and cookie cutter elements
  18. 18. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY PRODUCTIZED SERVICES, BUNDLES, PACKAGES ▸ PROS ▸ Ensures definition and alignment of client and provider expectations ▸ Protects well against scope creep and additional requests ▸ Scope and deliverables are well defined and identical for all clients ▸ Well-defined scope of work and specific deliverables ▸ CONS ▸ Less flexibility if goals or requirements change mid-project ▸ May not provide ideal solution to client due to solution being generic ▸ Not personalized or customized for each client
  19. 19. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES RETAINERS OR SUBSCRIPTION FEES? DON’T BE SHY…
  20. 20. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY RETAINERS, SUBSCRIPTIONS ▸ Billed per unit of time (duration) ▸ Recurring revenue (income) ▸ Retainer agreements ▸ Service level agreements (SLAs)
  21. 21. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY RETAINERS, SUBSCRIPTIONS ▸ PROS ▸ Recurring revenue, possibly passive income ▸ More predictable cash flow and profitability ▸ Longer term, more financially sustainable ▸ Less chasing after new one-time client projects ▸ CONS ▸ Requires constant, ongoing delivery and proof of value, results, and ROI to client ▸ Generally more difficult to persuade and sell ongoing expense to client
  22. 22. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES FOR VALUE, RESULTS, OR PERFORMANCE? DON’T BE SHY…
  23. 23. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY VALUE BASED, PAY PER PERFORMANCE ▸ Financial reward is dependent on reaching goals, milestones, and measurable KPIs ▸ Effective price is fluid and dynamic (not fixed) ▸ Client only pays when desired goals or results are achieved
  24. 24. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY VALUE BASED, PAY PER PERFORMANCE ▸ PROS ▸ Revenue and profit connected to specific outcome or result of project or deliverables ▸ Low risk for client ▸ Aligns incentives and expectations of client and provider ▸ CONS ▸ Potentially higher risk for provider depending on strategy and execution ▸ Potentially higher revenue and profitability for provider ▸ Difficult to define and calculate value and accurately measure performance
  25. 25. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WHO CHARGES FOR % COMMISSION OR % PROFIT? DON’T BE SHY…
  26. 26. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY COMMISSIONS / PROFIT SHARING AND EQUITY / PARTNERSHIPS ▸ Commissions or profit sharing: ▸ Provider receives percentage of sales, revenue, or profits for predetermined length of time ▸ Equity, ownership, or partnerships: ▸ Provider owns shares or percentage of client’s company ▸ Collective ownership, management, and control
  27. 27. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY COMMISSIONS / PROFIT SHARING AND EQUITY / PARTNERSHIPS ▸ PROS ▸ Aligns incentives and expectations of client and provider due to common goal ▸ Potentially higher return for both client and provider ▸ CONS ▸ Potentially higher risk for both client and provider ▸ Requires a very strong, trusting relationship ▸ Difficult to find, negotiate, and execute effectively
  28. 28. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 WEBSITE PRICING 101: DON’T BE A COMMODITY ADDITIONAL ARTICLES + RESOURCES ▸ Breaking the Time Barrier / Mike Derment ▸ Consulting Success / Michael Zipursky ▸ Double Your Freelancing / Brennan Dunn ▸ Four Hour Work Week / Timothy Ferriss ▸ SEO Consultant/Agency Pricing, Structure & Services / Rand Fishkin ▸ Smart Passive Income / Pat Flynn ▸ Value Based Pricing 101 / Vivian Guo ▸ WP Elevation / Troy Dean
  29. 29. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 THAT’S IT FOR NOW… THANK YOU! Questions? Get In Touch:
 geoff@simdex.org
 simdex.org
 414.455.6675
  30. 30. GEOFF@SIMDEX.ORG | WWW.SIMDEX.ORG | 414.455.6675 BEFORE WE BEGIN… THIS PRESENTATION IS AVAILABLE ONLINE: simdex.org/pricing More Presentations by Geoff:
 simdex.org/talks Get In Touch:
 geoff@simdex.org
 simdex.org
 414.455.6675

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