Value-Based Pricing:Guide for Digital

Agencies4 Steps to Scoping for Higher Profits

#DcCha@GeneHammett

Shifty & Slimy

Trusted Advisor

Journal of Experimental Social PsychologyEnclothied Cognition, Adam D. Galinsky and Hajo Adam

Relationships based on VALUEwill last longer than relationships based on PRICE.

“We pride ourselves more on client relationships than the technology solutions we provide.”

Randal Kent, Sevaa Group

“I love to use the lifetime value of clients’ processes with my prospects.”Melanie Romanaux, Somedia

Solutions

Trading Time for Money

Traditional fixed fee pricing is hard to scope for PROFITS.

Focus onFeatures & Functions

Jumping to conclusion

s

Who Am I?

@GeneHammett

• Entrepreneur• Business Coach• My Focus

Value-based pricing is just charging more…

Performance-based pricing

Who likes retainers?

Value-based pricingstarts in the MIND.

4 Steps to Value-Based Pricing

Gap

Value

Solution

Offer

Every step has VALUE to the prospect.

VBP Step 1: Gap

Gap

Value

Solution

Offer

• Now vs. Future• Why?• Client’s drivers?• Pains, challenges, breakdowns, goals,

aspirationsWarning: Too many begin to focus on the SOLUTION.

VBP Step 2: Value

• Lifetime value of the client• Calculate the acquisition cost for new customers

Gap

Value

Solution

Offer

Warning: Without understanding the real VALUE of the project, you will likely only scope the “traditional” way.

Customer Lifetime Value

Revenue: $1000 per month per customer

Pardot Example:

Acquisition Cost: $8000 per customer

David Cummings, DrupalCamp Atlanta 2013

Avg. Length of Customer: 5 Years

VBP Step 3: Solution

• Strategic and tactical• Optimal to build it together• Differentiation is the key

Gap

Value

Solution

Offer

Warning: It should be in alignment with the customer’s goal.

VBD Step 4: Offer

• Compelling• Combination of all previous steps

Gap

Value

Solution

Offer

Warning: Your offer has to be seen as UNIQUE either by your experience, the approach, or skills. “Aspirin vs. Vitamins”

4 Steps to Value-Based Pricing

Gap

Value

Solution

Offer

Every step has VALUE to the prospect.

#1 Way to Do VBP

Qualify

25%

90% 90%

BigProject

Fear is that it istoo difficult

Fear is that it istoo much like accounting

Change the Conversation

“Even when we were a little firm, we would immediately change the conversation to talk about their business and what are their business problems… ”

Aaron Shapiro, Co-founder of Huge, Inc.

Parting Thoughts

• Scoping for Higher Projects is a process

• Stop Undercharging

• Look at COST of themnot taking your offer

• Communicate ROI

• Differentiate

• Confidence

Which do you want to be?

Questions

And Finally...

Get slides.

CoreElevation.com/value/

Ask me a question.

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@GeneHammett