Value-Based Pricing:Guide for Digital
Agencies4 Steps to Scoping for Higher Profits
#DCATL@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.
VBD 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.
Business Owner Survey
Get it at...
coreelevation.com/success/
VBD 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
VBD 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
• ROI
• Differentiate
Which do you want to be?
Questions
And Finally...
Get slides.
CoreElevation.com/dcatl/
Ask me a question.
askgene.me
@GeneHammett
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