by Adewale Adedamola
Due to my recent tweets, so many people being asking me questions & I took my time to extract from the Book I plan to launch this year #themillionairedesigner to tip y’all on How to charge well after your skilled is now lit!
Pricing is such an important decision as it affects your marketing. Once you get it rightly, it will help you make a good marketing strategy. Once you are not billing or pricing enough, or let’s say you undercharge, it means you are not making profit, and that is not making money, quite bad for business, but if you are pricing too high, you will def lose customers /clients or necessary user volume as the case may be — by so doing, you won’t grow. SO you need that fine balance, the right and soothing pricing strategy to change everything!
- Bill in accordance with your competitors.
Basically, it’s like finding out what your competitors are charging and kind of charge the same.
Let’s say they charge 10k for a logo, then you should charge 10k too. Or find out from 2,3,4 people and find an average to be your own price.
Although, you want to be a little bit smart about this cause they are called competitors for a reason, they are no friends in business, right? At that point, you might want to compromise your price a bit, reduce it by lets say 5, 10, 15% (especially when you are in a commodity kind of business), cause clients/customers will definitely look forward for the best price.
Except you are very good with positioning yourself, or you have earned good branding, or you control the price, you might want to kind of try that. If you are not in the monopoly stance (monopolistic firms are those that control the prices, they lead the pricing in the marketplace), you will need to keep updating with the prices. So when your competitors go higher, you want to go high too, when they drop price, it’s best you drop also.
2. Price to Break Even.
If you are new in the design industry, or some kind of newbie, this one might work for you.
It’s likely the one I have always been ranting on for the past couple of weeks.
This is how it works;
You are going to be telling customers or clients that “hey you know what? Lets just make this work. You, me, Let’s be Even”… you are not so entirely running after profits… although, you don’t want to do this for too long until you are satisfied with the volume of clients you have, so you don’t go bankrupt because there is no profit here. Dan Lok called it a Self — Liquidating offer.
It is an offer that has a lot to do with what comes after the first cheap price. You look forward to the profit that comes aftermath, like the follow-up offers. It is exactly what I am doing right. I am giving you free content to consume, for free… then, Boom! It is time to attend my webinar, then I go, “hey, you gas to pay 10k to listen to my Live, Or to buy my book” you know?
3. Price to Time
Basically, this happens on fiverr or some much more professional billing. You price according to time. $40 per hour, $100 per hour, N50k per month for 3 hours per day, almost like salary system, but not entirely.
You could tell your clients right? I will design from 9am-2pm, Mon —Fri, every week and you pay me 50k a month end, whatever content you bring, I will design. Right.
4. Time to Cost
Actually this happens to folks in the construction, electrical, plumbers and the likes. Like say; “doing your work is going to cost 30k, buy the materials and all, then you will pay me 10k to get it fixed — let’s say workmanship.
I used this method in school, trying to enter the printing industry. I will design your business card for 5k (don’t touch that), then i will help you go and print it, and it’s going to cost you 12k. Now at this point, you could hike the printing price a bit, to like 15k, clients are actually going to negotiate and cut down your workmanship price, buh your profit still remains. Right?
The customers in this category are interested in results. They will tell you, “you know what, from the start to the finish, I want this app to launch 14th of June. They came to you for the UI Design, buh, you end up finding the graphic design, web developer, Digital Marketer, something like that.
Now, sometimes, you want to make a deal in some cases, say something like “This project is going to take 40days, buh, if i can make it done in 30days, you are going to pay more — they call it express delivery (like the Jumia food delivery model)” or you say “This is the Cost of the materials to do this project, N400k, but if i can help you get the materials within N300k-350 k then, you will pay me more (don’t stress yourself to go to market finding resources/material model — fiverr model)
Get it done on time = $More Compensation
Get it done below clients budget = $More Compensation
5. Price for the Package.
One of my Fav. It’s like creating an offer, for a package. Right? Let’s assume you have a value worth N100k to offer, stacked up, different units of products or services in one wrap, you decided to charge 30k for it. Just a fraction of a total value to be paid for.
Now this is what happens with it, It makes the offer irresistible! No sane person will back out. It’s like how they sell these figma courses. What they are supposed to charge in units for itching you typography $10, Prototyping $5, Mobile app design $20, Web design $30, then end up selling everything for $20 rather than $65. Although the clause works for digital products, a service can be a product.
I use it as Aorthar, rather than going to different sources, or agencies to get a product working, we will bill you in a package deal. Motion graphics, web dev, logo, branding, UI, pay N1M for everything, instead of N10M from different sources.
Now, I mentioned something about selling your service as a product, right? So let’s say you are selling web development, instead of saying, I am going to charge you 100k to develop a fully functioning website, you say, I can help you with some many other things such as:
- Create a custom email for you
- Create Google profiling
- Make some graphic design for you
- Manage your social media for a month
- Create a blog
- 3 landing pages.
Pay 300k for everything instead of N500k.
At this point, it is more attractive, you are also helping the client to help them build a complete functionality. You are thinking ahead. So rather than them having to patronise someone else for Social media management in the next 3 months, since they know you to be a developer only, you have snatched the deal.
6. Price as an Authority.
This is what my colleague like them Praise Philemon or Charles are trying to say, only that he forgot his listeners are upcoming folks. They are like an authority, the charge because they are in that position, it’s a rule of demand of supply.
Let me explain what demand and supply law is briefly for those of us that was attentive to our sec school teachers those days;
When there are so many customers (demand), you are not available to supply everybody with your time (supply) — that will lead to Hike in Price.
When you don’t have enough clients, or you don’t have high paying ones, the demand is little, but you have the time to attend to them, you just can’t wait to work for someone, whosoever, your supply is much.
The truth is, there is nothing shameful about it, the funny thing is you can arrive at the same income at the end of the day.
You earned 10k (cheap) for the day, he earned 50k (expensive) for the week. Just an example. Know your place.
7. Price to value
Yea this is another one, buh there is a little misconception about this. How we describe value, was supposed to be for positioning, not about your so called “worth”. Let me give you a better clarity on what value means, cause in fact, it is the riskiest.
The kind of client that will patronise you for this are those that are interested in quality and result, regardless of how much you charge or how long it took.They want premium.
You know? I gave a better insight on how to categorise your price on your rate cards, (PS: please own a rate card) — call it “Basic”, “Pro”, “Premium”, or “Bronze”, “Silver”, or “Gold”. What it does is that you instantly will be able to categorise your clients. The “Big Guns” will scream “I want the Premium!” the Average Clients, will strive to afford the “Pro”, it’s a little bit fair (this is where your most monies come from), buh the “Basic” are up for filtering after on, This is my friend said you can Change your client circle, at this point, you are in control, scaling.
Now how can I charge for value?
Actually this is where my friend missed it. He laid an example of a certain time he charged 750k for branding, cool! Clients will pay it once and for all. But it is not so enticing, it’s too dry. You can do it better this way in similar cases, because the success or failure of the brand has nothing to do with you. If the branding fails in 3months time, like we normally say’ “what’s my business, I have collected my money, whatever happens to you is not my fault” right? Well that is not good cause it lacks empathy, cause your client takes all the risk and you are getting the full reward.
Buh what if they get more results? The brand blew up and the worth of your good job started declining to your face, like the case of the guy that designed Nike’s logo. The price was probably cool, It was $35 at that point (designed by Carolyn Davidson in the 1960s). Pepsi’s logo that is worth $1million can actually look smaller later one in the next 100 years.
Charging for value is like this:
Let’s say the revenue your clients generate is N10M a year, from your finding, you discovered this, or you know the CEO and how rich he is, during briefing or negotiation, you can say something like, “you know what? I can help you get more sales, get you more instagram followers, get you more leads, get you more reach, you will end up generating more revenue, I will put some systems in place that will last 6months from now, or a year, we will keep working together, during this long term period, and i will help you generate 15M. If it doesn’t work, Pay me 500k (rather than 750k), if it works, pay me 3M”
Lol, yea, so risky, buh very cool. At this point, a sane CEO will say, Bro, let’s do this! Automatically, through good calculations, you can earn more than 3M if you help him scale his revenue to let’s say 18M that year. He would compensate you more
At that point, your interest, and the clients interest, aligns. That’s Value! Some Mad Portfolio and testimonial bro!
So comment, share and RT on what model you would love to start applying to your design business!
I will love to hear a testimony from you soon!