You’re not selling web design or development, you’re selling value.January 25, 2013
I’ve just returned from the New Adventures Conference, which was a great learning experience but also an awesome opportunity to meet other developers, designers, freelancers and a range of small and medium agencies.
One thing that was clear was the tiny amount of difference between established companies and freelancers in expertise and quality. So why are some established and others finding it hard to make ends meet?
It all comes down to the business end of design and development. How different people and companies approach the concept of charging for projects and setting expectations with customers.
One common theme among small businesses and freelancers was the uphill battle to get paid fairly and help customers understand the proposition.
To start off, I’ll posit a question;
Say an IT company comes to you for a quotation for a 10 page website to showcase a new product offering. They express that they have an existing logo and some design constraints but you will have some freedom to help them create a unique experience.
They also request that it should have certain functionality, like a blog, and that they want a content system to maintain it.
How do you start? Where do you get the pricing from? Do you estimate a number of hours and add a few percent? Do you go straight down the line with a fixed price based on previous experiences and jobs?
Stop. Stop. STOP STOP STOP.
There are more important questions to ask your customer before you even start thinking about pricing up a project.
The number one most important is;
“What are the objectives of this new website?”
That is the single most important question you will ever ask a potential client and it will lead you to areas even they weren’t aware of. Not only will this question help you determine what they want – it will more importantly help you determine what they NEED.
Nine times out of ten a client is aware they need to either refresh their website because it has had zero attention for 5 years, or they’re launching a new site, new brand, or indeed they’re just new. What they say is that they want “a website” with X and Y features.
What they don’t say, or indeed may not even know, are the inherent benefits that they subconsciously expect to receive via a new website. Do they want to increase their sales? Do they want to sign up a particular amount of customers to a demo product? Do they want an automated shop not just for revenue, but also to make their lives easier?
Case in point, a recent client of Unleash expressed interest in redeveloping a new simple website that was purely informational, plus a blog for press releases.
After asking them “What do you really want to achieve?” and endeavoring to find out the real objectives it was revealed that what they actually needed was a website with user management, a portal for select customers to be able to access resources and another portal to allow for marketing materials to be purchased and sent automatically via their printing company.
So by simply asking questions their real requirement became visible and it snowballed from a simple website into an all encompassing online presence.
Make no mistake, this is not a money spinning exercise for you to drain their bank accounts to treat yourself to a new Porsche – this is the biggest part of your job – providing consultancy and helping them discover what they really need, not just delivering what they say they want.
The best way to end up with a happy to customer is to fulfill their needs, not just their wants.
The second most important question is a little more abstract.
“What is the value of the project to the customer?”
This can be difficult to answer, especially for new businesses or small companies who are just getting to grips with the web.
Remember the company I mentioned earlier? The hypothetical IT company – what would price that website on once you’ve ensured their needs are to be covered? £5000, £10000, £15000?
Perhaps. But what if I told you that company was Microsoft? Would that impact your price?
Anyone that says they wouldn’t adjust their price is a liar.
But let’s figure out why we would increase our price for a massive customer like Microsoft.
There are two key elements at play here;
- The value of the project to the customer
- Their expectation of the pricing they will receive.
Note that their expectation will hinge on the first, namely that they will attach a value to your quotation and price is a huge part of perceived value.
Let’s look at it another way – if I told you that the most fuel efficient, fastest, most luxurious car in the world would cost you only £500, you’d laugh in my face, because price is an immediate and obvious indicator of value – your expectation for quality hinges on the price point.
Because pricing is a quantifiable attribute and measure of value.
Let’s get one thing straight – you are not selling a website. You are selling value. You are selling benefits. Your are selling their desires.
Any business wants to increase revenue, reach new and existing customers faster and better – your job is provide them access to their goals and bring value to their business.
A website is a vehicle to the benefits of an online presence, not an insular and stand alone enclosed product.
Only when you have crossed off these two key areas can you begin to work out pricing.
So, you’ve covered my suggestions – what now?
Well the best way, in my opinion, is to price projects largely on the value. Looking at the potential revenue or monetary benefits of the website to the customer and pricing accordingly.
From both ends of the spectrum this is fair. For example, if it’s a business that will likely make £100 a month – then positing charging £50,000 is never going to help win that job.
However, if they could be expected to make £100 a minute, then you charging £1000 is equally just as stupid.
Both have expectations to match and you need to ensure your pricing reflects the value you’re bringing to the table.
However, you of course have to work out how many hours a project is going to take, figure out how many people you need to allocate and how in depth their expectations are for service.
You also have to work in contingencies – like potential for overflow, requirement for travel, meetings and a little bit for unexpected requirements.
But those last points are your problem, not theirs, so make sure they’re covered absolutely, but don’t lead with those as the reasons for pricing.
This method will lose you jobs, but win you better ones.
If the customer doesn’t appreciate the value of the proposition – did you want that customer anyway?
Or do you want customers who can appreciate the experience, the knowledge and the benefits therein of using you and budgeting to match your value?
So, go forth and lead with your value – be confident in that you are worth it, explain to customers your experience and knowledge and consult their needs, not their wants.
Because it will help you grow your business, find exciting and unexpected projects, all while helping you achieve your goals and helping your customers achieve theirs.
- A related article worth checking out Invoices, Contracts, Paperwork, where to begin?