Pricing Strategy for Creative Entrepreneurs

The Pricing Trap

• Many creative entrepreneurs are caught in a pricing trap without realizing it.
• Common mistake: pricing based on time rather than the client or value.

Concept of Pricing the Client

• Price the client, not the job: A strategy to create greater value and impact for clients while increasing revenue.
• Traditional pricing based on time fails to account for experience, creativity, and uniqueness.

Problems with Time-Based Pricing

• Rewarded for inefficiency: Longer time taken leads to higher pay under time-based models.
• Caps on income: Limited by perceived value of time.
• Burnout and resentment: Feeling undervalued and overworked.
• Attracting budget clients: Focus on cost over value creation leads to order-taking roles.

Understanding Value-Based Pricing

• Focus on the outcome and result rather than the task.
• Value is subjective and depends on client’s perception and needs.

Steps to Value-Based Pricing

1. Outcome Focus: Determine the client's desired outcome and result.
2. Measure Success: Understand how success will be measured.
3. Assign Value: Quantify the value of achieving the desired outcome.
4. Price Anchoring: Use the assigned value to set a fair price, discounted for uncertainty.
5. Get Buy-In: Confirm client’s commitment to the proposed solution and pricing.

Consequences of Not Adopting Value-Based Pricing

• Stagnant income due to time limitations.
• Devaluation of creative work as a commodity.
• Persistent feeling of dissatisfaction and undervaluation.

Example: Pricing Differences Based on Client Type

• Local business vs. expanding franchise: Different values and risks associated.
• Printing costs and mistakes impact larger businesses more significantly.

Mistakes in Value-Based Pricing

• Focusing on self-interest over client needs.
• Lack of comfort discussing money and business.
• Rushing through client discovery and missing key insights.
• Using self-centered language instead of neutral, objective language.
• Over-complicating proposals: Keep them simple and client-focused.

Real-World Application

• Building long-term relationships enhances trust and authority.
• Cultivating these relationships allows for more intuitive pricing conversations.

Further Learning

• Recommended reading: "Pricing Creativity" by Blair Ens, "Implementing Value Pricing" by Ron Baker.
• Consider joining communities or coaching groups for deeper understanding.

By implementing these strategies, creative entrepreneurs can align their pricing with the value they create, leading to better client relationships and improved financial outcomes.