What’s It Worth to You?

Dough rolled out on table

The email from my friend came at a particularly opportune time.

I’d just found out that I’d lost a well-paying side gig, teaching the basics of coding to employees of corporate clients, when the training company that outsourced these courses to me decided to hire an in-house instructor.

That one decision immediately cost me half my annual income (based on the previous year’s instructor fees they’d paid me).

So, yeah, I was eager to find work, and that meant individual clients. While I was, and am still, trying to decrease my website work to focus on copywriting and social media management, I knew I couldn’t turn down any decent WordPress gig.

So when my friend alerted me via email to the newly minted 2-lawyer firm that needed a website and was specifically interested in WordPress, I got excited. Then I got to work.

I did my research on the clients, two lawyers who’d been working for competing larger firms and who’d decided to pool resources for their new small firm. I carefully crafted a proposal, laying out two options: a straightforward WordPress installation using a ready-made theme for $399, or a WordPress install with a premium theme and customization for $699, either of which I’d add copywriting (up to ten pages) to for an additional $600.

I proofed the proposal the next day, then emailed it to the two attorneys, with a CC to our mutual friend. She called back later that day and said she thought it was a winner. I tried to put it out of my mind and get on to other things – I mean, I’ve been doing this awhile and I knew better than to count any digital chickens before they hatched into paying clients, if you know what I mean.

Still, I felt pretty zen about it all. My prices were fair and covered a range of price points, cognizant of their startup status. My friend had spoken on my behalf (I’d created her website a few years prior and she was an ongoing client as well). But on the other hand, I’ve been around this block a few dozen times. You just never know.

Well, fast forward a week or so, and you probably won’t be surprised that I didn’t get the gig. It’s OK. I mean, I wasn’t.

Wait. Let me rephrase that: I wasn’t surprised that I didn’t get the gig.

But I sure as hell was stunned at who did – or rather, what the winning proposal’s details were, particularly with respect to price.

Are you ready?

For the same scope of work that I’d set out in my “Option A” part of the proposal — the straight-up WP install, ready-made theme, no copywriting, no customization — the package I’d quoted at $399 — the winning developer quoted these lawyers a flat fee of $1,750.

Let me say that again.

One thousand seven hundred and fifty dollars.

One thousand, seven hundred … 

Four hours of work, six max. No extra coding. Zero content.

ONE THOUSAND, SEVEN HUNDRED AND FIFTY DOLLARS. 

There’s competitive pricing, folks, and then there’s whatever that was.

And that’s the developer these two cash-strapped start-up lawyers chose.

At some point, you start thinking “Maybe it’s me….,” you know?

I tried to find out what had possessed these smart attorneys to make the decision they’d made, but the only thing we were able to figure out, my friend and I, was that the winning developer had created a very simple 4-page WordPress website for a professional organization to which these attorneys belonged.

I’ve seen that site, by the way. I was understandably curious. It’s a good site. It’s no cutting-edge design, of course – but it wasn’t supposed to be. (Most WP business sites aren’t, and shouldn’t be, though WP can certainly support some rad design choices.) It’s just – basic. Which is what they wanted.

So this all got me thinking …

What the fuck?!

I mean, pardon the language, but really now!

What lesson was I supposed to be taking away from this experience?

So, I tried just sitting with my feelings about the whole thing for awhile. I was incredibly irked and on occasion enraged. I thought (and still think) this developer’s prices were so high as to be unethical, honestly.

What really bothered me here? Two things, I realized:

  1. The “successful” developer was benefiting from perceived value. That is, his prices were so high that his potential clients assumed he must deliver a superior product with bells and whistles — even when he’s explicitly not delivering anything other than a basic product. It’s like offering a ’02 Ford Taurus with 100,000 miles on it at the same price as a brand new fully loaded model, and the customer picking the older model because “at that price, it must be worth it!” The clients, not knowing anything about web design, had no way of understanding this, so they figured the other developer “must be worth it.”
  2. It’s possible that all those times other colleagues told me my prices were way too low, and I was resistant because “c’mon, this isn’t rocket science” and “it only takes four to six hours!” — yeah, they may have been right, and I may have been wrong.

I don’t think this has anything to do with gender — though a lot of smart people think women in particular tend to undervalue their own worth in business — but I do think it’s got a lot to do with the psychology of decision making

Here’s what I think happened:

  • My prices probably were already too low, to begin with. They may have been based on my understanding of how long a task would take, but they were not based on the value of that work to the client.
  • The clients in this case — two lawyers — weren’t rubes out of the backwoods. These two people were savvy, sophisticated purchasers — even though they may not have known a whole lot about web development, they had a certain comfort, shall we say, with paying well over $300 an hour for skilled professional work. That was their context.
  • There were no hidden benefits here. There wasn’t a super-secret steep discount, no previous friendship or relationship with the developer (these guys had nothing to do with the professional group’s website), and no other personal or professional influencing factors, as far as my friend and I can tell.
  • When they were presented with two competing and otherwise identical proposals, with over $1,300 difference between the two, they could have had one of two possible reactions.  They could have thought: “Developer B is way too high! He must be unscrupulous!” Or they could have thought “Developer A is way too low! She must be not be as good as Developer B!”
  • Their conclusion was that “Developer A isn’t as good as Developer B.”

I think this last thing is really important to understand. When faced with those two possible conclusions, they immediately thought the lower bidder wasn’t as skilled as the higher one — not that the higher bidder was gouging them!

So what am I supposed to do with all this?

What are you supposed to do with all this?

Well, damned if I know. See, there’s a lot here that’s unknown. Would this same decision-making behavior hold true of non-service professionals? Would it hold true in a larger organization, or a team-managed purchasing process? Did the developer make some promise or assurance to the clients that the clients didn’t disclose to my friend?

Possibly. And any one of those unknowns could change the conclusions we draw from this experience.

But based on what I have now — which is what I’ve described above — I’m moving forward on these fronts:

  • I’m going to take another hard look at my prices for various services and try to figure out if they’re so low they’re scaring prospects away.
  • I’m going to give some serious consideration to taking pricing information off my website altogether, and working pricing into the tail-end of the conversation with each prospect, not the beginning. (One thing I do know: prospects who talk pricing first are shopping based on price, and those folks are almost never fully satisfied when all is said and done.)
  • I may take website work off my services pages altogether. I have nothing but anecdotal support for this, but I do believe clients for copy and social media are a whole lot easier to thrill than clients for website development projects. There’s an underlying skepticism towards website work that’s just not there with my other services.  (I can sort of understand that skepticism; our profession has some bad apples, to be sure. The stories I hear…)
  • Whatever I decide to do about pricing is going to be based not on my time, at least in anything other than a “bottom line” context. Instead, it’s going to based on the value to the client.

Over to you. What are your struggles with pricing your services? Let’s talk this out. I can’t be the only one struggling with this.

Did ya like that? This post is part of the Word Carnivals – a monthly round-up of some of the best writing on the web by, for, and about small biz owners. This month’s topic is all about value and pricing. Check out the rest of the Carnies here.

Photo credit: larkin.family via photopin cc

{ 8 comments… read them below or add one }

Tea Silvestre, aka Word Chef June 25, 2014 at 9:49 am

…and perhaps the perceived value is in part attached to the type of client you’re targeting. As you noted, some people would see the price as too low. Some, too high. Lawyers, doctors and other professionals who are used to paying $300/hour will have a different perception than someone with a blue collar background might. Lots to learn from here, Annie. Thanks for sharing!

Melanie Kissell June 25, 2014 at 5:48 pm

Wow-Wee!! Talk about getting your hopes up … only to feel the pain of the axe falling. 🙁

I dunno, Annie. As far as this kid’s concerned, pricing your services ranks right up there with heartburn. Seems the proverbial crap shoot. And do we want to keep adjusting prices based on each and every prospect’s perceived value? I’m getting dizzy just thinking about the notion. But I guess there’s some validity in that approach, as is witnessed by your recent experience in submitting a proposal to those two attorneys.

Thanks so much for sharing your story. Kudos to you for moving toward some new fronts!

Diana Adams June 25, 2014 at 7:00 pm

What I do about my competitors is pretend I am a client, all the way up to the part in whom I am choosing…this way I can clearly see how they tick…how do I do this…I suddenly become someone else, or have a friend help, just for a while…this lets me know exactly what they are doing to win…

Carol Lynn Rivera June 25, 2014 at 10:51 pm

Price higher and think value. It’s a lot easier to come down on price than to charge more after the fact.

The hard part of pricing (as if there’s only one) is that there are so many factors to consider and rarely are comparisons apples to apples. Sometimes things seem the same on paper but who knows what kind of conversation they had with that other guy? Maybe he took “WordPress installation” and made it sound like WordPress would also do the dishes.

As for putting pricing on your site we had this same discussion recently and decided to nix it. It’s not that we don’t have it or don’t share it but 1. anyone looking at pricing online IS comparison shopping and 2. you will never be able to get your value across once that happens. People will judge on price. They don’t have context for anything else so we decided to lead with the value and save the price conversation to the end. Can we charge less? Sometimes. But that’s to be determined much, much later.

There’s no right answer. The important thing is that you define FOR YOURSELF what value you bring to someone and go from there. Once you start thinking that way you can get out of “but it only takes three hours” mentality. Because that sounds an awful lot like an apology…. gee, sorry but I need like THREE WHOLE HOURS, sorry, really, is that ok?

That other guy was probably like GEEZ, I need like THREE WHOLE HOURS, that’s just nuts, I mean ALL THAT WORK!

Perspective, right? And to Tea’s point, there are some people who are used to paying for what they want…. and some who never will be. Figuring out who is who is one of the many, many challenges.

Sharon Hurley Hall June 26, 2014 at 4:30 pm

Yikes! I put guide prices on my site last year and it’s cut down on some of the timewasters. Even those on a lower budget approach the conversation differently. However, it’s never the first thing we talk about – it’s just there in the background to provide a benchmark.

Molly McCowan June 27, 2014 at 1:57 pm

Oh, this is such a meaty question. I struggled with pricing for a while, just choosing to go off of the “industry standard” pricing set by the U.S. editorial freelancing groups. I justify my prices for editing work by my experience, skills, and quick turnaround. The more education I get, the higher my prices get, because the more educated I am on the latest and greatest editing techniques, the quicker—and better—I work. I try to be competitive with other editors in the region, but really our rates are all very similar, and based off of the three factors above (which really translate into value for the client).

It is so frustrating to be outbid by someone who charges an exorbitant rate for the same amount of work—I’ve never had that happen, but I think there would be a little bit of steam coming out of my ears!

Nicole Fende June 30, 2014 at 10:42 am

Wow Annie that must have been hard. I suspect, as others below have mentioned, that with lawyers used to billing at such high hourly rates they questioned if the price was too low. As a consumer I almost didn’t hire someone to do illustrations for me because her price seemed too cheap. But I loved her stuff so I thought what the heck I’ll do a trial run. Here’s the thing – if there had been a more expensive alternative I would have probably taken it. Fortunately for everyone I tried her out and loved her – and convinced her to raise her rates.

On the posting of rates – I like to at least have some idea of what I’ll be expected to pay. If your minimum is higher than my budget I don’t want to waste everyone’s time. Plus I appreciate the transparency. My two cents.

Deah CurryPhD July 11, 2014 at 10:35 pm

What a sucky outcome to a good proposal. Bummer. But I think you are right about that decision making psychology, and the context of clients used to the $300 billable hour.

I’m with Nicole on pricing transparency. I won’t even consider hiring someone for anything if they don’t post a price list or at least a range. Trying to figure out the value of my work to the client — or worse, trying to convince them of it — is really not a conversation I enjoy. It’s disempowering to me, at best, as if my value is dependent on their perspective of the value to them. And worse, it feels slimy, like the used car salesman trying to squeeze as much as possible out of the customer.

My pricing philosophy is to consider what competitors charge, consider what’s necessary and comfortable for me, and then consider what my client market will bear, then find ways to creatively adjust if someone is a good client for me but hesitating due to cost. I try to set prices high enough to screen out the time-waster energy-drainers, and low enough to attract the eager-to-learn, new-to-business solopreneurs.

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