99% Of Creatives Lose Money With These Pricing Mistakes

Summary

In this video, Matt Essom identifies three common pricing mistakes that hinder creative businesses from attracting high-paying clients and charging what they're worth. He explains the pitfalls of hourly billing, undercharging, and discounting, and shares strategies to overcome these issues. Essom emphasizes the importance of focusing on client outcomes, packaging services effectively, and setting prices that reflect the value delivered. He also touches on the need for support, strategy, and systems to implement these changes successfully.

Takeaways

• 💼 **Hourly Billing Issue**: Charging by the hour or day can lead to attracting low-value clients and not getting paid what you deserve, as faster work results in less pay.
• 🔍 **Scope Creep and Pressure**: Clients may request more work or faster delivery, often symptomatic of the first pricing mistake of hourly billing.
• 📉 **Micromanagement**: Clients frequently checking on work or expecting you to be physically present can indicate a problem with hourly billing.
• 💡 **Value Perception**: The perception of value for an hour of work is subjective and can limit earnings, emphasizing the need to move away from hourly billing.
• 🏃 **Race to the Bottom**: Constantly competing on price and having nightmare clients who expect more than paid for are signs of undercharging.
• 🎨 **Creative Limitations**: Undercharging can restrict the ability to do the best creative work due to budget constraints.
• 💰 **Haggling and Discounts**: Constantly feeling the need to negotiate or give discounts is a sign of undercharging and can attract the wrong kind of clients.
• 🛍️ **Discounting Mistake**: Discounting services can create a cycle of clients expecting discounts and devalue your work.
• 📈 **Outcome Focus**: Shift the focus from the process to the outcome, packaging services based on the desired result for the client.
• 🌐 **Client Value**: Understanding the value of the outcome to the client is crucial for setting appropriate prices and avoiding undercharging.
• 🔗 **Strategic Support**: Having a strategy, support, and a system in place is essential for implementing changes in pricing and attracting higher-value clients.

Q & A

What are the three common pricing mistakes that prevent freelancers and agency owners from attracting high-value clients?

The three common pricing mistakes are: 1) Hourly billing, which can lead to clients asking for more work without additional pay as they perceive they are already paying for your time. 2) Undercharging, which often results in clients expecting more than what they've paid for, leading to a race to the bottom in terms of pricing. 3) Discounting, which creates a cycle of clients expecting discounts and not valuing the service as much.

Why does hourly billing often lead to clients asking for more work without additional compensation?

Hourly billing can lead to clients asking for more work because they feel they are already paying for the time spent, regardless of the amount of work completed. This can result in clients pressuring for additional services without understanding the need for extra payment.

What are the symptoms of undercharging as mentioned in the script?

Symptoms of undercharging include feeling like you are in a constant race to the bottom with competitors, dealing with nightmare clients who want more than they've paid for, not being able to do your best creative work due to budget constraints, and constantly haggling over prices.

How can undercharging attract the wrong kind of clients?

Undercharging can attract clients who are primarily looking for the cheapest option, rather than the best service or solution. This can lead to a mismatch of expectations and a higher likelihood of dealing with difficult clients who may not value the quality of your work.

What is the main issue with offering discounts to clients?

Offering discounts can create a cycle where clients expect continuous discounts, leading to a devaluation of your services. It can also attract clients who are primarily bargain hunters, which can be detrimental to the business's profitability and client satisfaction.

What is the suggested alternative to offering discounts to clients?

Instead of offering discounts, the script suggests offering bonuses. These are additional services or value that you can provide without significantly increasing your costs, but which add perceived value to the client.

How can creatives avoid the mistake of undercharging for their services?

Creatives can avoid undercharging by pricing their services according to the value they provide and the outcome they deliver for the client, rather than basing their prices on the internal cost of production or comparison with competitors.

What is the importance of understanding the client's current pain points or frustrations?

Understanding the client's current pain points or frustrations is crucial for tailoring your services to meet their specific needs. It helps in creating a service package that directly addresses their issues and demonstrates how your service can provide a solution.

Why is it recommended to package services based on outcomes rather than hours or manpower?

Packaging services based on outcomes focuses on the value delivered to the client. It allows for a clearer demonstration of how your service can help the client achieve their desired state, making it easier to justify the price and attract high-value clients.

What is the role of a system in implementing the pricing strategy discussed in the script?

A system is essential for tracking and implementing the pricing strategy effectively. It helps in measuring the average project value, tracking the success rate of sales pitches, and understanding what aspects of the strategy are working or need adjustment.

How can creatives and agency owners get support in implementing the pricing strategy discussed in the video?

Creatives and agency owners can seek support from coaches or mentors who understand the strategy and can provide guidance tailored to their specific situation. This support can help in navigating nuances and overcoming challenges in the implementation process.