The Psychology of Pricing Services for WordPress

Marcus:
Hey everyone. Welcome to another BizChat. My name is Marcus Burnett and I’m a community marketer with GoDaddy. We have a special guest today, but before I introduce him, I’m also here with my wonderful co-host from Barn two plugins, Katie Keith. How are you doing today, Katie?

Katie:
Yeah, great, thanks. Yeah, good to be on again.

Marcus:
Yeah, it’s been a little bit, but we’re back. Let’s also get our guest on here. Brian is an accomplished internet marketer, international keynote speaker, entrepreneur, consultant, author, trainer, and mentor among a range of other roles. He holds two master’s degrees in psychology and literally wrote the book on today’s topic, the Psychology of Pricing. So we’re going to spend some time finding out how we should be thinking about pricing our products and services. Welcome to Do the Woo, Brian Rotsztein.

Brian:
Thank you. I’m happy to be here.

Marcus:
Awesome. Your book is The Psychology of Pricing WordPress Edition. Why don’t you start by telling us a little bit about how you got into WordPress?

Brian:
So I started building websites in the late nineties and in the early two thousands I was looking for better and better solutions, and I came across WordPress and I started using it in 2005 in version 1.6, and I thought, wow, this is so different. The idea of A CMS just kind of revolutionized my world, but believe it or not, in the beginning a lot of people just didn’t buy into it. I literally had people calling me looking for a CMS type solution, and when I would propose WordPress, they would say, well, isn’t that for blogs? And I would explain to them, no, no, no, but I can hack it to make it work for your website. Don’t worry about what the intent is. That was long before the current version of WordPress, which is obviously so many iterations later. It’s a different world. But yeah, I started eventually convincing people that that’s the way to go, and then just went from there, just started building websites from there using WordPress, and it just took over my world basically.

Katie:
So tell us a bit about the book. So how did you get so interested in pricing out of all the different angles of building a WordPress website for clients, which you have experience of why pricing?

Brian:
Okay. It’s kind of a multifaceted origin to this. I really like helping people and I had a lot of problems with pricing, really a lot. Unfortunately, one of my best friends was really good at business and early on he was sort of like my advisor. I’d ask him a lot of questions about pricing, and the first time that I closed a $5,000 deal, I was over the moon. I just couldn’t believe it. I’m like, someone actually is going to pay me $5,000 to build a website. It was just remarkable. And the thing is, the reason why it happened was because this guy, one of my best friends was like, give them options, a thousand dollars option, a $3,000 option, a $5,000 option. And when they went for the 5,001, I was like, this is next level. And I realized, wait a minute, wait a minute.

Somebody out there actually appreciates and values what I have to offer here. And that’s kind of when my real pricing journey started. So that’s kind of one path. And then what happened was I was giving a lot of talks at different WordCamps and different conferences, and a lot of them were with marketing, especially with my book before this on content marketing and on SEO and I was giving workshops and people were asking about pricing a lot. And just before the pandemic, I gave a talk at WordCamp Montreal about pricing, about filtering your clients and qualifying your clients, which I wrote about in the book. And what happened was after the talk, so many people lined up to talk to me. It was unprecedented, a huge number of people. It’s like usually when you get off stage, you go to the side, you talk to a few people and then move on with your day.

People wouldn’t let me go. They had so many questions about, wait, wait, wait. You wouldn’t take on a client for this reason and that reason and you would charge them this and that. And I was overwhelmed. I couldn’t believe how many people were just fascinated in this. And so when the pandemic happened, we’re sitting in lockdown, I’m in Canada, we had really, really strict guidelines for what you could and couldn’t do. Basically we were stuck in our homes for a really long time and I said, you know what? I think I’m just going to write my next book. And I was trying to think, well, what would the book be? And I thought back to the talk that I had recently done and said, you know what? I’ll write a book on pricing because everybody needs to know. So many people want to know about it.

There’s this hunger for this kind of information. And I said, this is it. This is what I’m going to write about and it’s not an easy task. I went searching for different blog posts, articles, books, different sources of information, and nobody presented the information in a way that I wanted to present it. Something that I could read and someone could read and be like, oh, you know what? Yeah, okay, I get it. This is how to build confidence. This is how to value your services. This is how to go about charging for your services. And nobody actually did it that way. The way that I thought would be helpful. A friend of mine told me actually to consider not writing the book because he’s like reading a book on taxes. Nobody wants to sit down and read a book on taxes. Nobody wants to sit down and read a book on pricing, but 400 pages later, there’s a lot of information in there that I figured, okay, somebody’s going to want some of the information here. So yeah, that’s the long story. The long version.

Marcus:
Yeah, for sure. And I would disagree that it’s the same as reading a book on taxes. I think this is far more interesting, I promise we’ll get into the book and not harp on the title forever, but it does say WordPress edition and the one that I saw, is there a difference between the psychology of pricing within the WordPress space versus web design and development in general, or products in general? Is there a reason why you decided to make this one like a WordPress edition? Is it really focused on the WordPress community?

Brian:
Okay, so yes, I find it kind of funny, but there’s no other edition. And a lot of people ask me, is there a regular edition? There is no other edition, there’s only the WordPress edition because I wrote it for the WordPress community because like I said before, it really is the WordPress has taken over my life in so many ways and I really wanted to give back to the community again, especially during the pandemic, I wasn’t giving any talks. There were no WordCamps. I said, okay, so I’ll write this book and I’ll gear it towards the WordPress community. So there’s no regular edition. And the difference is that most of the examples in the book are related to WordPress, something involved in WordPress. So it’s either you’re a web designer, a programmer, if you’re selling services related to WordPress, even hosting the book could be relevant for you. And there’s a section with three chapters, one for geared towards content creators, one for theme developers and plugin developers or theme designers. They’re small sections for the WordPress community. I thought about maybe putting out another edition. I know that some people who don’t specialize in WordPress have been hesitant to buy it. I know they’ve approached me about it. So I thought, okay, maybe I’ll change it at some point. But for now it’s just WordPress.

Katie:
Yeah, because basically relevant to anybody even outside of web design in many ways, who need to quote for mainly services which they’re providing and projects, although I like the way that it’s kind of tailored to WordPress because of even in subtle differences like perceived value and particular issues that we might have in the WordPress community because of the standpoint that some of the potential clients are coming from and the fact that some might be very small and some might be bigger. So I read your book and was amazed at how many different aspects of pricing psychology you go into. So you mentioned in the introduction about how when you got your first $5,000 project, you gave a choice of options and was surprised at which one the client went for. So could you talk a bit more about pricing strategies and that appeals to people to ultimately win the project and get them to spend more?

Brian:
Okay. One key issue that I try to get across throughout the first part of the book is to really value yourself. And when you’re trying to close the deal, you have to really consider what is the project about? Can you bring value to the project? I actually turn down projects all the time and a lot of my business friends just don’t understand that. They’re like, what do you mean you walk away from business? And I say, no, I only want to take on a project that I’m interested in that my team’s going to be interested in, and I want to make sure that my whole team’s happy. Basically, happiness is a big factor in working with different clients. I’ve worked with my share of really, really bad clients and I try my best to filter them out. Hence my talk at WordCamp Montreal, like I was talking about before the pandemic where I was really talking about all these different kinds of people who are going to approach you that you don’t want as a client.

Once you filter them through, you can actually get the clients that you do want and the clients you do want are going to work with you and they’re going to have the appreciation and value what you do. And I think that the strategy beyond, once you’ve figured out your mindset and you change the way you think about things, the strategy is, okay, I got the right clients. Let’s take it from there and say, okay, what can I do for this client that will bring them results and go through there from there and figure out, okay, the way that it needs to work with this client, they’re going to have to pay using this method or that method and then work through that and see which pricing approach will actually work for them.

Katie:
And I like the way in the book you talk about specific as a starting point, you have to know exactly what it’s going to cost you to do the work. I believe that a very big proportion of people who are building WordPress websites for clients or sending products don’t know what it actually costs to provide that product or service. So in the book, you do some really specific calculations that you provide to people to input all of their costs, including things you would never have thought of. There’s direct costs and then indirect costs and how to calculate your desired hourly rate and things like that. Do you have any particular advice about that?

Brian:
Okay, so there’s no absolute right or wrong that’s very important to understand when it comes to pricing. However, the true, one example of a wrong way to price your services is if you’re going to lose money. And I feel like people, because I work with a lot of freelancers and the ones that I work with, they don’t do these calculations. They don’t say, Hey, you know what? I want to make $50,000 a year, which I think might be the example I use in the book. And I say, well, if you want to make 50,000, you need to work backwards. You say, okay, I want to make $50,000. What will it take? And then you run through the calculations and you say, well, these are the number of hours I could possibly work. This is the amount of work I can handle in a given time.

And then you work your way through it and then you find the clients and work with them and go from there. Most people that I work with, most of the freelancers that I work with, they do it the other way around. They just say, well, I’ll charge $25 an hour, I’ll charge $50 an hour, what have you, and they hope for the best by the end of the year. They hope it adds up to the $50,000 that they were hoping to make and that it won’t work. It doesn’t work that way. I think you’ll get a lot more out of it figuring out your endpoint and then working backwards. And so in the book I specifically gave this breakdown of like, well, you think you can work 40 hours a week, 52 weeks a year, but then you have to account for winter vacation, summer vacation holidays, sick days and so on. And then you realize accounting for that you don’t really work 40 hours a week because maybe 20 hours a week is administrative tasks, so then no one’s going to pay you for that. And then you cut down and cut down. And then I kind of give a realistic breakdown of, okay, how much can you charge given the limited hours you can actually charge for and then go from there.

Katie:
Do you have many examples or people that you’ve seen in real life who charge say $25 an hour and then did this calculation? Do they typically end up charging more or less? Do you have any examples?

Brian:
So there was one freelancer in particular who really stands out where at a time I was looking to hire at $25 an hour, this is going back several years, which is obviously quite low for these days. And he came back to me and said, I really need to make 40 because after tax and after all the time I’m going to put in everything, then I’m going to make the $25. And so it was much more clear cut. He was aware that yeah, the numbers just didn’t add up. If you pay 25 after tax, maybe you’re only going to be making $17 an hour. So it definitely has happened. I’ve definitely encountered that.

Marcus:
So I’ve been on both sides of the pricing, both at an agency where there’s plenty of work coming in and we can make decisions on whether or not to take work on or not take work on. And also the freelance side where I’m doing my own thing and if I don’t take the work on, I don’t have any work. So do you have any advice for what makes sense monetarily to take on a job but then having to battle that internal dialogue of if I don’t take this job, if I feel like it’s too low and I don’t take it, then I end up with nothing. So am I better off taking the work at a slightly lower rate and having something than turning it away and having nothing at all? Is there some advice, whether that’s first time or just haven’t had luck getting work lately, figuring out how to adjust based on having work and not having work?

Brian:
This is a very common question. Two key things to point out here. So first, my number one rule for confidence in charging is be prepared to walk away. I can’t say that enough times. When you’re negotiating with a client and they see your value and you put out a price and they say no, then you have to be ready to say, you know what? If you’re not going to take my price, two things. Either I’m going to walk away or I’m going to lower a little bit of the value. So instead of a 50 page website, I’ll build you a 40 page website and the price will come down a little bit so you can kind of negotiate a little bit that way, but always be prepared to walk away if you have that mindset that you’re prepared to walk away, it’s unbelievable the level of confidence you gain in the discussion over pricing.

The other issue is what you’re asking about is a stopgap work. So I have a chapter on that and basically the point is you finished a bunch of projects of good significant projects, well-paying projects and that at some point you’re going to be starting up some other bigger ones and you have some time in between. In those cases I say yeah, sometimes lower your price a little bit just to get the work, but don’t go too low. Don’t go so low that you almost regretted after because you spent all this time doing work at a much lower rate. And also make sure the project is not too big because you don’t want to work at a low rate going into the next project where you can go back to your regular rate. So you need to consider that as well.

Marcus:
Yeah, I was going to kind of follow up to that. In the past I’ve taken work on that was at a lower rate than I wanted to, but it did lead to more work with that same client. However, jumping up in price is very difficult at that point. Do you have maybe any suggestions where, okay, I’ve taken the stop gapp work and it’s created more work with that client, but I don’t want to keep working at this lower rate forever. How do I get back up to where I should be or at least closer,

Brian:
Right? Okay. So frequently what happens is if you’re going to take on stopgap work, people forget to tell the client that I’m lowering my rate temporarily. And it’s something that you actually should tell clients. I know that it sounds strange. It’s a strange thing to say, instead of 5,000, it’s going to be 4,000 for you, but just for this one project. But it’s also one of the reasons that I actually rarely lower my price because if more work comes, they’re going to expect that lower price like you’re saying, and then you’re kind of stuck because people are going to say, well, I paid you 4,000 before, why would I pay you 5,000 for the next project? It’s almost the same. Similarly, sometimes clients will come or potential clients will come and they’ll say, I want to build five websites, so I need a good deal.

And I always tell them, I’ll tell you what, you pay full price on the first one and then we’ll talk about the other ones after. And red flag, by the way, in terms of filtering clients, someone comes to you and say they want to build five websites, chances are they’re not building any. I’ve had people call me and tell me I want to build five websites, a hundred websites, so I need the best possible deal, like 50 websites. Those people generally don’t know what they’re talking about. It’s very rare that somebody comes to you out of the blue and says, yeah, I need 15 websites, so I need a better deal. It’s rare.

Katie:
I love what you said earlier about if the quote is too high for the client, you don’t devalue yourself, you remove things from the quote so that this project is smaller and that keeps your integrity in terms of your pricing. So connected with that. When would you give a single all inclusive quote for the project and when would you itemize that quote into multiple sections so that they can mix and match to some extent?

Brian:
So usually I try to have a main project and then small fees that get kind of added on. So I’ve played with proposals. I mean proposals could be a whole other book, but I’ve played with proposals for 25 years, put out one main option. So it’s like you’re getting a website, it’s going to be responsive, it’ll have some social media integrations and so on. And for that you’re going to get X price. Let’s say that’s a $10,000 project, but if you want a logo, okay, a logo is going to be a separate option with all the terms, and you can take that as an add-on if you want a press release to announce your new business or your new website or to do some SEO backlinking or what have you. That’s another option. So I’ll have all these other options that I pull out of the main project so that there’s always a main project that’s kind of like front and center in the proposal and then all of the add-ons that the client can choose later on. So that way I don’t have to play with the price because in the past I would throw in the logo for example, and then the logo would become a huge headache and I’d say, well, now this is devaluing the rest of the project. It’s not worth it anymore. So I pulled that out and said, okay, that’s going to be an add-on instead. That’s just an option at this point.

Katie:
That makes a lot of sense. So basically the core quote should be the things they cannot remove, you will not even take on the project without the things in that, and the optional items have to be able to be removed. So if they provide their own logo, you need to be able to deliver the project using the logo they’ve provided, for example. Otherwise it makes no sense to have it separate. So when I hear about pricing, most advice generally says to do a fixed quote for the amount of work, is it ever okay to charge for your time on an hourly rate or something?

Brian:
Okay, so this gets into me the meat of the book. So the book is basically three books in one. The first part being talking about pricing mindset, pricing psychology, and client persuasion. The second part is all about the different pricing models. And then the third part is the WordPress section, like I mentioned before about themes, plugins, content creators, and so on. So in the meat of the book to me is really the central part. And so I give basically an explanation of the pros and cons of all the main types of pricing approaches that people in the WordPress community use. So the first one is the hourly rate. So the hourly rate is where we all start. I don’t know anybody who didn’t start with an hourly rate. Everyone just says they built their first website for a family member or a friend or some small local community center, something small.

And they said, okay, well here’s my hourly rate. It’s whatever, $20 an hour, and they go from there. Now there’s an inherent problem with the hourly rate, which is the more you do something, the better you’re going to get at it and you’re going to get it done faster. So if you charge a hundred dollars an hour for something and then after a couple months you get so good at it, you can finish it in 15 minutes, well now you’re charging $25 because it only takes 15 minutes. So then what about the $75? You’re getting penalized for being really good at something. So at some point the hourly rate really isn’t good anymore. So then we move on to the next step, which would be the project fee. So by the time you’re able to charge a project fee, you understand how long things are going to take.
Typically you’ll have a little more experience. You’ll know, okay, this is going to take me more time. You can more easily calculate how much this is going to cost and say, okay, instead of an hourly rate, how about you just give me $2,000 and I’ll complete this project? And then there are other projects that go from, there are other approaches. Now my kind of, I don’t know, you could call it my invention, even though it’s not my invention. I’m the one who formalized this as far as I could tell in the book, I go into detail about what I call what relative value pricing. I couldn’t find any source that explained pricing in the way that was just easy to understand. So people just say, well, you can charge an hourly rate and you can do a project fee and you can do a retainer fee and all these different methods.

And then no one really explained it. And then I said, but this isn’t always realistic. And so basically the idea of relative value pricing is that you’re looking at the math behind the pricing, but you’re also thinking about the opportunities and the risks of taking on the client. And I feel like a lot of freelancers and small agencies, they think about these things, but not in a formal way. So what I’ve done is I actually formalized it. And so I said, okay, let’s say you want to charge a project fee. So you come up with a number, you say, this is going to take me X number of hours, maybe ask a couple questions. Does the client have a lot of money? Okay, so maybe you were going to charge 5,000. You think, well, the client, they have a lot of money, we’ll make it like 6,000 and just leave it at that.

And I asked around, I asked different people in the WordPress community, how do they charge? And that’s mostly what they told me. Like, oh, then we just thought, okay, they have a little money. Oh, this client, they don’t really have a lot of money. So usually we do it for 5,000, no, maybe we’ll do it for 4,500. So a little bit of variation there with relative value pricing, what I say is take what you’re going to charge as a project fee and then look at each of the circumstances. Ask yourself client opportunity questions. So for example, you could say, will I get referrals from this client? Is this client well connected? Did they kind of hint? And this is where you have to become a really good listener. Did they hint that maybe there’s going to be more work in the future? Or maybe this business owner owns several businesses that might need to redo all of their websites.

So you look at what more can you get out of the project and think about that in your pricing decision, but you also think about your growth opportunities. Are you going to learn something? Are you going to gain more skills that you can then resell to somebody else or in the future can you get more project work out of it because of what you learned from that project? And then look at the scenario and the project in general. Is this a project that you’re interested in? Are you hesitating on it because you think maybe it might be beyond your skills or maybe you don’t have time. Are you ready for this project? So you ask all these questions, and in the book, I have endless questions to ask and to go over review and think about. And then I say, okay, now we look at the unique scenario and that’s when I have the 20 chapters just on different scenarios. So I’ll just go over one briefly. I think this is one that everybody can relate to. So one of the scenarios is rush jobs. So how does this work? Well, I explain the pros and cons of rush jobs and I say at the end, I charge 50% more if a client needs something done right away.

I’ve had emergency situations where really there was something that the client really needed in 48 hours or immediately even. And I said, fine, I’m going to drop another client. I’m going to push that work aside. I’m going to work just on your project, but you’re going to pay 50% more. So the unique scenario is someone’s losing out, one of my other clients is losing out. They have to wait longer, but I’m actually going to be compensated more for that. What do you do for friends and family, especially if you’re a beginner, friends and family discounts are very common or like, whoops, one second. What happens if you’re trying to level up? Do you increase your price, lower your price? I’ve bartered with some clients, I wrote a whole chapter on bartering for your services. So you figure out your pricing based on bartering nonprofit organizations as clients, they come with their own set of scenarios that you have to consider dealing with RFPs, request for proposals, and some clients with substantial budgets, which seem like the dream might not be that ideal for you. And so I have all these different scenarios that I say, okay, you know what? I think that you could change the amount that you charge based on these different scenarios.

Marcus:
We talked a little bit about the different pricing models and some of the different ways to think about setting your prices. Have you found any particular model to work best in closing the deal? Giving plenty of options and figuring out and all of that is great on when you’re thinking about the offering side. But when it comes to closing the sale, are there any specific recommendations that you’re like, this works every single time. If you, I don’t know, like you said earlier, you have the different tiers and you price your tiers based on them likely choosing the middle one, right? I’m pretty sure that that’s generally the case is you price it in such a way that great if they choose the top tier, but the middle one, is that a good pricing strategy? Is there just one solid or a couple of solid pricing strategies that you would recommend for just the closing every time?

Brian:
So I used to offer three options. That first gig that when I first made a $5,000 sale all those years ago, it was based on a three option proposal. Now I don’t write a proposal unless I know exactly what you want. So I have a 20 minute rule where every potential client can call me and they get 20 minutes of consulting, and if I can’t figure out what they want in 20 minutes, then they need to get back to me because they’re not sure what they want. So because usually whenever somebody calls me within 20 minutes, I should be able to know exactly what they want and understand their needs. And so once I do, then I put together a proposal. Now I might go back to them and try to refine it. Once I’m working on the proposal, I might say, well, for this, did you want A or B or what have you?

But I won’t write a proposal with three options anymore because I realized that I need the client to understand that I’m going to do this one thing and I do it really well and they don’t need multiple options. It’s kind of like either you take this option or you don’t take this option after you speak to them, I should know what they want, I should work with them to understand this is what you want or this is what you need. Rather. A need is actually more important than want, because a lot of clients think they want something, but they really don’t. My famous example I’ve been saying for years, I was getting a lot of calls where people would say, I need a Twitter. And I’d be like, what do you mean you need a Twitter? And they’d be like, yeah, everyone tells me I need a Twitter.

How much is one of those? And I would try to explain to them, it’s an ongoing process. You don’t just buy a Twitter. And it happened a lot. There was a few years I got so many calls of people trying to buy a Twitter, so it’s not what they want, it’s what they need. But I’d say, well, do you even need this? Do you need a Twitter? And then a lot of times I’d explain to them what it is and they wouldn’t want it. I’m not out to just sell them anything. I want to sell them what they need. What makes sense?

Marcus:
It’s interesting that you boil down that initial conversation to 20 minutes to determine what it is that the client actually needs. There’s been some conversation about charging for the discovery process and what does that look like? Is it a long process? Do you benefit from charging for the discovery process? Because once you’ve done that, you know exactly what you need to go into doing the work, you potentially make some more money there because you don’t have to redo the discovery process. What are your thoughts around, I mean you just shared that you 20 minute phone call, but what are your thoughts around people having a discovery process and charging for that versus not charging for that?

Brian:
Right. I give everybody 20 minutes and I’d say nine times out of 10, the 20 minutes is sufficient. I write them their proposal and we move forward from there. Once in a while, somebody will say, this 20 minutes is great, but I really want to speak to you further. And that’s when I say, okay, let’s schedule a time where you’re actually going to pay for a consultation. And many people do. And at the end of the consultation, some people are enlightened as to how much money they can make. Is it worth it? And they’re just happy to have had the consultation and it’s a fee well spent. In some cases I get backlash and say, well, your competitors, I can just call your competitors and they’ll give me an hour or two consultation for free. Usually what I try to explain to them is they’re probably going to speak to a salesperson who’s going to sell them whatever they can because salespeople work on commission or if we’re going to take you on as a client, we want to make sure that you’re getting good value and I’m not going to sell you something that I don’t think you need.
And so I will explain that in the meeting and explain what their needs are. And so I’m not like some slick salesman who’s going to convince them to go with them just because they got a free consultation. There’s a price to the free consultation, they just don’t know it.

Katie:
So we’ve talked a lot about personalized quotes for clients. When I used to build websites for people years ago before we switched to selling products, we had a quote calculator on our website which was built using gravity forms where the customer could input basic requirements. Do they want a bespoke design or a custom theme? How many pages? Who writes the copy? That kind of thing. Do they have a logo, whatever, and it would kind of calculate a price and then we would refine that with if they’re interested. I quite liked that because it helped weed out the ones who couldn’t afford us, and I totally get that on the other side, it might’ve cheapened us for the people that could afford a lot more as well. What are your thoughts about publishing prices online in whatever format?

Brian:
So I write about this a little bit in the book and I say, if you really want to publish prices, put them out there and test it, see if it’ll work for you. I think there’s a reason why most web design companies do not publish prices, and I think that it’s so variable because you’re not comparing apples to apples. It’s always apples to oranges. Since there’s so many different ways to build a website, so many different ways that you support the customer service is different. You can’t just say, okay, this website, a 10 page website is going to be 3000 and a 30 page website’s going to be 9,000 and call us if you can afford it. I feel like there’s a kind of personal connection that you have to make with the web development company, and so you should really be able to speak to them and see what they have to offer and then justify more from there from the interactions and say, okay, yeah, these guys are asking for five.

These are asking for four, but you know what? The guys who are asking for 5,000, they’re a little more pricey, but the investment is worthwhile. We’ll go with them because it sounds like they know what they’re talking about and their process is effective and so on. If you publish prices, it’s a little scary because the number is out there and that’s what they’re going to use to compare to all these other companies. They won’t even contact you. They’ll say, oh, okay, a 10 page website is 3000. Great. I’m going to call four or five other companies and how much they charge for a 10 page website or what they could do for $3,000. And without talking to you, you don’t have a chance to defend your price or explain your price or make that personal connection. You lose out on that kind of interpersonal bonus that you get from actually speaking to somebody.

So I don’t know. I think pricing, putting your price on your website I don’t think is the greatest idea. What I do think works instead of that actually is if you want people to be interested, creates scarcity, even if it’s artificial scarcity. So one thing that you might want to do is let’s say on your contact page, say We have room for one or two more clients this year. If you can afford us, if you think you can afford us, contact us, but we have a pretty full schedule, and then people will contact you and ask for pricing and go from there, and it gets people more interested as opposed to just saying, well, here’s a price, and it’s like this cold approach to putting your price out there where they just see a number and then move on. They’re like, oh my God, I hope to get on their good side because they’re only accepting one or two more clients this year. And it’s like whatever price they quote me, okay, yes, I might be more interested. Yes, you’re building in that artificial interest or building in quality interest artificially, let’s say.

Marcus:
So Do the Woo does have an agency chat show, which we’ve definitely stepped on for this episode, which is okay, but I want to wander into that third section of your book where you talk about the WordPress specific themes and plugins. Is there a difference in psychology in pricing like client services versus a plugin product?

Brian:
Right. It’s very different. I’m not an expert in that area. We’ve created at least a dozen plugins, but we never actually sold them to the public or made them available. We just built these plugins and we just offer them to our own clients. You would know, Katie, the idea that supporting plugins is a really unique endeavor. It’s very different. The pricing approach is definitely, it’s basically a different animal. The closest kind of, let’s say connection that I would put between going into plugins like pricing plugins and considering plugins would be creating productized services from a web development perspective. So I have a chapter on that as well, where you say a productized service is basically you take a bunch of services, they’re almost inflexible and it’s like this is the price. So you get a five page website, a logo, 500 words of content for three of those pages, and that is $4,000.

That’s the price. This is exactly what you get, and there’s no or little to no variation. If you’re doing a plugin, it’s basically the same thing, right? You’ve built a set product and it might have a few options. There’s the premium, more advanced, the enterprise level, but it’s basically the same product with a few more features or that can handle more or less. And so the pricing approach is very different because you’re trying to sell something on mass with your plugin, right? You’re trying to sell thousands and thousands of that item, whereas with a productized service, there might be a limit to how much you can actually handle. Although if you can scale, if you’ve set up a system where let’s say you’re a solopreneur and you have all these other freelancers who can work with you, if you can scale, then the product I service can actually work very well too. I mean, the dream would be to have a thousand clients for something for a productized service, whereas with plugins, it’s very common to have thousands of people buying your plugin.

Katie:
Yeah, I enjoyed the section about productized pricing because a lot of people who provide WordPress web design services aspire to selling products such as themes or plugins, but actually they can productize, as you say, their services by making it repeatable basically. And there’s a very interesting list in the book of the sorts of web design services that you could productize, whether this is hosting maintenance and updates, SEO, ongoing link building or something, all those sorts of things. There’s a whole list of things that you could productize while still being a web design agency. So I think that’s a really good way that people can create sustainable recurring revenue, and especially if you can outsource some of those services. For example, I used to do that with ongoing SEO services where we would build the website and we had a partner that we would white label outsource to who did the ongoing SEO, and so that was kind of productized. We didn’t have to do anything, and they had a formula that they would follow on an ongoing basis, and so I think that’s a really good opportunity for anybody doing web design services.

Brian:
It makes sense to look at the different pricing approaches and work through them and say, Hey, you know what? Maybe this is for me, maybe this isn’t for me, one of the most common approaches that people aspire to or dream about is value-based pricing, and so I have a chapter on that as well. I don’t think value-based pricing is for most people, even though I know a lot of people would disagree with that. Value-based pricing is basically, let’s say you want to charge $10,000 for a project, but the client comes to you and says, oh, I’m going to invest $10,000 and I’m sure I’m going to make a hundred thousand dollars from this in value-based pricing. You say, well, what’s the value I’m going to bring? Oh, you’re going to 10 x this, your $10,000 investment becomes a hundred thousand. Okay, well, I want a bigger share then based on the value you’re going to make, I want 40%, so I’m going to charge 40,000 for the project, and when you make a hundred thousand, I’ll still walk away with my 40,000.

You’ll walk away with 60,000. Now, you can only do that with a client who you’ve been working with for a really long time that’ll never work with a new client because new clients, they’re not going to give you such a huge cut of the opportunity, but it’s based on a longstanding relationship. But the thing is value-based for freelancers with little experience or for new clients, it is just not recommended. That’s been my experience, and I’ve spoken to other people, like when writing the book and writing the chapter, I spoke to other people about it, and they tended to agree for the most part. Some people disagree. They think you should try to go for value-based all the time. I don’t think that’s realistic.

Marcus:
Just jumping back to the psychology piece, is there any kind of psychology around, I’m sure there is, but around sales and discounts and how often to run sales and how deeply to discount your services or products or anything like that?

Brian:
So I actually, I hate giving discounts and having sales. I think that you’re kind of devaluing what you’re offering by just having a sale. I think if it’s for a theme or a plugin and it’s Black Friday and you want to go along with the wave of discounts, okay, that’s one thing, but to just discount, let’s say a website project just for the hell of it, I don’t think that that’s a good idea. I feel like you’re doing yourself a disservice by lowering your price for no reason. Because remember, if you can be prepared to walk away in any negotiation, there’s no need to discount. When you tell a client, you’re have your conversation even after you’ve given them a proposal and they agree to everything and this project is going to cost $10,000, and they come to you and they’re like, I love it.

I love you. I love your team, I love your work. You’ve provided the social proof, you’ve provided the value. Everything looks great. Okay, can you do it for 9,000? Now, most of the time, especially if you’re beginning, you’re caught off guard and you’re like, okay, yeah, sure, no 9,000, because getting back to what you were saying before, 9,000 is better than nothing. So it’s like, okay, I’ll take 9,000. I say, stand your ground. So what I do is I tell people, that’s when the hold button, presumably that you’re having this discussion over the phone, the hold button becomes your best friend. What you do is you say, oh, 9,000, okay, can I just put you on hold for a second? Just a quick second. Nobody ever says no to being put on hold like ever. In the history of time, nobody has ever said, no, you can’t put me on hold.

Everyone says, okay, yeah, sure. Put me on hold for a minute. When you take a step back, you take a breather, you say, okay, should I give this guy a thousand dollars discount? Probably not. You say, okay, I’m getting back on you. Get back on, say, hi, Mr. Smith. I looked over the proposal, I looked over what we have to offer, and I think you’re rigging really good value at 10,000. Let’s go from there. And then most of the time the client is going to say, A potential client will become a client. They’ll say, okay, I had to try. I understand, but you’re getting good value at 10,000. It’s that ability to pull back. That is extremely important because you’re caught off guard, and so the initial gut instinct, your knee jerk reaction is like, yeah, yeah, give ’em the discount. Who cares? Just do it.
I want the project. No, but you don’t have to quoted that number for a reason, and you don’t have to just suddenly give a discount. Pricing is a very, it’s a sensitive topic talking about money, it’s a sensitive topic. It’s not something that people feel comfortable talking about. You want to get over the hump of the money discussion, and once you’re over that hump, then it’s like, okay, now we can get on with a project and do the things that we want to do, and really getting caught off guard with a question that makes you lose control of the conversation. You’ve lost control. If somebody approaches you with a question like that and says, oh, I need a thousand dollars discount, that’s it. You’ve lost control. So how do you regain the control? You put them on hold, you take a second to think about it and then come back and it’s like, okay, I’m going to press the button to speak to them.

Again, you regain control of the conversation and say, okay, I can’t give you a discount because what we’re offering is worthwhile at the full price, and then move on from there. And honestly, I wish this, I knew this 25 years ago because without exaggeration, I’ve given probably 40, 50, 60, maybe even a hundred thousand dollars worth of discounts probably in the first 10, 15 years of working, because that never occurred to me to just take a step back and say, wait a minute, wait a minute. What I’m offering is a value, and I’ll come back in the conversation, explain to them, no, I can’t do that. I have full price or nothing because I’m also prepared to walk away. So putting it all together,

Katie:
And in fact, in your book, you give some examples of pre-prepared responses for when clients do dispute your prices, and I actually recommend printing those off photocopying, whatever, and putting them on your desk so that you are ready. But however, the fact that people can be caught off guard linked with my number one lesson about discussing pricing, which I don’t think is you agree with Brian, which is do not discuss prices on the phone unless you’ve got amazing communication skills, you’re really confident, you think really fast on your feet If those things don’t apply to you as they don’t, to me, I think it’s better not to do this over the phone because it’s so easy to even want to be liked by the client to be awkward about money. As you said, when I used to discuss prices over the phone, I would always end up with a lower quote than if I had done it in writing, and so I learned never to discuss pricing on the phone, even ballparks. Keep that incredibly vague and say, I will look into that and follow it up with an email, and that’s where I am strong in writing. I think instead of failing over the phone, if you are the sort of person that might learn what your strengths are and discuss pricing in the context where you’re strongest, that was my tip.

Brian:
So the thing is, so you’re suggesting that instead of doing it over the phone to actually just email the quote as opposed to seeing them in person

Katie:
And they reply in writing and you discuss it that way so that you have that breathing space, which you can have by saying, can I put you on hold? But you have more breathing space if it’s an email, don’t you?

Brian:
Yes. The thing is, if you get it over with over the phone, it removes a step because if you say, okay, I think this might be about eight to 10,000, they might have a few follow-up questions immediately, and then I guess it’s like you’re saying you have to think quickly about it, be on top of it, because you could say, well, it’s eight to 10, I have to work out a few things, so I don’t mind giving a ballpark. Usually you give a ballpark and they focus on the lower number instead of the higher number. You also want to flip it on them and say, well, what’s your budget? And so by the way, my number one tip for getting a client budget, so most of the time they’re going to tell you, I don’t have a budget. Everybody has a budget. Everybody knows what they’re willing to spend.

Whether they want to share it with you or not is a whole different question. But what I’ll say is, let’s say a project should be ballpark, maybe three to 5,000, and I ask them, what’s your budget? Oh, I don’t have one. I don’t have one. It’s like, okay, well, no, no, come on. Tell me what’s your budget? You must know something. I really don’t have one. I was like, okay, this project’s going to be 10,000. I’ll just throw out a crazy number. 15,000 immediately. Every single time they’re going to say 15,000. Oh, no, I thought it was going to be much cheaper. Okay, okay, much cheaper. So how much were you interested in spending on this? Oh, I was thinking more around 5,000. It’s like, oh, okay, now we’re getting somewhere. Now you almost trick them into giving up that info. That’s something to consider as well, and then it helps you work through the budget while you’re discussing it with them as opposed to through email.

Katie:
Yeah, definitely.

Marcus:
For anyone who thought they were going to get through one podcast episode without hearing about ai. Sorry, I have one question for you there, and it’s just if you had any thoughts around how AI works itself into pricing decisions. There are some things that can now be done faster. There are now things that could be done maybe without hiring a contractor, you thought you were going to need to contract for something. Just if you have any general thoughts about how this whole AI landscape factors into figuring out how you’re going to price a project.

Brian:
Okay, so far I’ve already written AI into my contracts. I did it actually probably a month after I started using ChatGPT when it first came out. What is that? About 15 months ago? Something like that. And I already put in that if I’m being hired to create content, it might partially be written by AI and they’ll just have to accept it. What I find so far is that I charge the same prices I was charging before, but I could just do things a lot faster, and I don’t know, in time, maybe if AI gets even more widespread than it is today, maybe that’s going to change. But for now, at least in the present, I see no reason why it’s not another kind of skill. You do something 10 times, you get really fast at it. Well, now I’ll get even faster with ai, but I see no reason to lower my price. This is just my expertise. If I was at a level that I’m able to integrate what I want to do with AI to get the results faster to give to the client, then so be it. It’s just another tool to use. But as of now, I’m not lowering my prices just because I’m using AI to help me out.

Katie:
So before we finish, let’s go on to one topic, which is massive, but we haven’t covered yet, which is scope creep. I’m sure everybody that has experience of web projects has experienced scope creep where the client tries to change the boundaries or definition of the project and start asking for extra things partway through. How do you manage that in terms of pricing?

Brian:
Because I usually do relative value pricing where I have a fixed price for the main package. What I’ll do is I’ll put an hourly rate over and above what was done, so what’s being asked for. So for example, if we say, we’re going to build you a certain website with a certain design, with certain plugins, a certain functionality, you get all this in one package, and then you’ll have your options, like I said, your logos and what have you. So you get all these different options, but then as the project goes on, they say, well, I want this extra work and that extra work. That’s when I’m using the hourly rate, so it’s like a hybrid model. That’s where I come in and say, okay, you’re asking for this extra work. Look, if your project is a 15 page website and the client for a 16 page or 17 page website, at the end of the day, it’s not that much more work.

Maybe we’ll throw it in or maybe we’ll tell the client, look, you’re going to have to pay more. We’ll charge you at an hourly rate or at a buy the page rate, whichever makes more sense for the project, and then go on from there. I guess that’s kind of funny, but forget the idea of an hourly rate. We work it in as an over and above. Now, if the extra work is substantial, so if they hired us to build a website with no blog, and then we’re about to launch and they’re like, oh, actually now we want a blog. We want to start with 15 blog posts. We want a certain design to match the main theme of the website. Okay, well, we’re not going to do that on an hourly rate. Then I give them what I call a project fee or a mini project fee, and it’s kind of an extension of the main option that they took, and we say, okay, this extra blog, yeah, that’ll be an extra, let’s say $3,000.

Take it or leave it. When you tell them that they’re going to have to pay more beyond what they wanted, suddenly they don’t want it anymore. They’re like, well, throw in a blog, throw in some extra photos. I need some extra stock photos. I need this, I need that. And they say, okay, well, that’s all going to add up because you’re going to be paying an hourly rate for all these things and it’s going to cost you an extra five, $10,000, or even if it’s just a couple thousand. A lot of times clients will just suddenly say, yeah, you know what? I don’t really need it. Forget it. I just wanted to see. But yeah, if you don’t want to throw it in, that’s Okay, we won’t do it.

Katie:
Yeah, that’s good advice. I found that you just need to be, matter of fact about scope creep and not really apologetic or embarrassed about it. Just totally matter of fact. Right. Well I’d love to do that. That sounds like a great addition to the website that’s over and above what we originally quoted for. So I’ll send you an email, not a phone call with the extra price and just be matter of fact,

Brian:
I like to actually agree with them over the phone and then send the email.

Katie:
As long as its not a surprise.

Brian:
Yeah, exactly. Say okay, it’s going to be an extra 3000 for this part and I’ll send you the formal paperwork and we’ll get started.

Katie:
Yeah, definitely. Well, that’s been a really fascinating discussion. We’ve covered lots and lots about pricing, but actually that’s only the tip of iceberg of what you’ve got in the book. So Brian, can you tell us where can we find you online and where can we get the book for all these strategies in writing?

Brian:
So right now the only place to get it is on Amazon. So anywhere in the world, please go to Amazon. If you like the book, please review it. Give it five stars. If you don’t like the book, forget you ever bought the book, just put it away. But yes, Amazon, anywhere you are, you can get it.

Katie:
Yeah, and thank you so much for being a guest on Do the Woo BizChat. And thanks Marcus as well.

Marcus:
Thanks Brian.

Brian:
Bye.