 Thank you. Hi guys, sorry for the late start, a little bit of technical difficulties, but hopefully we'll get through this. Disclaimer, this is generic information. Seek individual advice if you wanna know about your scenario. So what we're covering today, I mean, I've already been introduced, I'll do a little bit more, but that's it. We're gonna talk about determining the underlying price. And those of you, how many went to Ben's topic this morning? Quite a few, about half you. So Ben's topic and my topic definitely interlink a lot, which is really good because they do kind of work together. And then I'm gonna talk about packaging, which is a way for you to save time and make more money, which is something really important to you guys as web designers, so I'm gonna be doing that. Then we're gonna talk about a few challenges that come up with pricing. There's a few common things I see, and then a little bit of summary at the end. So who am I? As was mentioned, I have my own business as well as, in fact I have two, as well as the Business Connect service. What that's allowed me to do is see 850 small business owners over the course of the last three or so years, face-to-face, one-on-one. That's in addition to the thousands I see through speaking and networking and everything else. And what that's enabled me to do is to get massive insights into what problems are with small business owners. And one of the big things I saw was pricing services. People just didn't know how to price their services properly. And most people kind of go, okay, my competitor's charging this, I'll charge this, and that's how I kind of determine my price. And then they find they're not making any money, because you know what, your competitor probably wasn't charging the right price in the first place. So I decided to start my business because I was sick of small business owners being ripped off. And this happens all the time, unfortunately. And so I've developed things in different spaces. So things like website briefs and SEO and that I've got involved in because a lot of people are being ripped off. And as I said to people when I spoke in Sydney about a different topic, the thing is you guys are here because you're part of a community. You have genuine concern for your customers. And a lot of the people that I see that are doing the shonky things and the wrong things and why I started my business aren't actually the people that are here. So that's great to see. So I used to work in corporate many years ago for my sins and I do have things like a Masters of Applied Finance, but I don't really tell many people that. So for a pricing conversation, I usually do. So I'm just gonna let people know a little bit about the Business Connect program. How many people here are from New South Wales? A few of you, over this side, mainly. If you're in New South Wales and haven't used the service, you get four hours of business advice fully subsidized by the New South Wales government. And if you're not in New South Wales, you don't miss out. So do check out business.gov.au slash assistance and check out what's available in your area because people complain the government does nothing for them but then they don't utilize the services that are available for them. So make sure you use it for yourselves but also get your clients to use it, particularly clients that come to you for a web design service and they're not ready. They still don't know what their mission is. They still don't even know what services they're offering or what products they're offering. They haven't sorted that out. Flick them to these sort of services first. Get them to sort the stuff out with them and you're gonna get a better result for you. I said click or not going. Okay, what are the common pricing issues? For people that are doing things that you're not sure how long something takes, how long does it take to put a website together? It can vary, right, depending on how much. Copy you get, how much content is going on the site. So how long a job is can vary quite greatly. Creatives, how many people are also graphic designers here? Can you just sit down? If I tell you sit down right here right now and design me a logo, can you do that? No, you need time to be creative. Sometimes it will, literally it will come to you in two seconds flat and you'll have the best idea straight away. But I'll tell you now, it's probably not the best idea to share that idea straight away because otherwise theoretically, right, you took five minutes to design that logo. So how much am I gonna pay you? Five minutes. So this is one of the issues that comes up with pricing. Does time equal money? It's an interesting thought. How do we quote therefore hourly rates? Well, in that scenario, definitely you don't wanna be quoting an hourly rate. So maybe you're quoting an outcome. Maybe you're quoting some packages, which we're gonna talk about today. Sticking by your price. How many people say, right, my price for this is $3,000? And the person says, love you, love your work, but $3,000? Not really my budget. How about I give you two and a half thousand dollars for that? Now, if you're pretty new, what do you usually say? Sure, no problems, I can do that. But now what have you told your client? How much are you worth? Are you worth $3,000? Or are you worth two and a half thousand dollars? So if we're gonna trade our price for something, we've gotta have them give away something. So be careful of that. Justifying the value is not just justifying the value to the client. It's actually justifying the value to yourselves. How many of you here, honestly, don't really think you're worth what you charge? It's interesting. Nobody has imposed the syndrome? Yeah. So there's a lot of people that actually don't do it. Yes, you probably are. But I'm telling you here, you do. There's a lot of people that have this. And one of the examples of this was a hairdresser. And I listened to her, she was talking on the phone and she was going blah, blah, blah, blah, blah, blah. And the person said, how much is it? And she goes, $70. She muffled it, she looked down because she didn't own the price. This was $70 for a haircut and parameter in a salon. And I'm like, God, $70 is cheap for that anyway. But in her mind, she was a Blue Mountain's mobile hairdresser. And for her, $70 seemed excessively expensive. So she didn't believe it herself. She doesn't believe it herself. How the hell was her client gonna believe her? So really think about this. And the last thing is really about making money, not making work. Too many people I see are busy, busy, busy and they don't take a cent. I was speaking to a guy last week. He told me his first year he made 100,000 sales, second year 200,000, third year 350,000 and stole the year to finish. And he's not taking any money for himself. That is not good. So why is pricing important? Again, another live example. This was ridiculous. And I will add, this guy used to be an accountant. So the fact that this guy can't work this out is freaking ridiculous. Okay, cause you're gonna look at this and go, what? $100 was what he was charging for this item. He was buying the item wholesale at $85. Those of us who went to Ben's talking about, well no, that's far off what we should be paying for a wholesale price. Shipping was included. So it was about $10 for the shipping and the packing cost. So now we're up to $95. So he's making $5 growth profit. Is he really? No. Okay, so I haven't told you the part of the story here. He drives a three hour round trip to buy that $85 item. How much is petrol this turnage? Probably about 50 bucks for a three hour drive. 50 bucks of petrol plus his labor. Now this guy wanted me to help him with his marketing. And you know what? Cause I have ethics, I said, sorry mate, I am not helping you with your marketing. If I help you with your marketing, you are going to go under. Even further and faster than you're going now. So this is why pricing is so important. And I use that example cause it's so obvious. But the thing is probably what a lot of people here are doing is very similar, just on a smaller scale. And some of the comments that were made earlier today for instance, it's not a bad thing to be making profit. It's a good thing to be making profit. It's a good thing to be paying tax. And a lot of people are about avoiding tax. But if you're paying tax, you're making money. That's a good thing. Why is my clicker not working? It's frozen, uh-oh. This isn't good. Things to scream was not working, playing nice. Oh, there we are. Okay. So pricing services is very similar to pricing products cause that's the other thing I hear regularly. But pricing a product is so easy, pricing a service is so hard. Honestly, they're basically the same. Remember the packages you offer are basically the products that you offer. And your packages should contain what are called productized services, which we'll go into. So you should always have, but wait, there's more. People want more value, so give them more value. When you're communicating value, people buy. So remember, we're not trying to sell to people. We actually want people to want to buy from us. They want to buy if you do these things. You solve their problem, you make them feel good. You give them a result that they're after. So if you're a personal trainer, you lose 10 kilos or whatever. And the price is acceptable to them. It doesn't have to be the cheapest, it doesn't have to be the budget rate, but it has to be acceptable. This is gonna be fun today if this is gonna keep playing out. Sorry about this guys, we have technical difficulties. Okay, clients are not all the same. How many people deal with big-end corporates? It's part of what they do. A few of you, and you also deal with small businesses. Do you charge the same price to a small business as a big corporate? No, they're different. So when you're deciding who your ideal clients are, remember they do have different price points. Someone that spends $100 on a website, $1,000, $10,000, $100,000, they're different people. Decide who you want to service and really concentrate on doing the right thing by then. Remember, once you have social proof, awards, your reputation's built, Tony Robbins for instance, he can command a much higher price. But when you don't have that proof, you're much lower. So determining price, and the reason I have a picture of a cushion here is when I do this as a two and a half hour workshop, what I do is we actually give people an exercise to do and they price the cushion. Because what I say is the seven pieces that make up the actual cushion, the fabrics, the trim, the insert and all that stuff, we take that out of the picture and what's left is pretty much exactly what you do when you're pricing a service. It's left with the labor and the overheads and the other costs that are involved. So what we do is go through these and I'm not going to go through these in detail, I'm really skipping over this so we can get the packaging part. But I do have some separate training available on this that you can sign up to later, which is free, if you want to understand more about calculating your hourly rate. So, tax was mentioned by Ben earlier, 100%. If you're collecting GST, make sure you put it aside straight away. It's not your money. If you pay employees, put aside their PYG and they're super immediately, even though you may not pay it immediately, because it's not your money, it's spent already. Put also money aside for your end of your tax bill because as I said, you want to be making money and therefore we want to be paying tax. The overhead and fixed costs. And when I get people to do this cushion exercise, what I get them to do is to look at it from two perspectives, sole traders making the cushion themselves in house and a mire or a spotlight making that cushion. And the thing is, think about big business when big business makes something. So if I get a mire and buy a cushion, I'm not just buying the cushion. I'm buying sales staff salaries. I'm buying chief executive salaries. I'm buying board of director. I'm buying profits if they make any. I'm buying everything. I'm buying cleaning products. I'm buying racks. I'm buying rent. I'm buying everything. Do we think twice about it? Nah. So why in small business do we have this really bad habit of going, okay, I think that web design part is gonna take four hours to do, but I don't think a customer's gonna pay that much. So you know what? I'll knock that down to two hours because I think they'll pay that. You haven't allowed for admin time, marketing time, travel time, all these other bits of time that you are consuming for that customer. You're actually losing out. You're not charging your overheads. So when you actually do this exercise and work through it and at the very end, after this, you can look when you get the slide pack, you'll see there is a bit about the cushion thing. Have a look at it because it is really interesting. And the reason I get people to do a cushion rather than a service is because you think objectively, because otherwise we'd be far too subjective. We think about our businesses and what we do as a service provider. Whereas you think about a cushion, you're totally looking at it from a different perspective. So even if you don't make sales, these sort of overheads have to be paid. Things like insurance, buying your laptop, buying your software and themes and things you have to buy, it's all essential. Before you made one sale, you've had to buy all that stuff. You also have the other costs that are optional, things like paying for advisors, coming to WordCamp, these are optional things. They're good things, but they're optional things. And marketing, I'm not saying it's optional, I'm just saying you can go for low cost options rather than expensive one. There is an NAB breakeven calculator that you can work through. And again, that's something that would go through in the big version of this. Variable costs are the things that are directly related to the individual sale. So if you're doing a web design for a customer, how much is directly related just to that? The overheads, though, are all the other costs, the costs of running your business. So the profit in you, this is the most forgotten about part. You need to pay yourself as an employee if you're the web designer, but you also need to pay yourself as the business owner, as the marketer, as the admin person. Because guess what, if I outsource those roles, I have to pay for those. So why am I not paying for myself to be in those roles? We have this mentality, it's not chargeable to the client. It is chargeable to the client, otherwise our business simply won't exist. Go back to business. Big business we pay for everything. We've got to change our mentality. The profit, Ben mentioned this morning, 20% target for profit. But make sure you do allow profit. Profit allows us to do things like grow our business, reinvest in our business. If we don't put profit in there, we actually will end up eventually suffering. And you can benchmark. So people like Business Connect have access to actual benchmarks to say what your industry profit margins and that are. But the ATO also has some basic benchmarks on their website too. The biggest increase you can make in profit is by raising your prices. Because your prices are the top line. Expenses, reducing expenses will save you and make you profit, but it won't make you as much. Because expenses should only be a percentage of your sales. Unless you like that clown earlier with this $100 product. In that case, he would have been better off cutting expenses. So the acceptable pricing range. Good old Goldilocks, right? We need to be in the range. So the green bar is the acceptable range. If we go too low, people won't pay. This was a real example. 200 blogs for $500. Now this lady, I said to her, like seriously, what are you doing? And she's like, oh, each blog going to take me seven minutes. Even if it took seven minutes, that is not a good alley rate. But seriously, I think we can work out why she's charging that, because the quality is crap. So we get dubious about the quality when things are too cheap. If it's too high, there's too many other alternatives that we can go to. So you've got to be within the acceptable range. So you need to work out your bottom-up pricing, but you also need to fit in with your market, too, because they just won't go for you if you're not in that range. Why don't we quote alley rates? How many people here quote alley rates? Is all or part of what you do. Maybe there's extras and stuff. OK, a few of you. There's a few reasons why not. For a start, people don't know how long a job will take. If they know it's going to take them four hours to write a blog and they think it's going to take you four hours, but you're actually only going to take an hour. They're actually going to go four times whatever you quoted for an alley rate. So be careful about that. You've done a lifetime of training and experience to get to that one hour, so what's an hour really worth you? As I said before with the five-minute logo idea, time is punished, alley rate punishes speed. Yet we pay for expedited shipping. We pay to get things quicker. So it's actually a really interesting thing to look at. It's about relative risk. I'd rather pay someone that I know is going to do a good job and do it once than pay someone that's terrible and have to do it three or four times. And I get a lot of clients doing that. This is a video you can watch later, and there's some really good key messages in the video because it is a long video. So if you only want to watch those key bits, just watch those four sections on it. OK, the packaging. So this is how we get away from our alley rates and things. So for a start, go back to what I said before about how we get people to buy from us. Think about the emotional benefits. We go to a personal trainer or something. The benefit might be losing weight, might be losing 10 kilos, but what emotional benefit do we get out of that? We can chase our children around the backyard comfortably. We can go climbing mountain, whatever, mountain Everest, whatever. We can do all these things. They give us an emotional benefit. They make us feel good. They make us feel relieved. They make us feel something. Think about what you communicate to your customers. What unique selling points do you have? What are you different about from your peers? Although we can use pain points, people like Kate yesterday talked about pain points and agitating them, totally agree, but get them away from the pain quickly. Make sure your solution is a positive solution. And make sure it is a solution to their problem and really meets their goals or their results that they're after. Another lock up. Do, do, do, do. Come on, come on. OK, so comparisonitis is the other issue with our alley rates. If I say to someone, I'm charging you $150 an hour and they earn $30 an hour, they automatically start going, but wait a minute, I earn $30 an hour. I've got to work five hours to pay for your 150. But the thing is your 150 isn't an hourly rate because that employee gets paid to turn up from 10 to two, whereas if you do work for a client, you're only paying for two hours. It's very different. As we said before, penalizes efficiency and expertise. So instead, what we want to do is explain the service and include value add offers. So what we're going to use is a three tier pricing system and we're going to combine products and services. So even though you might go by only offer services, I can trust me, we can turn your services into products. These are products you can put on your website. You can use WooCommerce to make a store and sell things. They could be digital downloads, they could be online courses, they could be all sorts of things. So we can sell them individually, but we can also package them up, which is what we want to do. So we have three tiers. Tier one is typically at their budget level and is the bronze package, okay? We don't have to call them boring names like Bronze or Gold, but we start off with this idea. Tier two, more perceived value for the client, but not more time, and this is imperative. Tier, sorry, sorry, tier one, sorry, scrub that. Tier one is we're doing the time savers. Tier two, we are adding more value, we are, sorry, not more time. Tier three is only where we increase more time. Okay, so here we have the bronze, silver, gold packages. The perceived value is the total outside boxes, okay? So that's what the client perceives that they're getting. Okay, so they want that big outside box. So their value that they perceive is always more than something costs. The cost to us is those little orange boxes at the bottom. What you will notice is that the bronze and silver packages are almost identical in size of cost. And that is because I'm not adding more time to my silver package. I'm only adding productized services. So I'm adding things which we've created once and we can put in that package many times over, but the things that we're saving, we'll see in a second. The reason the gold one has more cost is because it's more of our time. So the key thing with this is the bronze and silver have different amounts of profit. So we had the same amount of cost, but I've got more profit in the silver. And the gold is only very similar to the silver. So therefore our sweet spot becomes the silver one. Okay, so in the bronze package, what are you trying to do with the bronze package? These are things that help you sell the product. They help it just be more than just your hourly rate. So just the thing that's obvious. So the obvious thing is I'm getting a website. I'm getting a four page website. That's the obvious thing. But what things could you chuck in there that would have value to the client, but would save you time? So think about those really annoying time TDS questions that you get. So for web designers and things, how do I load that blog onto my website again? And it's the 15th time they've asked you the same question. I'm sure we've all had some of those. Things like variations, don't give them lots and lots of options. Only give them a couple of choices at this level. So at the bronze level, we're really restricting decisions because decisions take time. So we try to save time. With the web design space, what are the type of things that we could save time? So any TDS questions, any how-to's, instructions, anything that's a bit fiddly that you might have to use visual aids because you can't talk about that over the phone. These are some examples of what you could do for your time savers as a web designer. A website brief document or e-book because it's gonna speed up your time if you get a better brief to start. How to edit the text, how to add a photo, how to insert a blog. And a checklist of items they need for their site. Get them prepared in advance. These will save you time. And you've created those things once because they're very minimal cost you to create. The silver. These are things we're gonna create to sell over and over and over again. But we could also add things like more payment options. They're things that don't really cost us any more time but it may be benefit to the client. Could be the level of inclusions or your scope of suppliers. It could be the choice of themes or whatever you're giving them depending on how you do your construction or your websites. So the type of things you can do in here are things like productized services. You can sell these on your site too and we'll show an example in a second. Addresses their pain points and their questions genuinely provides them value. It's not something they can just grab off the internet really easily. And the FOMO, the fear of missing out. So they'll upgrade because they don't wanna miss out. So things that you could offer here is a web designer. You could do a little e-book explaining what pages should you have on your website. Explain to them how to do keyword research. Get them to do their own keyword research rather than you having to do it. So your website will offer basic SEO regardless of them paying for it or not. How to create 100 blog ideas. Again, that could be a little course or a little e-book. Present them as videos, e-books, short online courses, blogs, whatever. So the thing is we've increased our costs slightly because we've had to create these things. But one of these things for instance might take a day to complete. But if you can then have it for sale on your website, you can sell it over and over again. Etsy. People are familiar with Etsy as handmade items. Etsy also sell digital downloads. So you could actually put your product there and potentially get a whole new audience. So these things are great because you can genuinely say these have X value because they actually do. They're actually available on your website. But then in addition, you're putting them as part of this package. So the thing is by somebody buying a silver package over the bronze, you haven't spent any more time, no more time, but you've made more money. So I did this with resumes in a cover letter template package. I sold them the template package. So they'd buy that and I could sell that over and over again. I could sell that hundreds of times. But it saved me going through tedious, boring phone calls of when you're doing a cover letter. It was just so dull. So think about what's dull and things. What's a value to the client that you can get rid of? Only in the gold package do we add more time. Only in this one. We might give them greater choices, greater selection, again, because decision making takes time. It's about giving more consult time, more emails, more to and fro, but we make sure we charge accordingly for that time. So what are some of the challenges? The bit I mentioned earlier about trying to work out all your overheads, it's really hard to work out, well, how many sales am I making in the year to therefore allocate the overheads to? And that can be a really tricky one. And that's what my extra training that you can use covers. So if you have one service, you have multiple service, do you have lead generators? How are they counted? Earlier I mentioned the example of paying $3,000 for something and the person's saying, I want to pay $2,500. How do we deal with that? We only reduce our cost if they are trading something out. So what's the triangle? The cost triangle is reflected by the quality, the scope, and the time and timeframe we're completing it in. So do consider if you're going to cut something, one thing has to go, something in your scope goes, something of your quality goes. So if you were a fence builder, for instance, you could use a lower grade of timber. But consider your values. If you are selling yourself as a high quality provider, you're not going to want to drop your quality. There's only a certain part that you can drop. So the idea being, though, if we drop our quality, then we can reduce the cost. But there was a trade-off. And we'd be clear about the trade-off. When we put it in our invoice or our quote, we say, was this, now it's this because of these reasons. So that way if they come back to you, they're not expecting to get that same price again. They know that they lost something was traded for that. Scope creep. How many of us have this issue? Everyone, right? If the customer wants something extra, charge them for it. It's simple. How do we make sure that happens? Be very clear from the start. Make sure you manage the expectations. Be crystal clear. This is what your website includes. This, many pages, and that's it. Includes the button being here, not moving up and down the page. If you want that, it's extra. Think about the discussions you're having with people and make sure that those things are included in here. So be crystal clear in your agreement and that way you will not have fights with your customers later. As I've already said, creatives need to be in the zone. Sometimes creatives have problems with their decision and that's when you give the client too many options. It's actually you making the problem, not the client. I had an example of perfectionism. It was an interior designer. And the client was perfectly happy signing off but she wasn't. She didn't want to sign off. I'm like, for God's sake, she's a client's happy. Just take it and move on. Sometimes we're going to do that. And the other one that can be difficult for creatives costs a quote and can actually take quite a long time. So to go back again, qualify those clients. Who are your ideal clients? Not everyone is your ideal client. Are they genuinely interested? Do they have genuine urgency to get this job done? We don't want someone that's in the next year I want a website. We want to know they want it in the next three months or whatever we're going to do. So be friendly with the person. Push them a little bit but don't cross the line. Be careful about how far we prod someone. Be careful with some of the questions we ask. I know some people don't like asking questions like what's your budget because they think that the person's going to think, oh, you're just going to give me something at my budget even though you would have done it for half the price. So just think about how you can rephrase that to get that across the line because it's really important. Things like changing your processes. There may be things that you're doing that are taking up too much time. We can be more efficient, more productive than we save time and money. So one of the things was mentioned earlier by Emma was about how she creates a base site. She then copies across for all her clients. So she set up all that stuff in the background. All those, you know, put the word fence and updraft and all that are already in there. I thought that's really clever. Why waste that time setting that up each time? Because that might be an hour every time that you save. You can still charge a client, but you save it personally. So I would suggest doing time logs for a two-week period, a normal two-week period, as you measure every 15 minutes what you do. Get that out there because then you can know what things you need to fix. If you're repeating stuff, you need to fix it. I've talked about restricting choices and about perfectionism. So we're going to talk about that again. So that is it. So we talked about pricing and packaging. Determining your price, make sure you think about everything that goes into your price. Don't sell yourself short. Too many people do this. Make sure you're including your owner time, your profit. Make sure you're really thinking about this. Think about your three tiers. What could you do to put in that bronze time saving tier where it looks like you're adding value to the client, but really you're adding value to yourself because you're saving yourself so much time. The silver is what value adds can you put in there? Think about that. And the gold is the only one you should be adding more time in. And I can guarantee you there's a lot of people in this room that are giving people the gold package at the bronze price. So think about it. Calculating your time, do the time log exercise, and really work out how you can communicate your value. The last thing I will say though is just remember on your website you do need to have at least one price. Okay, one price. It doesn't have to be all of your prices, but people need to have an indication of where you fit. Think about when you go looking for a service. If you go on there and there's no price, particularly if they've got a beautiful website and it makes them look super professional, what do you automatically think? Their prices are up there, or they're too expensive for me. So just remember that you need to have some indication of price on your website somewhere. So I would suggest that you review your costs and pricing, review your value proposition and your tiers and your peers and make sure that you fit in with them and test your new pricing out, see how you go. And that is that. Thank you.