Value-Based Pricing for Digital Agencies
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This document provides a 4-step process for value-based pricing to help digital agencies scope projects for higher profits. The 4 steps are: 1) Identify the customer's gap or problem, 2) Determine the lifetime value of the customer, 3) Collaboratively design a strategic solution, 4) Create a compelling offer that combines the previous steps. Each step aims to demonstrate value to the customer rather than focusing on features or price. Following this process frames the conversation around the customer's business and needs rather than the scope of work.
Value-Based Pricing for Digital Agencies
- 1. Value-Based Pricing: Guide for Digital Agencies 4 Steps to Scoping for Higher Profits #DCATL @GeneHammett
- 3. Trusted Advisor Journal of Experimental Social Psychology Enclothied Cognition, Adam D. Galinsky and Hajo Adam
- 4. Relationships based on VALUE will last longer than relationships based on PRICE. “I love to use the lifetime value of clients’ processes with my prospects.” Melanie Romanaux, Somedia Solutions “We pride ourselves more on client relationships than the technology solutions we provide.” Randal Kent, Sevaa Group
- 6. Traditional Fixed fee pricing is hard to scope for PROFITS.
- 7. Focus on Features & Functions
- 9. Who Am I? @GeneHammett • Entrepreneur • Business Coach • My Focus
- 10. Value-based pricing is just charging more…
- 13. Value-based pricing starts in the MIND.
- 14. 4 Steps to Value-Based Pricing Gap Value Solution Offer Every step has VALUE to the prospect.
- 15. VBD Step 1: Gap Gap • • • • Now vs. Future Why? Client’s drivers? Pains, challenges, breakdowns, goals, aspirations Warning: Too many begin to focus on the SOLUTION. Value Solution Offer
- 16. Business Owner Survey Get it at... coreelevation.com/success/
- 17. VBD Step 2: Value Gap Value • • Lifetime value of the client Calculate the acquisition cost for new customers Warning: Without understanding the real VALUE of the project, you will likely only scope the “traditional” way. Solution Offer
- 18. Customer Lifetime Value Pardot Example: Revenue: $1000 per month per customer Avg. Length of Customer: 5 Years Acquisition Cost: $8000 per customer David Cummings, DrupalCamp Atlanta 2013
- 19. VBD Step 3: Solution Gap Value Solution Strategic and tactical • Optimal to build it together • Differentiation is the key Warning: It should be in alignment with the customer’s goal. • Offer
- 20. VBD Step 4: Offer Gap Value Solution Offer • • Compelling Combination of all previous steps Warning: Your offer has to be seen as UNIQUE either by your experience, the approach, or skills. “Aspirin vs. Vitamins”
- 21. 4 Steps to Value-Based Pricing Gap Value Solution Offer Every step has VALUE to the prospect.
- 22. #1 Way to Do VBP Qualify 25% 90% 90% Big Project
- 23. Fear is that it is too difficult
- 24. Fear is that it is too much like accounting
- 25. Change the Conversation “Even when we were a little firm, we would immediately change the conversation to talk about their business and what are their business problems… ” Aaron Shapiro, Co-founder of Huge, Inc.
- 26. Parting Thoughts • Scoping for Higher Projects is a process • Stop Undercharging • Look at COST of them not taking your offer • ROI • Differentiate
- 27. Which do you want to be?
- 28. Questions
- 29. And Finally... Get slides. CoreElevation.com/dcatl/ Ask me a question. askgene.me @GeneHammett
Editor's Notes
- #4: We introduce the term “enclothed cognition” to describe the systematic influence that clothes have on the wearer's psychological processes. We offer a potentially unifying framework to integrate past findings and capture the diverse impact that clothes can have on the wearer by proposing that enclothed cognition involves the co-occurrence of two independent factors—the symbolic meaning of the clothes and the physical experience of wearing them. As a first test of our enclothed cognition perspective, the current research explored the effects of wearing a lab coat. A pretest found that a lab coat is generally associated with attentiveness and carefulness. We therefore predicted that wearing a lab coat would increase performance on attention-related tasks. In Experiment 1, physically wearing a lab coat increased selective attention compared to not wearing a lab coat. In Experiments 2 and 3, wearing a lab coat described as a doctor's coat increased sustained attention compared to wearing a lab coat described as a painter's coat, and compared to simply seeing or even identifying with a lab coat described as a doctor's coat. Thus, the current research suggests a basic principle of enclothed cognition—it depends on both the symbolic meaning and the physical experience of wearing the clothes. Highlights ► We show how clothes systematically influence wearers' psychological processes. ► Three experiments demonstrate that wearing a lab coat increases attention. ► Attention did not increase when the coat was not worn or associated with a painter. ► Attention only increased when the coat was a) worn and b) associated with a doctor. ► The influence of clothes thus depends on wearing them and their symbolic meaning.