Pricing Your Website Design Services Noted by: Francis Orozco LI: https://www.linkedin.com/in/ivan-francis-orozco-a84279188/ This is the show notes for The Freelancer Podcast https://studywebdevelopment.com/podcast.html Found this document thru a friend? I’m also a member of Kyle Prinsloo’s Freelance Web Designers & Developers Want to start freelancing and need guidance? Hop on to: https://studywebdevelopment.com/ Episode 3: Pricing Your Website Design Services The Myth of Fair Value (and how to take advantage of it) by William Poundstone People were offered 2 kinds of beer: premium beer for $2.50 and bargain beer for $1.80. Around 80% chose the more expensive beer. Now a third beer was introduced, a super bargain beer for $1.60 in addition to the previous two. Now 80% bought the $1.80 beer and the rest $2.50 beer. Nobody bought the cheapest option. Third time around, they removed the $1.60 beer and replaced with a super premium $3.40 beer. Most people chose the $2.50 beer, a small number $1.80 beer and around 10% opted for the most expensive $3.40 beer. Some people will always buy the most expensive option, no matter the price. What’s the Best Way to Sell a $2,000 Wristwatch? Do this test at home. Pour water in three bowls. Fill one bowl with cold water, the second with hot water, and third one with lukewarm water. Now stick one hand in the cold water and the other one in the (not too) hot water. Keep them there for 30 seconds or so. Now put both of your hands into the lukewarm bowl. One hand will feel the water is warm, the other one that it’s cold. It’s about the contrast. The same principle applies to price. Nothing is cheap or expensive by itself, but compared to something. Once you’ve seen a $150 burger on the menu, $50 sounds reasonable for a steak. At Ralph Lauren, that $16,995 bag makes a $98 T-shirt look cheap. What’s the best way to sell a $2,000 wristwatch? Right next to a $12,000 watch. Are You Charging Too Little for Your Website? You can have this idea where you can buy a website for $30 and you're going to sell it for $100 and you haven't done much work. You're making $70 and that's too little. You may also just started web design and you're not confident on your skills yet. You can also bringing your prices so low because you're not experienced and confident enough that you can deliver the results. We have two groups: junior developers and senior developers. Who should charge more? We assume that the senior developer would. He may have more experience in terms of technical skills but maybe the same in presenting on how to charge for a website effectively. A junior guy might only know the basics but he could benefit from it if each time he would increase his prices for every project he would take on. Do You Know that there are Many People Who Charge $10,000 and $50,000 for Websites? These developers don't position themselves as a commodity but rather as an expert. They write winning proposals and they bundle their services. They communicate effectively, add value to the project and over deliver. Therefore they can charge at premium price even if someone could do it for cheap. Why Should You Increase Your Pricing? In order to to grow and scale your business. In order to have freedom. In order to have more income and less stress. There's a lot of stress involved in client handling, admin work and onboarding when you charge $500 to $1000 for a website for 5 clients compared to focusing on 1 client for $5000. What Do You Do for a Living? Don't just say I build websites - there's a lot of people that build websites. Say "I help businesses sell more products online". How do you do that? "By building websites." Or say "I help clients receive more referrals through an effective website." Saying "I build websites" sounds like a commodity like Coca Cola. Take note of the words that you speak next time somebody asks. Saying "I build websites" is no different than Kyle's 9 year old niece who can also create a website. How to Charge Your Website Based on Potential Worth or Potential Value to the Business In a client’s mind building websites can be done quickly so $500 to $1000 should be enough. You say "No buddy! Listen! I'm pretty confident you want to increase your sales by 50% which means your annual turnover will increase by $50,000 additionally because you have this website. $50,000 is not a small amount therefore I'm charging you $5,000 to build this website and to give potentally other services as well." That justifies the $5,000 they'll pay because of the return on their investment. Another one would be "88% of people go online. You are no longer looking billboards because it's just too much and it's cluttered. Even if there are billboards, people are on their phones nowadays. You need to be on social media platforms to communicate straight through your clients." You need to help your clients understand that it is not a cost, but an investment. You just need to bridge the communication gap and explain in to them in that way based on the value to help them understand the potential return on their investment on what you're going to deliver them. How Do You Actually Write a Proposal? A 3 tiered pricing encourages people to go for the middle option or potentially 10% will go for the most expensive one. Writing Proposals on a Practical Level (Writing Proposals Effectively will be for another Episode) 1. Highlight the Pain of Their Business 2. Goals that You’ll be Hitting for Their Business 3. Your Pricing Options
