259 - How do we know what to charge? WordPress Business Bootcamp - Series 1 / Episode 2

‘WordPress Business Bootcamp’ with Nathan Wrigley and David Waumsley

Hello, welcome to another in the WP Business Bootcamp series. It’s the series where we relearn EVERYTHING we know about building WordPress sites and running a web design business from start to finish.

The Premise of this series is that we have our first potential website client. All we know is that she is a lawyer in a large city. She asked a mutual friend who thought of us. We have few skills and no business or processes in place. She has no previous website. No branding or copy.

As we go through the series, Nathan and David will be taking different routes to get our business going and our client’s website up and running.

Presently, we are on Season 1 of the series which is looking at the things that need to happen before the build.

How do we know what to charge? Some initial thoughts prior to recording:

Nathan:

I’ve always worked on the, “how long do I think that that will take” and then make a number up from there, model. CMS’s really made these calculations easier for me, and made it easier to do the work in general. Page Builders went further.

This has mostly worked but it leaves me open to being beaten on price from rivals (this happened more and more), plus life got more expensive with family, but my skills did not really. It felt like younger people with less expenses were able to increasingly beat me on price.

David:

I’m a fan of the Agile mindset and project management style. This has influenced the type of business model I have gone for in the first episode. I don’t expect to make much profit on the building site but want to engage in a long term relationship with the client, making a more passive income from hosting and care.

I’m starting from the premise that clients have little clue what the web can do for them, and we do not know what they want until we start. I will plan to start offering a MVP cheap. David’s Agile pricing approach is explained here.

Episode intro: The Problem

• Gig economy, this is now the reality of the world. It’s international, and cheap to get most things.
• Many going pro will not have run a business before. They may not be aware of how much time is lost to marketing, accounting, general management and meetings.
• Just keeping up to date in the industry can be a full time job. How many other costs there are, like software, insurance, legal fees, utility bills and transport.
• How do we come up with an hourly cost for ourselves even if that’s never made public.
• Web designers rarely know what they can charge for a project? You see many asking groups what other would change for X, but the answers vary and the thread descends into unsolicited business advice.
• Location and expectations of target audience are important.
• Clients rarely provide briefs that allow for accurate quotes. Even if they are clear on the design and functionality, you have to collaborate with them and perhaps many stakeholders.

Pricing models

Fixed Fee

Service > Cost  > Price > Value > Client

The more traditional model. With a web project you get the price by costing the scope of the project. The hours, business running costs and what you need on top for profit.

Value Pricing

Client > Value > Price > Cost > Service

A popular augment for Value Pricing is that clients do not know what the cost of their website should be (only perhaps the cost of others).

You start with who they are (how and what they have to spend). What is valuable to them ie. what problem you can solve that has a high value?

It a very scalable concept for courses because you say stop trading your time for dollars when with the right initial question you can win 30K jobs.

Nathan’s thoughts:

Nathan can value price based on the last episode (where for the sake of this series Nathan is going to deliver the Waterfall design process. Ie a scoped project where price is agreed for the end deliverable)  He will have an issue applying this to ongoing jobs for clients. Chris Lema says he does though.

David’s thoughts:

David can not value price easily. He is going the Agile route. The client and design collaborate and learn from doing. The value will change if the process is done correctly. Probably best to charge for fixed sprints of work with set time. The Agile project will be a set number of sprints.

Pricing tactics

• Discounts
• Loss leaders (perhaps the money is made back in hosting and care).
• Do we end prices with 97?
• Do we put fake high prices and discount them like products (endless sales furniture stores)?
• Do we provide price option like product (fake high price to make the expect price look relatively low)?

Nathan: Can use these.

David: Can’t so easily.

Key questions:

• Are we trying to establish an ongoing relationship or does the relationship end with the deliverable?
• Can you get in quick, charge for what the client say they want and get out before the realise this web stuff is complex and ongoing?
• Do we have an amount we will not go below (or above)?
• Do we give a price and cut off features if they say it is too high?
• Do we give a low price and upsell add-ons (keyword research, testing, extra browser support)?