When discussing a project with clients, you’ll inevitably get to pricing. Especially for less established creatives, pricing can seem like a black art. How can you give a fair market price while still keeping the lights on? Mike McDerment, CEO of Freshbooks, suggests “value-based” pricing:

If you start the conversation by throwing out a price, you’re just an expense. Nobody likes expenses, so clients — typically entrepreneurs and businesspeople — try to keep them as low as possible. By following my process, I was able to position my fees as an investment rather than as an expense. That’s because the price would be directly connected to something the client wanted to achieve — it would be a means to help them get results.

When you position your price this way, the client merely wants to know that the investment is a sound one. As an example, if I was proposing to build a website capable of creating an additional $100,000 of profit annually, I would ask the client to make an investment of $40,000 in their website. Essentially I based the price on the expected value to my client, not on how long it would take me to do the work.

By framing your work as an investment, you can move the conversation in a direction that will make both you and your client happy.

  • http://www.link Lincoln Alves

    Could you give an example in a differente situation? Between a digital agency and a outsourcing company (digital production)? What is the best way to offer outsourcing services (design, front and back-end development) for digital agencies? 🙂 thanks in advance

  • kamaronn

    What is the best way or how can you “predict” the profit the project will be capable of creating? I have no clue.

  • kamaronn

    Allright, I’ll try to keep that in mind, thank you for sharing. But what if it’s something offline? Like a campaign, or a brochure, or something non “analytic’able”? Any suggestion?

  • http://jeremybeasley.com/ jeremy beasley

    I agree. The value-based pricing works well with for projects with very predictable impact on their business. As a counterpart, this model is a nightmare for “hit-and-miss” projects will have a ton of risk. However, you could make the argument that you shouldn’t be involved high-risk type of projects…

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