7 Pricing Strategies For Recurring Subscription Freelance Clients

[00:00:00] Brian: Subscription pricing as a

[00:00:01] Brian: freelancer is the holy grail of business models for us. It's very difficult to implement. Many people never find a way to do it. But if you can do it, it can be wonderful for stability in your business.

[00:00:11] Brian: Last week's episode, I talked

[00:00:12] Brian: in detail about this. Around

[00:00:14] Brian: to shift

[00:00:14] Brian: from one time packages to subscription or recurring revenue packages as a freelancer and

[00:00:19] Brian: there was so much interest conversation around that episode that I wanted

[00:00:22] Brian: to dive into this further

[00:00:23] Brian: because I Found one common thread that I saw amongst the conversations that I saw and that is

[00:00:27] Brian: people try this, they get the subscription pricing model wrong,

[00:00:31] Brian: and

[00:00:31] Brian: you end up running yourself ragged.

[00:00:33] Brian: Clients will

[00:00:33] Brian: advantage of you, not out of spite

[00:00:35] Brian: or meanness They just take advantage of the thing that they're paying for

[00:00:38] Brian: or clients really resist to joining your subscription offer or service, or they outright reject it altogether.

[00:00:45] Brian: And so you just give up and say, this just didn't work for me. This doesn't work for my industry.

[00:00:48] Brian: And this makes sense. A lot of people try this and that's the result that they get.

[00:00:51] Brian: And

[00:00:51] Brian: reason I say this makes sense is because freelancers are just not

[00:00:54] Brian: sophisticated business owners. We

[00:00:56] Brian: solo owner operators. We rarely have outside [00:01:00] influence. We don't really understand

[00:01:01] Brian: the best practices and best strategies for the recurring subscription

[00:01:05] Brian: revenue business

[00:01:06] Brian: because you haven't studied the model. You don't

[00:01:08] Brian: what works

[00:01:08] Brian: and what doesn't work. Fortunately, that information is out there. There are many,

[00:01:12] Brian: many, many, Many businesses out there that are offering subscription pricing To their customers or clients.

[00:01:17] Brian: and just about every iteration and version

[00:01:19] Brian: under the sun

[00:01:20] Brian: has been tested at this point.

[00:01:21] Brian: So I'm just going to give you seven pricing

[00:01:23] Brian: strategies to consider. These aren't, things that you have to do. these are just things that if you're going to move down this, route of moving from one time packages to subscription packages or retainer packages,

[00:01:32] Brian: or you've tried it and you want

[00:01:33] Brian: to try it again.

[00:01:34] Brian: These are seven

[00:01:34] Brian: strategies to consider. if you can

[00:01:36] Brian: actually get this done right, you're going to have

[00:01:38] Brian: more revenue

[00:01:39] Brian: As

[00:01:39] Brian: a freelancer.

[00:01:39] Brian: you're going to have more stability, more predictability, you're going to have a

[00:01:42] Brian: Clear understanding

[00:01:43] Brian: of like how many clients you can actually take on

[00:01:45] Brian: to quote fill your roster, which should be the goal when you have a

[00:01:47] Brian: subscription recurring freelance offer. Because you

[00:01:50] Brian: understand the workload involved with delivering

[00:01:53] Brian: on this monthly recurring package that you're giving your clients.

[00:01:55] Brian: And when you

[00:01:56] Brian: understand the workload, then you can

[00:01:57] Brian: understand how many clients you can reasonably take on before [00:02:00] running yourself ragged. Which means when you fill your roster, then you have stability in your freelance business. And if you get all of

[00:02:05] Brian: this right,

[00:02:06] Brian: it is a wonderful world. If you get this stuff wrong, it is a painful way to learn hard lessons as a freelancer. So

[00:02:12] Brian: before I get into those seven strategies, if you haven't heard of this podcast before, you haven't listened to the show before, and your first time welcome.

[00:02:17] Brian: So glad to have you here. This podcast is for freelancers who offer

[00:02:20] Brian: services,

[00:02:20] Brian: and you want to make more money from those services without selling your soul.

[00:02:24] Brian: We have

[00:02:24] Brian: 306 other podcasts in our backlog for you to go explore and enjoy all related to that same central

[00:02:31] Brian: making more without selling ourselves.

[00:02:33] Brian: Except for a few weeks ago, I talked

[00:02:34] Brian: the actual making the case for

[00:02:36] Brian: selling your soul,

[00:02:37] Brian: but that's a one off and it was

[00:02:39] Brian: a fun episode

[00:02:40] Brian: to do.

[00:02:40] Brian: Sometimes like playing the devil's advocate. So let's dive into this. We've got seven strategies to talk about. Let's have a bonus. I want to talk about actually two bonuses. I'll start with a bonus. I'll end with a bonus. There aren't really strategies,

[00:02:48] Brian: but things to consider when you're doing this. and the

[00:02:51] Brian: first bonus I want to talk about is something

[00:02:52] Brian: called value based pricing.

[00:02:54] Brian: You could maybe call this a

[00:02:55] Brian: strategy, but I don't really think it's a strategy. I just think it's an approach to pricing that's worth talking about [00:03:00] So we're talking about creating value for our clients.

[00:03:01] Brian: Ultimately, the

[00:03:02] Brian: thing that they're actually paying us for,

[00:03:04] Brian: value does not equate to hours spent

[00:03:06] Brian: with our clients.

[00:03:07] Brian: Another way of

[00:03:07] Brian: thinking about that are saying

[00:03:08] Brian: this is the

[00:03:09] Brian: time we spend with our clients, the hours we are spending with our

[00:03:11] Brian: clients are working for our clients.

[00:03:13] Brian: That is not what

[00:03:14] Brian: client is paying for. They're pain for the end result.

[00:03:16] Brian: and the end result is ultimately

[00:03:18] Brian: what they care about.

[00:03:19] Brian: So your client does not necessarily care about how many hours you work

[00:03:22] Brian: for them. They

[00:03:22] Brian: care about the result that you get for them. However, you should Absolutely. Care about your hours a lot more than your clients do.

[00:03:29] Brian: So you need to put a premium on your hours in your clients can put a premium on results hours and results are not the same thing.

[00:03:36] Brian: And

[00:03:36] Brian: hear this value based pricing

[00:03:38] Brian: A lot

[00:03:39] Brian: of people mistake this

[00:03:40] Brian: as I have to create an ROI, a financial return on investment for my clients. That's value. And I wanted to take this kind of section here, the small section, instead of making a whole episode on this, just talk through this mindset shift on value based pricing to

[00:03:52] Brian: about there are multiple forms

[00:03:54] Brian: of value that we provide for our clients that are above and beyond just money. Many of you aren't even niches [00:04:00] where you're helping your clients.

[00:04:01] Brian: get any sort of

[00:04:01] Brian: financial ROI,

[00:04:02] Brian: but just

[00:04:03] Brian: quick list of all the other types of value that you can provide

[00:04:06] Brian: your clients

[00:04:07] Brian: based on the services you give them

[00:04:08] Brian: is status.

[00:04:09] Brian: So making your client look or feel better. Ego Status and ego kind of go hand in hand and that's why luxury brands exist.

[00:04:16] Brian: A

[00:04:16] Brian: third kind of closely related

[00:04:18] Brian: type of value to that is

[00:04:19] Brian: self

[00:04:19] Brian: worth. People buy fancy cards, buy fancy watches because of those sorts of things. They want to inflate their egos. They want to have sense of worth. They want to increase their status or their perceived status. but those are all

[00:04:31] Brian: of like

[00:04:31] Brian: Negative connotations to me.

[00:04:32] Brian: There's still a lot of

[00:04:33] Brian: things to be gained from many freelance niches that help increase status, that make them look better, make them feel better, make them feel like they're worth more. An example of this is a client we recently took on who's a boudoir photographer, this client takes photos of

[00:04:46] Brian: predominantly women, but some men in like, lingerie. And while

[00:04:50] Brian: there's no real financial ROI

[00:04:52] Brian: for

[00:04:52] Brian: the clients,

[00:04:53] Brian: from my understanding, many of them do it for their own needs.

[00:04:56] Brian: Their own self

[00:04:57] Brian: confidence is another one here. Building the self [00:05:00] confidence of that person. They do

[00:05:01] Brian: it for themselves more than anyone else. Now, some people package that up

[00:05:04] Brian: and gift it as like a a wedding gift. Sometimes but that's an example of a niche that there is no financial ROI

[00:05:10] Brian: on hiring a boudoir photographer,

[00:05:12] Brian: but if done well, if done right, this could help increase.

[00:05:15] Brian: The self worth thing or the self

[00:05:16] Brian: confidence thing. Sometimes even the self actualization.

[00:05:19] Brian: These are all

[00:05:19] Brian: things that are valuable to the end

[00:05:21] Brian: person. Self worth, self

[00:05:23] Brian: self confidence ego status. And then finally

[00:05:26] Brian: just fun experiential things.

[00:05:28] Brian: Many freelancers are hired to

[00:05:30] Brian: offer some

[00:05:31] Brian: or all of these things.

[00:05:32] Brian: And I

[00:05:32] Brian: can tell you as somebody with a music

[00:05:33] Brian: production background,

[00:05:34] Brian: I've done just about all of these with my clients.

[00:05:37] Brian: I've had bands

[00:05:38] Brian: that came to me to

[00:05:39] Brian: record an album that they hope

[00:05:40] Brian: to sell and be able

[00:05:41] Brian: to tour make a financial ROI. I've had bands come to me that wanted to take their songs and make them sound amazing so they can increase

[00:05:48] Brian: their status in their own circles so they have better recordings than their friends. that also goes along with

[00:05:53] Brian: ego. So I think status and ego are similar things. I've had bands come to me to help increase their self worth.

[00:05:58] Brian: they wanted to prove their [00:06:00] families wrong. That they didn't choose the wrong career field to go into.

[00:06:03] Brian: That they could actually make it in the world music. and then I've had people

[00:06:07] Brian: come to me that they just wanted to release an album. Because that's something they've always wanted to do. And it's

[00:06:11] Brian: Their own form of self

[00:06:12] Brian: actualization.

[00:06:13] Brian: And I've even had bands

[00:06:14] Brian: that just

[00:06:14] Brian: came to the studio because they wanted the whole experience.

[00:06:16] Brian: They wanted

[00:06:17] Brian: to have that in the studio

[00:06:18] Brian: experience recording somewhere or producing with somebody that's recorded some of their favorite bands.

[00:06:22] Brian: These

[00:06:22] Brian: are all forms of value.

[00:06:24] Brian: And when it comes to subscription pricing, specifically for freelancers, I wanted

[00:06:28] Brian: to make that distinction that It's not all financial ROI.

[00:06:31] Brian: So when we're doing value based pricing, I want you to do whatever you can to avoid selling your hours. And it can be really tempting and freelancing to just say, I will give you, X number of hours per

[00:06:41] Brian: month on retainer for

[00:06:42] Brian: X

[00:06:43] Brian: hundred or X thousand dollars a month. I see this in many freelance niches where they just sell a bundle of hours per month.

[00:06:48] Brian: That's not what I'm advocating for here. And I would Absolutely encourage you not to do that. So

[00:06:52] Brian: that's my rant. My first bonus rant

[00:06:53] Brian: on value based pricing. I've got another one at the

[00:06:56] Brian: end

[00:06:56] Brian: something completely different. Let's get into the seven

[00:06:58] Brian: pricing strategies for subscription [00:07:00] pricing for freelancers.

[00:07:01] Brian: The first

[00:07:01] Brian: is offering tiered pricing. I talked about this last I want to go to more details here on this episode, but

[00:07:06] Brian: there's different types of tiered

[00:07:07] Brian: pricing. And just to clarify,

[00:07:08] Brian: you've seen this probably a lot on software sites where it's like the basic package for 20 a month, the mid tier package

[00:07:15] Brian: for 50

[00:07:15] Brian: a month, or the ultimate package for, 100 a month.

[00:07:19] Brian: That's tiered pricing.

[00:07:20] Brian: And

[00:07:20] Brian: there are a few different ways for us

[00:07:21] Brian: to do this as freelancers. The first

[00:07:23] Brian: is something I call up to

[00:07:24] Brian: packaging. this is something like

[00:07:26] Brian: quantity based. And remember

[00:07:27] Brian: when I say quantity based, I'm not saying hours. We throw away the

[00:07:30] Brian: concept of selling hours here.

[00:07:32] Brian: We're trying to provide value for our clients.

[00:07:34] Brian: So whenever we're doing up to. Tiered pricing. It be

[00:07:37] Brian: that you are doing it by deliverable. So in a mastering example, if you're a mastering studio, it might be that you offer up to ten songs a month mastered for one price,

[00:07:46] Brian: up to

[00:07:47] Brian: 20 songs a month for another price.

[00:07:49] Brian: that's an example of up

[00:07:50] Brian: to pricing where it's based on the amount of deliverables that you provide.

[00:07:53] Brian: This is also great for just

[00:07:54] Brian: naturally recurring subscription businesses like podcast production where you might have ebbs and flows [00:08:00] in the amount of episodes you're doing in a month because some months have. five weeks or five Mondays in it if you do episode every Monday and some only have four.

[00:08:07] Brian: So what do you do in those cases? You could either charge

[00:08:09] Brian: by a week,

[00:08:10] Brian: which is perfectly fine and bill every 28 days instead of every 30 days,

[00:08:14] Brian: or

[00:08:14] Brian: you can do pricing of up to X episodes. So it could be that you are pricing is. know, 2, 800 a month for up to four episodes.

[00:08:22] Brian: So if the client fails to do one of the four episodes that month, you still build them for the up to pricing. Or if

[00:08:27] Brian: go up to five, it would bump up to the next

[00:08:29] Brian: year where it's up to seven episodes or up to eight episodes a month. So that's

[00:08:32] Brian: the first way to do

[00:08:33] Brian: tiered pricing is to tier based on deliverables.

[00:08:36] Brian: AKA

[00:08:37] Brian: up to tiered pricing. the next type of tiered pricing is service bundles. So in many

[00:08:41] Brian: niches, there are a lot of different services you might offer that the client might want and there's natural kind of blends of packages that you might have. go back to my, background just cause I can speak to this really easily without having a bunch of stuff planned out in music production.

[00:08:54] Brian: There is the songwriting, song tracking, editing, mixing, mastering. And like promotion, you can call like six [00:09:00] different things that are involved and you might put packages together that are just recording,

[00:09:04] Brian: editing and mixing,

[00:09:05] Brian: no songwriting

[00:09:06] Brian: or mastering or promotion. might put a full service together with all the things and you do, one song every three months in that you might put together a bundle

[00:09:14] Brian: that's just

[00:09:15] Brian: mixing, mastering and promotion.

[00:09:17] Brian: the only

[00:09:17] Brian: caveat I'd have here if you're going to bundle things together like this is don't create more than three bundles.

[00:09:22] Brian: when you get into like four or five or six packages, people start getting overwhelmed with options and they're going to resist picking any because they're not sure which one to pick.

[00:09:30] Brian: So in these sorts

[00:09:31] Brian: of cases, you might have these bundles preplanned ahead of time before you have a sales conversation or a sales call with someone. And when you determine what services they need, you just tell them what package they need based on the services that they want or the services that they need.

[00:09:42] Brian: So you're not presenting.

[00:09:43] Brian: Five different packages. You're

[00:09:44] Brian: just saying, this is the package for you and it's going to be this price.

[00:09:47] Brian: so a lot of this can be

[00:09:48] Brian: internal pricing and packaging, not something that you're publicly displaying everywhere for people to see. And the third type of tiered pricing is

[00:09:53] Brian: something called bolt on or you can think of it as modules

[00:09:56] Brian: or

[00:09:56] Brian: modular This is very similar

[00:09:58] Brian: to previous

[00:09:59] Brian: where you [00:10:00] have different kind of configurations of services But

[00:10:02] Brian: this makes a lot of sense

[00:10:03] Brian: In industries where you have a core service you offer But then there's a lot of little things that you might need this is common in video production where you have, obviously you're doing a video for somebody, but there could be so many different elements of what's involved with a shoot.

[00:10:15] Brian: There could be extra help

[00:10:16] Brian: on set. There

[00:10:17] Brian: could be different cameras that you need or rentals that you have to bring in. There can be different pre production or post production things that are needed. it may just be that you have a

[00:10:26] Brian: core that you offer your clients. Say you're doing

[00:10:28] Brian: like four events

[00:10:29] Brian: a year for a flat monthly fee or a flat quarterly fee with a client. And then you have bolt ons that you can add to any given project.

[00:10:36] Brian: It might just be that for one project, you need to bring on

[00:10:39] Brian: some

[00:10:39] Brian: one thing for this one project and that's just an add on price. It could be that you have. One client needs the core service and six of your bolt on type

[00:10:47] Brian: of services and so they have a

[00:10:49] Brian: flat monthly fee or flat annual fee based on the

[00:10:52] Brian: core service plus the six

[00:10:53] Brian: bolt on while another

[00:10:55] Brian: client might just need the core service plus one bolt on service.

[00:10:58] Brian: that allows you to [00:11:00] essentially tear the pricing

[00:11:00] Brian: based on the needs of the client while not confusing them with a bunch of different individual packages that they might need. So if you have a more complex deliverable that you're giving clients, and this usually revolves around one or two central services with a bunch of ancillary things that could be utilized in certain circumstances, this modular or bolt on type of packaging can really be helpful. the first pricing strategy is create tiers

[00:11:22] Brian: of pricing, because in many cases, every client has a different need. So having a package or a model that matches their need can be really useful.

[00:11:29] Brian: The second. Pricing strategy is something called

[00:11:32] Brian: onboarding fees. This is very common in many industries. Freelancers don't quite understand this yet. But when you get on a recurring revenue package with somebody, there's a

[00:11:39] Brian: of work to get the client

[00:11:41] Brian: on board. And when you think through the life cycle of a client, you've got kind of different phases. You've got the new lead phase where they've just found you, the nurture phase where they're getting to know you, the sales phase where they're making a decision. Then you've got the

[00:11:51] Brian: onboarding phase

[00:11:52] Brian: where you're actually getting them up to speed and ready to actually start the services. and then the fulfillment

[00:11:56] Brian: phase. And that's where you're actually delivering services. Once you get a client

[00:11:59] Brian: [00:12:00] up and going, say they're six months in, you're just on a nice routine.

[00:12:03] Brian: You understand how it all works. Yes. You understand. What you're supposed to do the client understands what they're supposed to do and it's just humming along assuming you've said it all up right, you've got great systems in your on your side of things. They understand your systems and they're not confused by anything but

[00:12:15] Brian: at the start of a

[00:12:16] Brian: relationship None

[00:12:17] Brian: of that's true.

[00:12:18] Brian: The client doesn't really understand how to work with you yet you don't quite understand the quirks of that specific client. There's a lot of things to figure out. It can be files you need. You need to get information about how to fulfill the project.

[00:12:28] Brian: You might need to get logins to certain things. You might need to create certain assets one time that will be used for the rest of the time. This is very true in like podcast production where if you're launching a brand new show, you've got to create the show

[00:12:38] Brian: or you can do all these

[00:12:39] Brian: things just to get the

[00:12:40] Brian: client on board as a client.

[00:12:42] Brian: There's a

[00:12:42] Brian: lot of work

[00:12:42] Brian: being compensated for that. One time amount of work is called an onboarding fee and an onboarding fee

[00:12:48] Brian: is just a flat rate. Usually

[00:12:50] Brian: it might be that

[00:12:51] Brian: charge

[00:12:51] Brian: a thousand a month for your services But because of how much times invested in the new client that first month you might charge 2, 000 or 3, 000 or 4, 000 for [00:13:00] the first month and then a thousand a month after that It might be that there is a certain amount of work that needs to be done before you even start the recurring subscription So This is again, going back to podcast production.

[00:13:08] Brian: There's so much needs to be done before you get to a weekly show. So it might be that you have a flat rate for upfront to get the podcast off the ground. You can consider that an onboarding fee. You can call it a launch fee, but that might be, four

[00:13:19] Brian: five, 6, just to get it off

[00:13:21] Brian: the ground and then you have a flat monthly fee But you don't start the flat monthly fee until the onboarding process or the launch process is done So there's a million ways to do this It really depends on

[00:13:30] Brian: your needs,

[00:13:30] Brian: the client needs how projects typically go But an onboarding fee is a necessity if you want to make sure that you are not being overwhelmed with new clients when you get them That you are being properly compensated for your time on that. and also, so you're not feeling the need to take on more clients when you can't afford to time wise.

[00:13:46] Brian: You're making sure you're being compensated for that upfront time so that you are not dropping the ball with your existing clients. Because here's what can happen. You start to get your roster full and you're fulfilling the work on all the clients you've gotten so far. And then you bring new clients in

[00:13:59] Brian: and

[00:13:59] Brian: [00:14:00] you're still not the income level that you want.

[00:14:01] Brian: Because you're not taking onboarding fees so you feel like you have to get more and more clients on just to get your monthly recurring revenue up to the sustainable level and Meanwhile, everyone's paying the same price at all points, even though all clients are not taking the same mental bandwidth from you or the same time from you.

[00:14:16] Brian: And you can just

[00:14:17] Brian: tell you from someone who does monthly recurring subscriptions,

[00:14:20] Brian: clients on month six

[00:14:21] Brian: are not as needy. don't take as much time or effort or mental bandwidth for me as clients on month one. The

[00:14:26] Brian: third pressing strategy is

[00:14:28] Brian: something called project to retainer transition credits. it's not an official term, but that's

[00:14:33] Brian: The best way to say it project

[00:14:35] Brian: to retainer. Transition credits come up with a better term than that. But basically

[00:14:39] Brian: we talked about last week

[00:14:40] Brian: where you might have the foot in the door where you take client on with a one time project or a one deliverable project, whether it's, the band coming in to do a single or client coming in and do one photo shoot, the client come in and do one video. The client who just wants the logo, whatever, and you do the one time project and you're trying to sell them on the recurring subscription because that will increase the [00:15:00] lifetime value of the client that will help stabilize your income, all the benefits that you want. So one the ways that you can get them to make that transition now versus later is to offer them a credit based on what they paid for that first project. for example, just gives you some rough numbers here for music production. If a client comes to me for a single and I charge 1, 000 for that single, but then I also have a monthly recurring package that offers similar to what Mark Eckert did in his, business. If I'm offering one song every quarter where we have one month spent on songwriting, one month spent on production, and one month spent on promotion, then I'm essentially doing one song every three months or about

[00:15:33] Brian: four songs a year. Which

[00:15:35] Brian: would be about 4, 000 a year.

[00:15:37] Brian: if it was just a flat rate. Now, typically you might want to discount that slightly to just incentivize that. so instead of

[00:15:42] Brian: the 333 a month, it would be maybe reduce that down to just a flat 300 a month. Well, first thousand dollars that

[00:15:47] Brian: the client spends

[00:15:48] Brian: with you. Can be given as a credit towards the subscription and there's a number

[00:15:52] Brian: of ways to this. You wouldn't just

[00:15:53] Brian: give them a thousand dollars and you work for months for free That wouldn't be very good for you. You can do it in a number of ways You can [00:16:00] either put that thousand dollars towards their onboarding fee If you have one you could put that thousand dollars that they use on this first project Towards the first six months of their subscription or the first year where that thousand dollars is broken up over the next six months Or twelve months So essentially they would have around 50 percent off their six months or around 85 off their first

[00:16:18] Brian: 12

[00:16:18] Brian: months, something like that, where you've broken it out to give them a long term incentive to sign up. But can be a really good

[00:16:23] Brian: incentive to get people over the fence because what will inevitably happen if you have a offer like this is that a client comes to me for a single we record that single. I

[00:16:31] Brian: try to pitch them on the recurring subscription

[00:16:33] Brian: thing. It's better for your band.

[00:16:33] Brian: It's better for keeping up momentum as an artist. It's better for actually taking the time to write the great songs, capture them correctly, promote them well so that you're actually gaining traction as a band. yeah, selling them on it and they're like,

[00:16:43] Brian: yeah, I you're right. I'm going to think about it.

[00:16:45] Brian: Maybe the next single. you and I both know the next single is not going to be for six months because the band will put it off because they're slow at writing music, right?

[00:16:53] Brian: instead of that

[00:16:54] Brian: inevitability happening, you can say,

[00:16:56] Brian: okay, I understand

[00:16:57] Brian: take as much

[00:16:57] Brian: time as

[00:16:57] Brian: you want, but

[00:16:58] Brian: just so you know,

[00:16:58] Brian: we have an offer right now, [00:17:00] where if you join now, we can put this thousand dollars you just spent on your first single towards the subscription for the next 12 months so that you save

[00:17:07] Brian: 80 bucks a month,

[00:17:07] Brian: whatever, can say the next six months and you save 160 a month, something like that. I would probably

[00:17:12] Brian: prefer the

[00:17:12] Brian: 12 month thing. So you're not taking that big of a hit on the subscription pricing, but if

[00:17:16] Brian: you do this, I can virtually

[00:17:18] Brian: you will have a higher conversion rate based on a version without this. If you've tested so that's the third strategy is taking the one time project fee and using it as a transition credit into a recurring subscription And that's typically going to be credited over 6 to 12 months

[00:17:33] Brian: That strategy, by

[00:17:33] Brian: the way I got from

[00:17:34] Brian: Alex

[00:17:35] Brian: ramos's book gym launch secrets uses it in the gym industry It would do a one time like

[00:17:39] Brian: six

[00:17:40] Brian: week bootcamp of some sort and they pay a flat rate for that and then to transition them in the long term subscription, he would credit them that flat fee back over the first six months of their gym membership. And this is a really good example of taking something from a completely unrelated industry, the gym industry, and bringing it into the freelance industry and it works wonderfully.

[00:17:57] Brian: The fourth pricing strategy is something called introductory [00:18:00] offers. This is something you've seen all the time. I don't love these, but there's a use case for these in certain circumstances. So an example of what this looks like is it could be that. For the first six months of the subscription, it's 20 percent off, 30 percent off, 50 percent off,

[00:18:12] Brian: whatever number you want to say.

[00:18:13] Brian: It's the first six months are 50 percent off.

[00:18:14] Brian: And

[00:18:14] Brian: this can be good in a number of circumstances. One is like when you're trying to fill your roster, and that's especially when

[00:18:19] Brian: you are offering something new, a new package or pricing, and you're uncertain of what you should charge.

[00:18:25] Brian: You don't have high confidence in the rates that you're charging or the service is even going to be valuable to the client. So in these cases.

[00:18:30] Brian: It's essentially like offering just a cheap

[00:18:32] Brian: price to a while also having a naturally baked in price increase after six months. And the for this

[00:18:39] Brian: versus just saying, all right,

[00:18:40] Brian: client, cause you're brand new and this is a brand new service.

[00:18:43] Brian: I'm just going to say, I'll only charge you 300 months for this. And then that's the end of that conversation.

[00:18:47] Brian: Many people do this

[00:18:48] Brian: on a new service and on a recurring subscription, this can be the death of your business because now that client expects that price for life.

[00:18:54] Brian: when you start getting newer clients at the higher rates,

[00:18:56] Brian: you start to resent that client.

[00:18:58] Brian: You start to

[00:18:58] Brian: possibly,

[00:18:59] Brian: not always, but [00:19:00] possibly treat that client differently because they're paying less. And it's not really a good dynamic to have. And it can be

[00:19:04] Brian: hard to raise the rates

[00:19:05] Brian: on them because they just weren't expecting that, right? So in this case, when you're doing introductory offer, you say for the first six months for the first 12 months, it's this price and then it will go up to our normal price and normal price is what your ideal price is for this. And when that expectation is set in advance and the client gets to experience the value for the first six months at the lower price, then they're more likely if you've done a good job to increase to that higher rate and it allows you to just, again, Have that price increase baked in. So that is the fourth strategy is

[00:19:32] Brian: introductory offers.

[00:19:33] Brian: And

[00:19:34] Brian: we

[00:19:34] Brian: move on to the fifth one. And that's something called long term incentives.

[00:19:37] Brian: This basically where you lock

[00:19:38] Brian: your client into a contract. There are pros and cons

[00:19:40] Brian: to both sides of this. And I see arguments all over the place on whether you should lock someone into a contract or not. I've seen it work both ways, but generally speaking, a client who's in a contract will find less excuses to cancel.

[00:19:52] Brian: where

[00:19:52] Brian: a client who's on a month to month. Subscription where they have no contract locking them in, they will find many excuses to cancel. And it

[00:19:58] Brian: be excuses

[00:19:59] Brian: that are[00:20:00]

[00:20:00] Brian: actually detrimental to the client. So for example, if you are

[00:20:02] Brian: doing music production, and you're on that quarterly subscription with a client where they're paying monthly for a song every quarter and the client is not on a contract, they may cancel after six months after two songs done and they've started to gain momentum, but they decided that they're just too busy right now or money's getting a little tight. Whatever sort of excuse comes up and they have the option to leave, they naturally take the path of least resistance,

[00:20:24] Brian: But it

[00:20:25] Brian: doesn't get them closer to their goals. They came you and they hired you because they wanted to put out songs more regularly. They wanted to take more time to intentionally write and produce and promote the songs that they've done so they

[00:20:35] Brian: can ultimately

[00:20:36] Brian: gain momentum as an artist and have more success.

[00:20:38] Brian: Well, If they cancel after six months, they're not to get it. It's just like someone who cancels their gym membership after six months or three months or two months. They're not getting the results that they want as far as weight loss or muscle gain or endurance.

[00:20:48] Brian: So by putting contracts into place, you can

[00:20:50] Brian: actually help

[00:20:50] Brian: the client get what they want while also

[00:20:52] Brian: your business be more profitable

[00:20:53] Brian: because clients are worth more to you.

[00:20:55] Brian: So we are in this

[00:20:56] Brian: fifth strategy for long term incentives, we can essentially give

[00:20:59] Brian: [00:21:00] clients an incentive

[00:21:00] Brian: for signing on a long term contract. And you see this in the gym industry as well. I had the same offer when I signed up for Orange Theory. It was something like 180 a month, month to month, or I could sign up for a six month contract, something like that. And it reduced it down to like 130, I think is what I pay. I think they actually probably reduce that too much. Personally, I'm not going to

[00:21:18] Brian: but I think that's too big of discount, but might be that you do

[00:21:21] Brian: 500 a month or you can be locked in for six months for a flat 2, 500, essentially saving 500 total in that period. Now, this

[00:21:29] Brian: is not me. They're pre paying for all

[00:21:31] Brian: of that. That just means they are locked in for the full six months or full 12 months for that 500 a month payment, or maybe they're reduced to 450 a month, something like that. Or another strategy you can use as far as long term incentives is

[00:21:41] Brian: you actually discount

[00:21:41] Brian: the monthly fee at all. You keep that monthly fee of 500, whatever your number is.

[00:21:46] Brian: But instead of the 2, 000 2, 000 onboarding

[00:21:48] Brian: fee and the 500 a month because remember we talked about onboarding fees earlier you charge onboarding fees now, congratulations good job.

[00:21:54] Brian: Instead of charging

[00:21:55] Brian: the onboarding fee, maybe you waive the onboarding fee for a a 12 month contract You're more eager to [00:22:00] get

[00:22:00] Brian: clients who are signed on for the long term. Then you work to collect those onboarding

[00:22:03] Brian: fees because onboarding fees

[00:22:04] Brian: are collected because it takes extra time Well, you're willing to invest that time into

[00:22:07] Brian: client.

[00:22:08] Brian: if they're willing to invest 12 months of time together on the calendar So that's a secret ninja strategy.

[00:22:13] Brian: That is

[00:22:14] Brian: awesome,

[00:22:14] Brian: in my opinion and should be utilized more So just to clarify long term incentives is the fifth strategy and maybe you have a flat rate per month that you're charging clients and maybe you've decided to charge An onboarding fee to compensate you for the time and effort it takes to get a client up and running You And for a long term 12 month contract, you just waive that onboarding fee. It's a win for you because you get a contract for the client. It's a win for the client because they get to save on the onboarding fees, or they get a slight discount on their monthly fee, and it's a wonderful strategy. So that's the fifth long term incentives. Pricing strategy. Number six

[00:22:43] Brian: is prepayment discounts.

[00:22:45] Brian: This is similar to the previous one, except instead of

[00:22:48] Brian: Locking them into contracts and, still paying per month. You're essentially giving them a similar or same discount, but they're paying in advance. So instead of collecting a month by month, You get a big influx of cash right up front. you see this all [00:23:00] the time in software, where it's, 35 a month or 29 a month paid annually. So you pay the 29 annually up front, which is 348 instead of paying 35 a month over time, which is 420. The I

[00:23:15] Brian: keep bringing up software is because they're the ones who have figured all this

[00:23:17] Brian: out. They have the brightest minds, the smartest people the people with

[00:23:20] Brian: all the college degrees in pedigree, figuring out the numbers, and we can just

[00:23:24] Brian: take what they're doing and implement ourselves in our, freelance businesses. Now, one caveat here, one thing to consider is well, it

[00:23:29] Brian: absolutely improves cashflow, if you were paid for your entire year of work today, you're

[00:23:35] Brian: going to have, 100, 000, 200, 000

[00:23:37] Brian: sitting in the bank right now. Awesome. So our bills are paid.

[00:23:40] Brian: We have no financial concerns. We're great. That brings up a problem though. Now we have to be good at cash management because

[00:23:46] Brian: we have the next 12 months to live off

[00:23:48] Brian: of this money in the bank.

[00:23:49] Brian: So if

[00:23:49] Brian: you're not good at managing cash, don't do this. If you're going to do this, you have to be great at managing your money, budgeting, making sure you are putting out projections.

[00:23:57] Brian: So you're not getting paid now and then [00:24:00] doing the work later and not, saving that money for later for 6, 12 months down the road, where you still have work to do. You still have bills to pay, but somehow where did all that money go? Now we have to get more clients on and pay in advance.

[00:24:10] Brian: to pay today's bills. So now we're doing the whole thing where

[00:24:13] Brian: you

[00:24:13] Brian: have to keep bringing on new clients to pay today's bills,

[00:24:16] Brian: even though should have saved

[00:24:16] Brian: that money from

[00:24:17] Brian: before. this gets really

[00:24:18] Brian: messy, really fast if you're not good at managing money. So just be careful with this one.

[00:24:21] Brian: so that is number six, the sixth pricing strategy,

[00:24:23] Brian: which is prepayment discounts.

[00:24:25] Brian: and that brings us to pricing strategy number seven,

[00:24:27] Brian: This is the last one before our bonus.

[00:24:28] Brian: and that is scheduled pricing increases.

[00:24:30] Brian: This is something my CPA does really well

[00:24:33] Brian: almost to an annoying level, but not so annoying

[00:24:34] Brian: that

[00:24:34] Brian: it'll cancel.

[00:24:35] Brian: So this is a really good example of like how to do this.

[00:24:37] Brian: Scheduled pricing increases just he will bump up

[00:24:40] Brian: my monthly fee every year by a small percentage. I think it's like three or 4%. And this

[00:24:45] Brian: essentially just

[00:24:45] Brian: keeps up with inflation. And these small increases are never enough to make me sick. But do know that if I looked at it

[00:24:51] Brian: like four five years ago, when I

[00:24:52] Brian: was paying him a month, it's a lower than it is now. So this, avoids the whole like you need to raise your rates like a ton after three years and clients will [00:25:00] leave you because you have to like double your rates. And this is something you can just put in the contract. Rates go up or the goes up by 4 percent a year. on schedule every year.

[00:25:08] Brian: this is a short, but sweet strategy, but it's

[00:25:10] Brian: something that can be really good for those of you who hate conflict, who hate asking for pricing increases or who never increase their prices. If you just put it in, it's just baked in where every single year on the subscription, your price is going to go up by 4 percent and you're going to see weird numbers.

[00:25:23] Brian: It might start at 500 then it's going to go to

[00:25:26] Brian: five 20 then like 544, something like that.

[00:25:29] Brian: But

[00:25:29] Brian: at the end of the day, you don't have to renegotiate. You don't have to ask for massive price increases later on.

[00:25:33] Brian: You just set it and forget it. And if inflation gets way out of hand, then you can have those conversations.

[00:25:38] Brian: So those are the seven strategies. I'll talk

[00:25:40] Brian: over them again, really quick. And then I have like One bonus thing I want to talk about that's really important here, especially if you're going to move into subscription pricing.

[00:25:46] Brian: So the seven again are

[00:25:47] Brian: tiered pricing,

[00:25:48] Brian: onboarding fees, or starting charging onboarding fees for those brand new clients who are a big time suck and mental bandwidth suck.

[00:25:54] Brian: Third is doing the project to retainer transition credit. So when you do those one time projects, taking that money you've got [00:26:00] from the one time project and gifting it as a

[00:26:03] Brian: Discount over the next six months or first 12 months of the subscription pricing for the client

[00:26:07] Brian: Number four is introductory offers.

[00:26:08] Brian: So like first six

[00:26:09] Brian: months at a discount something like that fifth

[00:26:12] Brian: pricing strategy

[00:26:12] Brian: is offering long term incentives So getting people to sign up for longer contracts for a slight discount or for a waived onboarding fee Which is my favorite

[00:26:19] Brian: Number six is pre payment discounts So getting them a slight discount by paying for the full year or the full six months in advance

[00:26:26] Brian: And number seven is putting in scheduled

[00:26:28] Brian: pricing increases Every year. So if

[00:26:30] Brian: follow those, if you do those, you're going to be setting yourself

[00:26:32] Brian: up for least a much

[00:26:33] Brian: easier subscription business to run. But this last little thing here, this bonus section is really important. I call it guardrails. For any business, any package, any pricing, especially subscription pricing, you need guardrails in place to make sure you're not shooting yourself in the foot. anytime you're coming up with a pricing package, whether it's one time or subscription, you need to make sure the numbers actually work for your business. And especially

[00:26:54] Brian: the numbers

[00:26:54] Brian: don't ruin your business. This is common thing. You start thinking, I want to do all these amazing things for my [00:27:00] client,

[00:27:00] Brian: But it takes

[00:27:01] Brian: a hundred hours.

[00:27:02] Brian: and

[00:27:02] Brian: if I want to make 50 an hour, I have to charge 5, 000, but the clients aren't going to pay 5, 000 for that. only really charge 3, 500 for it. And so here's what ends up happening. The only you have is You earn less per hour.

[00:27:15] Brian: And when

[00:27:15] Brian: you earn less per hour,

[00:27:16] Brian: you got to work more hours to make what you need to make. And you only have so many hours in the day.

[00:27:19] Brian: This is what I mean by the hours don't

[00:27:21] Brian: matter to the client, but they absolutely matter to you. So you've got to come up with a price and a package that is valuable to your client.

[00:27:26] Brian: It gets them the results that they want and the results that they need and the value that they want without taking up so much of your time. That you are overworking yourself. So a

[00:27:34] Brian: few ways to do this specifically

[00:27:36] Brian: for subscription

[00:27:37] Brian: One of those is putting in

[00:27:38] Brian: those natural bottlenecks.

[00:27:39] Brian: or, speed controls, I guess you could call it.

[00:27:41] Brian: This is similar to DesignJoy.

[00:27:42] Brian: if you go to DesignJoy. co, I've talked about them last episode. How they offer unlimited design on a monthly subscription.

[00:27:49] Brian: Can I send you a thousand projects to do right now? No, because he has a natural bottleneck.

[00:27:54] Brian: And that bottleneck is you have one service you can request at a time. He has a Trello board as

[00:27:58] Brian: a client.

[00:27:59] Brian: You go [00:28:00] on. And you say, I want this specific thing here, the of it,

[00:28:03] Brian: Move that trailer board over to

[00:28:05] Brian: service requested

[00:28:05] Brian: or the process is for him. He wakes up that He says,

[00:28:09] Brian: here are all my requests for the day. I will just go one by one and

[00:28:12] Brian: knock them all out. I will put them onto the delivered board. Clients review it the next day

[00:28:16] Brian: and they will either ask for revisions that day

[00:28:19] Brian: or they will put another service request in.

[00:28:21] Brian: So at

[00:28:21] Brian: most,

[00:28:22] Brian: I will only have

[00:28:23] Brian: one request from every client, every

[00:28:25] Brian: day. And in many cases,

[00:28:26] Brian: Every client is not going to request something

[00:28:28] Brian: every day, or sometimes

[00:28:29] Brian: just a

[00:28:29] Brian: quick revision that next day.

[00:28:31] Brian: So there's a natural bottleneck in the delivery mechanism

[00:28:34] Brian: just based on how he's

[00:28:35] Brian: arranged the packages. The other way to make sure your numbers actually work is to make

[00:28:39] Brian: sure you have

[00:28:40] Brian: lot of up

[00:28:41] Brian: to language

[00:28:42] Brian: in your contracts or in your Packaging. Earlier I talked about in tiered pricing,

[00:28:46] Brian: you can tier things based on up to language, but that's not really what I'm talking about here. I'm talking about in

[00:28:51] Brian: any subscription

[00:28:52] Brian: pricing having some sort of limitations that. The client

[00:28:56] Brian: can't exceed.

[00:28:56] Brian: It might be a number of revisions. It might be a number of [00:29:00] edits, a number of changes, a number of requests, a number of files, a number of whatever.

[00:29:03] Brian: It can

[00:29:04] Brian: be up to X amount. So anywhere you see yourself doing a lot of work or doing a lot of things, ask yourself, is there a limitation I can put in place in the package or the pricing of the contract that it says you get up to this amount.

[00:29:14] Brian: And this up to needs to be a fair amount. It needs to be what the average client will, will need. Never need above that

[00:29:20] Brian: When they hit that limit,

[00:29:21] Brian: You can either charge more or you can just outright refuse do it

[00:29:24] Brian: I can tell you right now, design joy will not give you five

[00:29:27] Brian: requests in a day get up to one

[00:29:29] Brian: I think there might be an

[00:29:30] Brian: even more expensive package where you get up to two But you're not going to get three or four or five It doesn't care. He's a lot of clients. And that's a wonderful, powerful place to be as a freelancer, to just have a system that says, if you can't fit within the system, you're not a good client for me. If you can fit within the system, you are a great client for me.

[00:29:45] Brian: That leads me to like kind of last point here for guardrails is pumpkin plan, your

[00:29:47] Brian: roster.

[00:29:48] Brian: There's a book by Mike

[00:29:49] Brian: Michalowicz.

[00:29:49] Brian: It's called

[00:29:50] Brian: the pumpkin plan. It's been so long since I've read it. I might even be missing the point here, but I think I remember the gist of the book. And the whole book is about looking at your entire client roster

[00:29:58] Brian: Looking at them from the lens [00:30:00] of which one of these pumpkins do I want to continue to invest time, effort, energy, watering, nurture, caring to let grow and which ones do we need to just cut the vines and let die off because we are going to have a better, happier, healthier, more profitable business if we just focus on those prize award winning pumpkins and don't let Those clients who are going to drag us down and drain nutrients away from the good clients. If we just let those die off, naturally we're going to grow.

[00:30:23] Brian: So

[00:30:23] Brian: sometimes you need a pumpkin planter roster, aka fire the bad clients. There's always going to be problem clients and there's nothing stopping you from firing those clients, especially if you have exit clause or some sort of thing in the contract that allows you to cut ties. So

[00:30:37] Brian: that is all I got for this episode. Hopefully you found this thing

[00:30:39] Brian: helpful, interesting. Love your feedback always. You just shoot me an email, podcast at six figure creative. com. Always happy to get your input. If you're If you're on YouTube right now,

[00:30:46] Brian: for whatever reason, that's the smallest percentage of our overall podcast downloads, but I love that you're here. me know which one of these six

[00:30:52] Brian: or seven things you would like

[00:30:54] Brian: to implement

[00:30:54] Brian: or will implement or just say like, Hey, Brian, this one's stupid and here's why.

[00:30:58] Brian: And I'll argue with you on YouTube if you [00:31:00] want.

[00:31:00] Brian: So all I got for you today. Thank you so

[00:31:01] Brian: much for listening to the six figure creative podcast.

[00:31:03] Brian: See you next week.