9 Lessons I Learned While Building A New 6-Figure Income Stream In 2022

[00:00:00] Brian: Hello and welcome to the six Figure Creative Podcast where we believe that it takes more than just passion in order to make a full-time living with our creative skills.

[00:00:07] Brian: If you believe that you're in the right place, if you're a new listener because if you think that all it takes is passion, if you're passionate enough, you will succeed. I can't really help you. It takes other skills above and beyond. The creative skills that you have, and it takes way more than just the passion you have.

[00:00:19] Brian: if you're returning listener to the show, you already know this. You see the sign on my wall says it takes more than passion. You already agree with this. That's why you're coming back to the show. I wanna first thank you for coming back.

[00:00:27] Brian: Then. I wanna thank you again for filling out the feedback form that we launched on the last episode, episode 2 29. That feedback. Has been great for getting ideas, getting feedback for things that we should change, things that we should maybe adapt and move around. My goal for 2023 is to make this podcast a top 10 in our category.

[00:00:42] Brian: We have peaked at 11. We haven't cracked the top 10 yet. we kind of hover between 11 and 25 It just depends on the week or the month. And the only way we will crack that is if. Improve this show needs to get better. If you've been with us for a long time, it's gone through some massive changes over time. It's evolved over time. Not all changes have been for the best. Sometimes it's good, sometimes it's [00:01:00] bad. But I wanna make sure 2023 is a year of evolution for this podcast in a positive way. And crack that top 10 once and for all and stay there.

[00:01:07] Brian: So this form, anyone listening right now or watching on YouTube right now, go to six figure creative.com/better. B e tt e r, the links in our show notes as well. And on that forum, you can tell us what you want in this show, what you don't like about this show. There's just like three questions there. Do you want more interviews? Do you want less of me being on solo episodes like this? Do you want more co-hosts episodes? What do you want personally? You specifically, you fill out the questions, let us know. It's a hundred percent anonymous survey. Unless you put your name in there somewhere in one of the answers, we won't know who it is.

[00:01:36] Brian: And the entire point of this is to get feedback. The topic today is actually from of the people that submitted feedback from me. so that feedback form is something I'm gonna be regularly pushing because I want to have a constant pulse on our audience to know whether or not I'm going the right direction with this.

[00:01:49] Brian: Because if you're not listening to the show, I can't help you. And if I don't know what you want, I can't help you either. I can tell you what I know you need, but also I have to shape it around what you think you need [00:02:00] as well. Cause that's the reality of running a podcast. I have to attract you with what you think you want, and then I have to actually give you what you need.

[00:02:05] Brian: That's just candid honesty right there. So today's topic is an important one when it comes to making a full-time living as a creative or specifically freelancer, who we talk to mostly on the show. is a topic around pricing, and if you listen to the last week's show, episode 2 29 raise yourgo darn rates, I wanted to try out a stupid title to see how the downloads did.

[00:02:23] Brian: the theme of that episode was, raise your Gosh on rates. That's basically it. We talked for 30, 45, 50 minutes. I dunno how long it was talking about raising your freaking rates. You need to do it. You need to charge more. Today's episode is a little different.

[00:02:35] Brian: It is about raising your rates. It's also about lowering your rates. It's about when to raise, when to lower. It's a skill that I used my entire career and I've never really talked about it. I don't know why I haven't talked about it. it didn't even come to my mind until I was onboarding one of my coaching clients we were just talking on a coaching call and we brought up something about Airbnb.

[00:02:53] Brian: So I'm gonna talk about how Airbnb plays into this, but this pricing discussion today is about the most profitable [00:03:00] way to price. yeah, you can raise your rates all day long, but at a certain point you're not gonna get clients, Let's just say you charge a thousand dollars per client on average right now.

[00:03:08] Brian: Well, If you charged 5,000, maybe you could get some clients still. I think you probably could. What about 50,000 or a hundred thousand for that same service? What about a million dollars for that same service? Clearly, you're not gonna close a client for a million bucks if you're usually charging a thousand.

[00:03:20] Brian: So clearly there is a drop off point somewhere in that pricing spectrum where you will get zero clients. So what is the most profitable way to price for your services? That's the topic of today. And if you're not doing this, which is most people that I know, if you're not doing this, you are leaving money on the.

[00:03:35] Brian: dynamic pricing. This is where Airbnb comes into play. So many industries, not just Airbnb, so many industries use dynamic pricing to find the most profitable price for the given day, week, month, year, whatever. flights do this.

[00:03:49] Brian: That's why you can go look at a flight right now and it's 300 bucks and then you. look for that same flight tomorrow and it's 500 bucks or 200 bucks. Same for the hotels, rental cars, ride share with surge pricing and [00:04:00] Airbnb. There's actually sites that link to Airbnb to help you as an Airbnb host, set dynamic rates for your Airbnb rental.

[00:04:06] Brian: Based on events happening in our city based on basically like AI or or machine learning algorithms, that help you understand moving supply and demand. And if you aren't using dynamic pricing as a service based provider or a freelancer or really any business, You are ignoring the basic laws of supply and demand.

[00:04:22] Brian: So if you're interested in this topic, you think this is something that could help your business, then this episode is for you, . And I'm just gonna get right into it. when I don't have a cohost on here or a guest, there's like no small talk I'm business Brian. Like This is why the people that listen to the show probably listen is because I just go straight into it.

[00:04:38] Brian: I don't do a lot of fluff typically, unless I have somebody on the show with me as a cohost. And we can just talk about personal life stuff. So let's talk first about prerequisites. What kind of business models or businesses make the most sense to do dynamic pricing?

[00:04:50] Brian: not all businesses can do this and not all businesses make sense for. and if you're not familiar with dynamic pricing, it's just raising and lowering your rates based on supply and demand. That's it in a nutshell, charge more when I'm in [00:05:00] high demand, charge less when I'm in low demand.

[00:05:01] Brian: but. The prerequisites are typically quote based. Businesses are better set up for this, meaning you don't have public rates or public prices listed somewhere on the internet because then it gets more nuanced the reason airlines and hotels and Uber and.

[00:05:16] Brian: Airbnb can show dynamic rates is because there is a machine in the background or software in the background that is making those adjustments all along the way based on tons and tons of data around the world, So we don't have that at our disposal. We can't have someone changing our website every day, or some software changing every day.

[00:05:33] Brian: Although that would be cool if someone invented that based on our schedules being full or. So the best way to do this is to be a quote based business where your prices aren't publicly available, and you can give a price based on your own supply demand curve right now.

[00:05:47] Brian: Now, the second prerequisite, this is more like a, a possible prerequisite is one and done businesses, like if you were offering recurring services on a retainer, you can't really. This month I'm really busy, so I'm gonna charge you more this month. Retainer client, [00:06:00] who I usually charge 500 a month, but this month I'm busy, so I'm gonna charge you a thousand this month.

[00:06:03] Brian: Like it doesn't really work that way. one and done projects, like in my background, I'm from the audio industry, so music production. So when an someone would come to me, we'd record an EP or a single, or an album, or I'd mix three or four songs and then we're done with the Those are like one and done projects, and those are the best set up for this sort of pricing model. But it doesn't mean you can't do it in a recurring retainer kind of model. think about it this way, when you have retainer clients, You can only take on a handful of clients, say like 3, 4, 5, 6, depending on what you charge.

[00:06:29] Brian: Maybe you can hold 10 clients at a time, each paying you a flat monthly retainer. And at a certain point as your spots fill up and your income goes up, you have more flexibility to then start charging more for the new people that are coming on. So you can still do dynamic pricing based on how full your roster is, cuz you can only have a certain amount of people on your roster before you have to start hiring teams.

[00:06:47] Brian: So you can still do. For new clients coming on. So that's something to keep in mind. So it's like I said, recurring work. It's harder to do, but you still can do dynamic pricing.

[00:06:55] Brian: The third prerequisite is you have to actually have demand for your services, [00:07:00] cuz this entire thing works off of supply and demand. if your calendar is always empty, then dynamic pricing is not for you. if you want your calendar to be full, I encourage you, go download. My client acquisition toolkit over@sixfigurecreative.com slash toolkit. And that'll help you build your client acquisition machine up to where you are now in demand, but you need to have demand for your services and some spots on your calendar filled before we can start worrying about dynamic pricing at all.

[00:07:25] Brian: All right, so prerequisites are out of the way. You have those things in place in your business. You are ready for dynamic pricing. You're a quote based business. You're typically a one and done type service. You actually have demand for your services. There's probably some others that I'm missing, so apologies.

[00:07:40] Brian: every business is slightly different, so maybe there's some nuance that you kinda have to read between lines here for your own business. The first thing we need to do for you is set a baseline rate. And what I mean by a baseline rate is what's the normal going rate for your services.

[00:07:52] Brian: you should already have this. Almost all of us already have this. this is how it worked with Airbnb. There was a tool that I used back when I ran [00:08:00] my Airbnb think it was like Beyond Pricing or something like that, was the one I used this tool. You set a baseline rate and my baseline rate was like a thousand dollars a night.

[00:08:08] Brian: And depending on events were happening in the city, like CMA Fest, in Nashville is a huge festival around June every year. And the city would be swamped. And at that, It could go up to double pricing based on this applied demand curve in our city for Airbnbs. And then the winter time when no one wants to stay Airbnb in Nashville, no bachelor parties or bachelorette parties are coming here, the demand would drop and the price would drop significantly from that thousand dollars starting point.

[00:08:34] Brian: And it would go as low as, I think three or $400.

[00:08:37] Brian: So choose what is your like standard rate because this is where we will be basically factoring all quotes for your clients from this point on. Again, basic stuff, but this is just something to have. In place ahead of time. I guess this is kind like a prerequisite.

[00:08:48] Brian: Second step in moving to dynamic pricing is determining your thresholds so you could set up rules in your business. And this takes emotion out of it and puts more logic to it. So the more logic based you [00:09:00] are, the easier This will be the more emotionally driven you are, the less easy this will be.

[00:09:04] Brian: But the way I did it and not only Airbnb, but also in my freelance business was Basically, how far in advance do you wanna charge your highest rates? So, For me, three months or more out on my calendar were the highest rates that I would charge. It's the same for Airbnb, three months out or more.

[00:09:20] Brian: You're gonna pay the highest rate per night from my Airbnb, three months or more out on my calendar for my, studio. You are also gonna pay the highest rates. So that might be my, baseline rate plus. 20%, 30%, something like that. It just depends on again, this is one of those gut feel things that you're gonna find You're, you're slowly raising your baseline rate over time, at least to keep up with inflation. Cuz again, right now, if you're not doing at least 10% a year in increases to your rates, you're not even keeping up with inflation. not just to keep up with inflation, but also to reflect the value that you're providing for your clients.

[00:09:48] Brian: Over time, you get better at your skills. You become more confident, you become better connected. You start getting better case studies from your clients. And so you need to be raising your rates over time from that. these three months and later quotes that you're [00:10:00] sending out to clients are your testing ground for higher rates, and you're gonna find out what will be your new baseline next year or the year after that.

[00:10:07] Brian: Because if you're charging, Say you're on a day rate. 500 bucks per day right now even though that's not how we really talk about pricing on the show in past episodes, if you listen to last week's episode, you know that we don't really like day rates, but I'm just using this as an easy example.

[00:10:19] Brian: If you charge 500 bucks per day as your baseline and someone wants to get a price from be three months or more from now, then you might charge $600 a day or CTA for $700 per day as your standard rate for that client. If you start getting more yeses on those $700 or more projects, then when it comes time for next year and you're looking at your rates and you say well, let's try my new baseline at $700 per day, you're gonna find that this is likely much easier for you to stomach because you've already closed project at that price point.

[00:10:45] Brian: So how far in advance do you want your high rates to be? That's the threshold. Three months or more is what I did in my freelance business and my Airbnb, and that seemed to work out really well.

[00:10:53] Brian: So what we're trying to do here is just find what's the sweet spot for you where you feel comfortable enough with some [00:11:00] openings on your calendar. So for me, it's one to three months out. I know I can probably fill any gaps in that time that didn't get filled from people that booked way in advance.

[00:11:07] Brian: So one to three months in advance was the spot for me for average rates where I would charge around my baseline price and then What's your threshold, your cutoff point for what I call your fire sale, My calendar is empty. One month or less out I have upcoming availability in my, schedule.

[00:11:22] Brian: Three weeks away, someone has come to me to fill that gap. I'm willing to take a hit on my, baseline rate just to make sure I close the client. for me, that was again, a month or less out.

[00:11:32] Brian: this is the adjustments we make off of our baseline. So again, three months or more, you're gonna be baseline plus 20, 30, 40, even double baseline rate. Just depends on your business how much courage you have and how much you wanna test things. Then you have your average rate, that's gonna be right around baseline and that's gonna be around one to three months out.

[00:11:50] Brian: For some of you, for some reason it might be different. And then you're gonna find your fire sale rates from one month or less away. But there's still other adjustments that need to be made when it comes to dynamic pricing, cuz it's not all [00:12:00] about the supply demand curve and your availability.

[00:12:02] Brian: It's not all about how far away the dates are. There's also what I call a pita factor, p i t A. You know what this stands for? If you don't know what it stands for, I'll tell you anyways. Pain in the ass Factor. I wholeheartedly believe that it is not only ethical, it should be required to charge a pe tax, a pain in the asst tax.

[00:12:19] Brian: If a client comes to. they're either half red flags where you're like this feels off. I'm questioning this project. I will do it, but I'm not sure. This will be great. If you have that hesitation, that gut feeling, and you just genuinely can't turn them away because maybe you, as freelancers, as business owners, sometimes we have to take on bill paying work.

[00:12:37] Brian: It's just inevitable when you get those projects, add a pain in the asst tax to it. Even if it's a month away and they're in your average baseline price, you can still add a pain in the ass tax fee on top of your baseline price.

[00:12:47] Brian: So one quote request might be 500 bucks a day, the other one might be 600 bucks a day to factor in the amount of pain and suffering you think you are gonna go through with that client. Now I can hear some people screaming right now. So if you don't wanna do [00:13:00] that, that is fine.

[00:13:00] Brian: But in the perfect world, you would just turn these projects down I'm telling you, we don't live in a world of black and white. We live in a world of shades of gray. And in this shades of gray area, which is the, P attacks, I'm okay with charging a PE tax for. , because it's gonna take a toll on your soul and you need to be compensated for that.

[00:13:18] Brian: Not all clients are created equal, and I would rather charge a PE tax than to raise my rates overall and have to make my good clients make up for those bad clients. Little side note there there's also like last minute projects, sometimes the last minute projects from your clients. Those are the biggest PS they're ill prepared.

[00:13:35] Brian: They probably had something fall out from under them from another service provider, and they're scrambling last minute. if that's not the case, they poorly planned and they're going to be panicked. Trying to get things done last minute. And so even if you have a scheduling opening and this client comes to you with like a last minute project, there's a reason airlines charge the absolute most you could possibly pay for a flight, like the day of the day of and tomorrow's flights are the highest charging [00:14:00] flights because they know they can get away with it.

[00:14:02] Brian: Because those people are most desperate to get the flights. in our world, if someone comes to you as desperate for the project in a very specific timeline, last minute it's going to be hard on you and you need to charge according for that. So, To me, again, last minute projects can actually be some of the highest rates even though it completely ignores supply demand.

[00:14:18] Brian: And then there's also, like, there's just some clients that just don't really match your norm. if you've been doing this for a while, especially if you've broken six figures and you have your stuff figured out. There are certain clients that just don't really match your vibe.

[00:14:28] Brian: There's something that's slightly different about it, like a project. You're like I would do this. It seems cool, but it's not something I would typically do. It's outside of the norm. And in these cases it's almost always. Going to take you longer, gonna be more work, going to take you outside of your normal systems and things that you do with clients and stress the project out.

[00:14:46] Brian: So in those cases, I typically want to charge more. For those projects. And they're typically not as, they can be fun, I take it back but this is an area to look at. Not always, but look at charging AED tax, even though it's necessarily pain in the ass clients. The projects can [00:15:00] still be pains in the ass.

[00:15:00] Brian: So that's another area of looking at the PITA tax as how we do dynamic pricing. And again, this is a gray area. I fully. To hear feedback from our listeners saying how displays they are, that I would recommend that, in the real world, not every client is equal, and not every client should be charged equally.

[00:15:15] Brian: I'm sorry. And then finally, as you're doing the higher rates for last minute projects and pain the ass clients, when you're, playing around with these rates, I want you to test and track the results.

[00:15:25] Brian: Because if you do not do this part, you don't know if you've actually maximized your results. So the thing I look for, and the number I track with all my clients and myself is what is my average annual client? This is an easy stat to track because all you need to do is look back over a certain time horizon.

[00:15:40] Brian: It could be a month, it could be six months, it could be a year. You look back over that timeframe and say, how many clients did I work with over this period? if you don't have any good systems in place, you can look on your calendar and look how many clients you work with. If you have good systems in place, you can check your crm.

[00:15:53] Brian: Your CRM will usually tell you how many clients you've worked with over that period. So look at your total clients over that period. And then [00:16:00] look at your total income over that period. so if you made a hundred thousand dollars in a year and you worked with 20 clients,

[00:16:06] Brian: that average annual client value is $5,000 because 100,000 divided by 20 is 5,000. that's the stat you want to track. And you wanna track this over a longer period of time, like six to 12 months to see if that number is trending up compared to before you started doing dynamic pricing. If it's not, there's likely something wrong.

[00:16:23] Brian: and even if you just listen to this episode and your takeaway is, I want to do dynamic pricing. I don't feel like doing what Brian said about threshold and timing and pet attacks. I just want to test pricing based on my gut. I just wanna use gut in emotion or whatever to drive me for my pricing.

[00:16:37] Brian: Not a great idea, but go forth and God speed. Do that as long as you track this metric, this metric is one of the holy grail metrics in a freelance business, what is your average annual client value? Really important metric. It's not hard to track, which is why I have people track this, but this can help you understand whether or not dynamic pricing is working in your business or it's hurting your business.

[00:16:55] Brian: Now if you are a software developer and you wanna develop something where you can have public rates and [00:17:00] dynamic pricing, contact me, we can chat. But otherwise, stick to quote based pricing. Find your baseline. And then price based on your own supply and demand.

[00:17:07] Brian: How booked up are you? How comfortable are you with raising your rates for these other projects? And how far do you want to drop in order to fill last minute gaps called your fire sale rates? I will say this. you probably have some hesitations objections is a word I would use here.

[00:17:20] Brian: My sales brain says that, of doing this because of a few scenarios and these scenarios can be different for all of you. What's the scenario for my repeat clients? Are they gonna get a different price from me? Short answer is yes. They will get a different price from you. Maybe they got a quote six months ago for 500 a day, and they're getting a quote today for 700 a.

[00:17:37] Brian: It is okay to quote your clients higher prices first of all, they need to respect that you are improving, growing and getting better as a freelancer. And they need to understand that your own supply of time is.

[00:17:48] Brian: Hopefully shrinking and your demand is growing, which means you should always be raising your rates. As long as those two things are happening, your demand is increasing, your supply of time is decreasing, and there's elite equilibrium somewhere where [00:18:00] your price lives in the perfect sweet spot. And dynamic pricing is what we do to find that sweet spot this is more art than science when it comes to finding that sweet spot.

[00:18:09] Brian: The second objection I hear.

[00:18:10] Brian: What if someone hears that they got charged different from another client, which is a real thing that could happen. And in which case, if a client comes to you and says, why did you charge this client 500 a day and you charge me seven 50 a day? That doesn't seem right. You can literally tell them, Brian, at six Figure Creative told me to do it.

[00:18:26] Brian: Go complain to him, and I will take full blame for that. in all seriousness, A good answer for that is listen. I price my projects based on how much demand for my time there is. And so when I'm really booked up, I have to charge more because I don't have any free time. And then sometimes I have a really thin gap in my calendar where I just don't have any projects to fill the gap and I have to lower my rates in order to fill those gaps.

[00:18:47] Brian: So your friend got one of those lower thin rates because he came to me as slow time of year. You got the higher rate because you came to me during a really busy season. It sucks. But This is how airlines do it. This is how hotels do it. This is just how I have to run my business in [00:19:00] order to make a living.

[00:19:00] Brian: If they don't understand that and you say it in that kind of tone or demeanor, you can't make everyone happy. If I have to make one person unhappy because I want to maximize my business, then I'm willing to do it. But I feel like it's reasonable enough where they shouldn't be unhappy, and it's on them if they're not happy.

[00:19:16] Brian: Again, it's your business, like you don't have to do this, by the way. Like If you don't love this advice, if this doesn't resonate with you. And you just wanna have set standard rate, and you put your rates out in the beginning of the year and you charge everyone equally. That is your business. You can do it how you want, but if you were trying to maximize your business and give yourself a pay raise, which I think you deserve as a creative, especially if this is your full-time job, especially if you have a family to support and you have inflation eating away at your profits every year and you are not doing the most you can to increase your rates.

[00:19:44] Brian: I think you deserve this, and this is a easy pay increase for yourself where you don't have to go to a boss and ask for a pay increase. You don't have to go to back to college in order to qualify for a better paying job. to give yourself a pay increase. This is something you can go implement and start doing immediately [00:20:00] to give yourself a pay increase.

[00:20:01] Brian: So I don't have any problem with it, but if you have a problem with it, I'm fine with that. Final thoughts here is if you don't have demand for your time, like I said before, that is the first step to making this entire thing work if your calendar's not getting booked up so that you can experiment with pricing.

[00:20:15] Brian: So again, if you want that client acquisition toolkit, go to six figure creative.com/toolkit, and that toolkit will give you a lot of the different pieces that you need in order to build a successful client acquisition machine. And a machine. That means you know what inputs need to go. In order to get the outputs that you need, how many inputs to get the clients that you need.

[00:20:35] Brian: that toolkit a hundred percent free, go get it now. So that's it for this episode.

[00:20:39] Brian: If you are first time listener, thanks for checking the show out if you're returning listener. Thanks for coming back and I'll see you all next week. Bye.