- The minimum income goal for any freelancer
- The consequences you face as a low-earning creative
- Overworking yourself with low rates
- How to price your services
- Using value-based pricing for your business
- Protecting yourself with flat rate pricing
- How to keep clients consistently coming back
- The gutsy payment method that big agencies can use
Join The Discussion In Our Community
Click here to join the discussion in our Facebook community
Click the play button below in order to listen to this episode:
Send Us Your Feedback!
Related Podcast Episodes
[00:00:00] Brian: Hello, and welcome back to another episode of the six Figure Creative Podcast. I'm your host, Brian Hood, and this is your first time joining on the show today. First of all, welcome to the six Figure Creative Podcast. This show is for creative freelancers. We're trying to earn more money from the creative skills without selling their soul.
[00:00:13] Brian: If that sounds like you, you are in the right place. From our returning listeners. We are in the thick of it right now. I have averaged two episodes a week for like three weeks now, which I think is a new record for me doing the twice a week thing. My goal unofficially is to catch up for the eight month gap we had between when we rebranded from the six Figure Home Studio to the six Figure Creative way back at like episode one 50.
[00:00:32] Brian: There was like this huge gap just no episodes while we went through that. Rebrand is a big slog of things to do. And maybe I can make up for it by just doing two episodes a week for a long time. Who knows how long I can gonna keep this up. Today's episode is probably gonna be longer than the typical part of this series.
[00:00:44] Brian: We're on the back to basic series for those who have not been following along, where we're talking through a lot of the basics that many people skip by or fail to really think about as they're building their creative freelance businesses. And in this specific episode, we're gonna cover a pretty beefy subject, which is pricing or setting your rates.
[00:00:58] Brian: And I don't know if I can cover [00:01:00] this in the typical 15 minutes or so that these, these back to basic series have been. So this might be longer, although I haven't recorded this yet. So I don't know how long this is gonna be, but there's just a lot to cover when it comes to this. So my goal for this episode is to give you five different methods for setting your rates or pricing your services as a freelancer with one main goal in mind is to increase how much a client is worth to you.
[00:01:19] Brian: This is a huge part of being a successful creative, a successful freelancer, or in my opinion, making what is the bare minimum you should be making as a freelancer, which is six figures.
[00:01:28] Brian: This is a huge part of it, and if you're wondering why, I mean the bare minimum, if you do the numbers of what actually what you take home as a six figure income earner as a freelancer. It's typically worth about the same or less than, what would you ma you'd be making at a day job? So when I say six figures, like that's the bare minimum you should be shooting for as a creative doing this full-time.
[00:01:46] Brian: Otherwise, you'd probably be making more with health insurance and benefits and paid time off as a person with a day job. So our goal should be to surpass six figures and ultimately net six figures or more, even multiple six figures would be the goal. And we cannot do that if our pricing and our [00:02:00] rates are not set properly.
[00:02:01] Brian: Here's how most people set the rates as freelancers, especially they look around, they look at what other people are charging, and they typically use a gut instinct to set their own rates in accordance to what they feel their value is in relation to people around them. And the problem with that sort of approach is that most freelancers vastly underestimate their skill level, the value they provide people.
[00:02:23] Brian: The talent that they have compared to other people. People have this comparison syndrome where everyone else is better than me, so I have to charge way less than everyone.
[00:02:30] Brian: So we end up setting our rates and charging our clients based on. Our lack of self-confidence and our fear of losing out on the project. And what that means is that we perpetually undercharge from what we should be charging. I know if you're losing the show right now, that is you. I guarantee you, if you clicked on this show, I'm like, oh, wonder what Brent has to say about setting rates or prices or whatever.
[00:02:49] Brian: I, I am almost guaranteeing you that, if that is your thought of like, Hey, I wonder what he says about pricing that you are probably undercharging right now. If you don't think you are, then just listen to this episode cuz I, bet there is something in here [00:03:00] that's gonna spark the thought of, damn, I, I should probably be charging more
[00:03:02] Brian: So I don't wanna be insulting here because like we all start somewhere, but if we can't get outta this perpetual cycle of undercharging and not thinking through and having a process for setting our rates, here's what's in store for us as freelancers. you're gonna be going through a lot of financial strain because you're not earning enough. That's an obvious one. So if you don't have enough money, you have more month than money. Go back to the budgeting episode I did a few weeks ago, or a few episodes ago.
[00:03:24] Brian: If that feels like you, it's probably cuz you're undercharging, you're not budgeting either.
[00:03:27] Brian: And that financial strain puts undue stress on you, and it affects your ability to be a creative. So our rates and our, pricing, I'm just using these terms interchangeably, pricing and rates. These things really have a lot to do with how creative we can be. I know a lot of people, they hate mixing money and creativity together.
[00:03:43] Brian: had someone recently tell me wanted to move away from freelancing because they wanted to be able to do these projects that they're doing. Without money getting in the way. And that sort of like toxic mindset about not being able to mix creativity and money together is the reason this podcast exists.
[00:03:57] Brian: It's the reason that I wanna talk about this stuff [00:04:00] because you have to be able to charge your value for what you do as a creative. There's nothing bad about it. And if you undercharge and you're under financial duress because you're undercharging, you cannot be the creative you are meant to be. You cannot put the value, the true value.
[00:04:13] Brian: You can't show up and put your all in on a project simply because you're not charging enough to make a good sustainable living. Preferably six figures or more, because again, six figures is not the same as taking home six figures in profit. So when I have the name six Figure Creative in this podcast, I'm gonna talk more about this because I really haven't clarified the name.
[00:04:31] Brian: Six Figure Creative that is like what we should be shooting for as a bare minimum as creatives, and you cannot earn that by perpetually undercharging. So financial duress. That's the first consequence of this. The second consequence of not getting this right
[00:04:42] Brian: is overwork and burnout. So this is common for those of you who have had some success, especially those of you who are really good at what you do, and you have consistent clients coming in. But they're coming in because you're undercharging and you're like a steal of a deal. I had know, uh, one of my friends who emailed me this morning asking about some of these problems he's experiencing because clients come to him.
[00:04:59] Brian: He's [00:05:00] getting referrals all the time. He's getting clients who want to rehire him for projects, and he's really undercharging for what he's doing, mostly because he doesn't have a good process for pricing a little bit because of the self-confidence issues, but it's leading to overwork and burnout because, In order to make the money he needs to make as a creative, he has to work constantly.
[00:05:18] Brian: 60, 70 plus hours a week on the regular seven days a week. He's working every day. He's always behind. He's constantly stressed out and burned out because he is working so much, because he's saying yes to every project and everyone wants to hire him because he's so cheap. He is the rare exception of somebody who is good at what they do, who charges very little and who is consistent and reliable.
[00:05:37] Brian: and if that sounds like you, there's gonna be some stuff in this episode that can help with that. But overwork and burnout's, another major consequence of not getting the pricing thing right. the next issue that's common with not getting the pricing thing right is you struggle to raise your rates because the clients that came to you at the lower rates. Aren't the kind of clients who are willing to pay the higher rates. So you feel stuck, you feel trapped in this because to move to the next level as a freelancer to that next tier of pricing, to [00:06:00] that better clientele, you have to essentially burn the ships that are beneath you.
[00:06:04] Brian: I don't wanna say that I guess the better way of saying this would be going back to the Chase Jarvis quote, your $500 client will never be your $5,000 client. Many people never leave the $500 client world because they're afraid of losing those clients, and the best thing that could ever be possible for you would be leaving those $500 clients behind and getting that next tier of clients to the thousand or 3000 or $5,000 client.
[00:06:25] Brian: but because of your lack of confidence, you're not able to leave that behind.
[00:06:28] Brian: Another big consequence of underpricing, undercharging, perpetually is that you don't have the finances to invest back into your business. just for example, if there's a problem I need to solve, out there has a solution, it's another freelancer, whether whether it is a course I need to buy, whether it's even just a book I need to buy or a coach I need to hire. I just spent $50,000 early this year hiring my own coach to help me with some things that I needed help with, like hiring, creating job descriptions, interviewing people.
[00:06:55] Brian: I just hired two full-time people on, on figure creative staff, so I, needed a lot of help with that. [00:07:00] I didn't have any experience with that before, and something that really held me back for years was this like mental hurdle I had to get over for hiring. And I hired a coach to help me through that, and it has been a huge help for me.
[00:07:10] Brian: But I had to have the resources to be able to drop 50 grand to do that. You cannot do that if you were vastly undercharging your value, you're scraping by. You cannot reinvest in your business the way you should be able to as a creative because. When we don't have a bus who's paying us a flat salary, and we are the captains of our own ship, we have to be able to constantly reinvest into that business, that ship, to make it better, to grow, to get bigger, to get better, to be better creatives, to solve problems, to become more valuable.
[00:07:36] Brian: And if we don't get past our own pricing junk or own own money junk, then we can't reinvest into our business.
[00:07:42] Brian: And there's a couple other small things that come with getting these rates or these pricing things wrong. Like There's a perception of your brand. I've seen this multiple times in multiple industries where people just won't work with you because you're so cheap. Like people won't even consider you because your price reflects that you are a low quality, cheap option.
[00:07:57] Brian: So like for example, on fiver.com right now, I pick on them [00:08:00] a lot. There's a lot of really good freelancers, I just won't work with 'em because I don't really wanna work with a fiver freelancer. of all, I don't support the platform. That's just me. I support the freelancers who are on that platform.
[00:08:10] Brian: I wanna get you off of there. But second of all, it's just you typically have a negative connotation to that type of worker. Quicker projects, less quality, cheaper. Again, that's not really the reality for all those people, but you get lumped in with that type of quality when you are undercharging for what your value is.
[00:08:25] Brian: So my goal for this episode is for you to increase what you're charging, Build confidence in yourself and not just be somebody who's a gut feel pricing person. Actually follow a process, So I wanna give you five different ways that you can price your services. If you actually go back to episode 247, I cover these kind of like quicker, like in part of that, the episode's called the Three Building Blocks of a Fine Tune Freelance Business. In that episode, I talk about some of these things, but I just really wanted to have a dedicated episode four pricing during this back to basic series.
[00:08:54] Brian: So that we can just talk about this and you can binge through this as part of your back to basics binge time, because I know a [00:09:00] lot of you will, you'll find this series. You're like, I'm just gonna binge through these, many episodes it's gonna be, starting at episode 50. All right, so let's talk about model number one.
[00:09:06] Brian: This first pricing model is the hourly billing model. no shame. a lot of this is people who have moved from the employee mindset, and they're not really quite an entrepreneur yet.
[00:09:15] Brian: They still think everything through the hourly lens. And again, not a bad place to start, but this is good for those of you who are in kind of those buttoned seat positions where you're offering a service, not a solution, not solving a problem, you're simply just offering a service. Go back to the last episode where I talked about creating your service or determining your product or whatever that that episode was about, where we're talking about kind of the four Ps right now, by the way, I forgot to mention that is part of the four Ps of marketing product was last week.
[00:09:38] Brian: Pricing is this week. We're gonna skip platform and we're gonna straight to promotion on the next episode. But when I talked about product, there was like three different ways you can determine your service or your product. The first one is to just offer a service. If you're just offering a service, like I'm going to master your songs, I am going to edit your podcast. I am going to create a logo for you. Actually, that's a flat rate.[00:10:00] am going to,
[00:10:01] Brian: Edit video for you. A lot of people do this on the hourly pricing model.
[00:10:05] Brian: I tell many people, as many people as possible, move away from this. A lot of freelancers, they think they're a freelancer, but really what they have is a part-time job.
[00:10:11] Brian: They're working for an agency, they're working for somebody who's a business owner, and you're doing recurring work where really you're just an employee of that person and they, they're paying you as a contractor, which may have some legal implications. I'm not gonna get into that, many people just won't get outta the mindset of, being an employee.
[00:10:24] Brian: So they fall into being an employee with no benefits at another company. That's a lot of the people that get stuck in this hourly world. So that's one type of pricing. It's not what I recommend. These other four are probably the ones that I recommend most people trying to explore because that means you have a little more, more control over things. You can get out of that button seat. I'm an employee mentality, and that leads me to number two here, pricing model, and that is project base pricing. my pricing model back in the day for music production.
[00:10:48] Brian: Where a band would come into my studio and we would produce a song or an EP or an album, and I would charge them a flat rate
[00:10:54] Brian: for the entire project. And it included a few other things and, and I got really good at figuring out what's [00:11:00] ways I can increase the value the perceived value and the real value of what I'm offering my clients so that I can capture more of the value. One example of that, by the way, just to give you a a real hardcore example was in my studio, I had a bedroom for the bands to stay.
[00:11:13] Brian: And that meant they didn't have to spend money on a hotel. And that meant I could charge more because that money they would've spent on a hotel. I can capture that value now, not all of it, but a good portion of that. So that was just one area where I'm increasing the value of my services by offering something that someone else wasn't willing to offer.
[00:11:28] Brian: cause I had a lot of bands that were from out of state, out of country that would fly in or drive in across the state or across the country or from another country, and they needed a place to stay. So that was just one way that I was able to capture more value and include that into my flat rate pricing for my projects.
[00:11:41] Brian: Now, there are two real ways to do flat rate pricing. First is just kind of a glorified hourly pricing model. You think through this project will take me 10 hours. I want to earn a hundred dollars an hour, so I will charge a thousand dollars. Is That's not really what I'm talking about here. That's not what I really want anyone to really do when they're doing flat RA pricing. if you want to do it in this [00:12:00] sort of way where you're thinking through the amount of hours it's gonna take, I recommend at least doing what's called the cost plus model. It's essentially where you are itemizing all of the, parts of the project, what it's gonna take time wise for all the elements, what sort of like monetary cost there might be.
[00:12:13] Brian: If you need to hire out especially musician in my case, or if you need to hire out contractors or freelancers to help in the project. Cost plus takes all of these things into account and then adds a margin on top of that. That margin is really important for those of you who are bad at estimating or for those.
[00:12:27] Brian: Those things where you're not sure what sort of things could come up in the project, you're marking up all of the expenses to account for those sorts of things, and that is crucial for those of you again, who suck at estimating. So that's the first way to do this is through a glorified hourly thing or a cost plus.
[00:12:42] Brian: But the second way of doing this is what we call value-based pricing. You look at the value of the project for the client. You say, how much is this worth to them? And you capture a percentage of that value. I'll give you a better example because in production,
[00:12:54] Brian: Many people do a flat rate per episode, or they'll do a flat rate per month for their clients on a retainer.
[00:12:59] Brian: And [00:13:00] the value you create for your clients directly correlates to how much you can charge for those clients. So here's two examples. Example one is I am a podcast production company.
[00:13:08] Brian: And I specialize in working with freelancers like you. How much is a podcast worth to your freelance business? In most cases, I mean, it could be worth a decent amount. It might be worth You might get one or two clients for it a month, and those clients might be worth one or $2,000 so that's three to four to five.
[00:13:22] Brian: Maybe even call it $10,000 a month in value, just on the high end of that podcast for you. So if that podcast is worth $10,000 to you on the very high end, that's how much that podcast is contributing to your business. How much of that can I capture as a podcast production company? Not that much.
[00:13:38] Brian: I'd estimate maybe, maybe one 10th of that, maybe I could charge you a thousand dollars a month to produce it and do all the things for your podcast, and you would find that a good exchange of value. I'm earning $10,000 as a business. I'm paying out 10% of that a thousand dollars to the podcast production company.
[00:13:52] Brian: Great. Now I can take the same exact services, the exact same amount of work. And bring it to a bigger business. One that's earning one to $5 [00:14:00] million a year from that Same podcast. All of a sudden, I can charge a whole lot more. All of a sudden saying that I'm charging 25, 30, 40 grand a year for those same services to that company is no longer a crazy proposition.
[00:14:12] Brian: And I know this because I have clients of my own who do full service podcast production for businesses like that. And they're charging anywhere from 20 to $30,000 per year for podcast production services
[00:14:23] Brian: because the value of that podcast to those clients is worth a lot more. So in order for value-based pricing to be a thing, your services have to be worth a lot to those people. And that's why typically I say if you can. If you can offer freelance services to business owners, you are going to make more money.
[00:14:40] Brian: that is not for everybody. And I know that not everyone wants to offer freelance services to businesses, but I am saying you will earn less because of that. In a lot of cases. In many cases. Now, there are some exceptions. Wedding photographers, wedding videographers, where you're not really working for businesses, you are capturing important moments.
[00:14:57] Brian: That is like one of the biggest of that person's life [00:15:00] up to that point. So there's still a lot of value to those services, to those people. But generally speaking, if you want to stay, like in my example with music production where you're working with predominantly broke clients, you're gonna take a pay cut for that.
[00:15:11] Brian: Doesn't mean you can't earn a decent living, doesn't mean you can't even earn six figures. I'm just saying it's gonna be more difficult for you. So that's where you have to make the decision, where is the additional income worth, it to you? And if it's not, you can stick with doing what you love, as long as you're okay with making that exchange.
[00:15:25] Brian: Now before I move on to the third type of pricing model and how to kind of come up with the pricing along with that, there's something I heard recently that kind of changed my mind a little bit about hourly pricing versus flat rate pricing.
[00:15:36] Brian: the argument this person made on this podcast I listened to was that, It's not always bad to do hourly pricing. and the reason was, at least his thought process here behind this reasoning, was the more risk as a freelancer that he took on, or actually he was an agency owner.
[00:15:49] Brian: But it's, about the same thing. The more risk they took on, the more they were willing to go to an hourly based pricing. So what they meant is it's a spectrum between certainty and uncertainty. The more [00:16:00] uncertain a project is, meaning that the client could come in unprepared, the client could drag things out, projects could go way beyond the scope.
[00:16:07] Brian: There's a lot of uncertainty there. And in those cases, it made more sense to have some sort of hourly pricing model for that to account for that increased risk, that amount of uncertainty, so that you are not working for things that you weren't paid for.
[00:16:20] Brian: And if you offer a productized service where you have a very specific set of deliverables, there's very little uncertainty there. So it doesn't make sense to do an hourly based pricing model there. So if you are in a business where you're doing a lot of, like what we consider bespoke services where every project looks different, every project's, got a lot of variables, there's a lot of uncertainty there, there's a lot of risk.
[00:16:39] Brian: For the project to not look the way you originally thought it would be. There is an argument there potentially for some amount of hourly pricing, or preferably in my case, having wording or terminology in your pricing, in your proposal or in your client agreement where your flat rate pricing contains language.
[00:16:57] Brian: Like it includes up to [00:17:00] X, Y, and Z up to 10 hours of music production services up to 10 days in the studio up to.
[00:17:06] Brian: Three revisions up to whatever you put that up to kind of terminology in your agreement, in your pricing with the client, and they know what those limitations are. It's not a surprise to them when they, butt up against those, then you can mitigate a lot of that risk, a lot of that uncertainty and still do a flat rate pricing model, and then you can tack on hourly.
[00:17:22] Brian: Which actually leads us to number three here, which is called hybrid pricing.
[00:17:27] Brian: This is where we're doing a combination of hourly and flat rate, kind of what I just talked about There. We have the project is this amount. And then we have variables that could be hourly. It could also be, this is another one that I saw is milestones. So for every milestone in the project, it's a certain fee or this is a fascinating one.
[00:17:45] Brian: When I, I was listening to, a developer talk about this cuz developers do these things called sprints. when they're working on a project, they'll have I think 6, 8, 12 week sprints of development. they'll have something scoped out during that 12 weeks of the project.
[00:17:58] Brian: They'll complete it all, [00:18:00] and at the end of the sprint they'll go back and review what was all done and they'll bring to the client they charged per sprint. They charged a flat fee per sprint. And so that's 12 weeks of development time and they're working on things, but it could be 3, 4, 5, even 10 sprints to get through a full project, which is, if you do the math there, that's 30, 40, 50, a hundred weeks of development time on some of these bigger projects. And that's a lot of uncertainty. That's a very drawn out project. But if you're charging per sprint, then you are mitigating that risk as somebody who is, you know, Working with somebody with a lot of uncertainty behind the project.
[00:18:31] Brian: So I'm trying to give you some thoughts with this hybrid pricing of if you work in a field where there's so much uncertainty, you don't know how long a project's gonna go for. Hybrid pricing may make more sense. and you can put it into project milestones or you can put it into flat rate plus additional, or you can put it into sprints, if you wanna call it that, where you're doing a certain amount of work.
[00:18:50] Brian: You could put it into time blocks if you wanted to. You could put it in two weeks if you wanted to. it's. A flat rate per week or a flat rate per month for up to 20 hours of work. the sky's the limit here. But I'm [00:19:00] hoping you are starting to use your brain a bit more and not just look at what Sally down the street is charging for her photography headshots or what Billy up the block is charging for his retouching services.
[00:19:10] Brian: And instead you're thinking through like, first of all, how can I get out of these button seat jobs like that and actually offer solutions or outcomes and work with bigger and better clients, but also, how can I put more structure and thought behind how I price things? To capture as much of the value as I can as a freelancer.
[00:19:24] Brian: So that's number three is hybrid pricing. Number four is the retainer and subscription model. I'm putting these kind of together, they're, they're similar. There's a little few differences, but it's basically the same thing. You're getting paid every single month from your client for services rendered.
[00:19:37] Brian: Now in some niches, this is painfully obvious. If you're in the podcast production niche, I already talked about that, then you're gonna charge your clients every week or every month for weekly episodes, or in our case right now, biweekly or twice a week episodes.
[00:19:51] Brian: If you're in the content creation niche, Maybe you're a video editor for a YouTuber. Obviously in that case, those are gonna be weekly or even daily, however often it is. So it's gonna make sense [00:20:00] to put it on a flat monthly retainer in charge accordingly. There's also things like copywriting.
[00:20:04] Brian: If you're a copywriter and you're doing copywriting for an email newsletter, and you're sending out a certain amount of deliverables, deliverables every month, then it makes sense to be on a flat monthly retainer.
[00:20:13] Brian: But there's also some niches that were, it hasn't been predominantly used in that world. it's like outside of the box that is gaining traction and it's really good for business. So if you're in a, freelance model where clients come to you on a semi-regular basis, But there is no real path forward for a retainer where it's like every month they're gonna pay you.
[00:20:32] Brian: It might make sense to, to think about this. So if you go back to episode 233, where I interviewed Anime Tonkin, she's the photographer. She does family portraits and she's put that on a a monthly subscription. Actually, she calls it her yearbook club. maybe it's more common now cuz she's actually teaching this, but definitely not very common over the last 10 years that I've seen.
[00:20:49] Brian: So she took a service that. Parents come in, wanna get their family photos of their kids, and they'll do that maybe once a year and then they forget about it, and then it's like three years later their kids have grown up. They miss some really key moments [00:21:00] in that child's life and then they get more headshots done and they regret missing those years.
[00:21:03] Brian: So Whate did was she put it on a recurring subscription. You just pay a flat thing every month and then twice a year I'll reach out to you, you book it on my calendar and I'll come out and we'll do all the shoots.
[00:21:11] Brian: What this does, As it keeps the clients consistent, there's a reason for them to want consistency. They're just not doing it because there's no real thing put into place here. There's no real reminders. Yes, you could reach out to them and get them to rebook, but if they're already paying for it, they're much more likely to come in and actually utilize that service.
[00:21:28] Brian: So it's an easy sell because you, you have a very good, logical reasoning behind, Hey, why don't you join the yearbook club? I know that parents get really busy school events, sports, whatever, and you forget to come back and get more head shots, or forget to capture these key moments in life. So if you join the yearbook club, You get to pay just a small flat monthly fee and we'll come in twice a year and make sure we capture all these wonderful moments.
[00:21:50] Brian: Another example of this in a less familiar niche is in music production. Most artists or most bands come into the studio once a year or once every quarter to get a [00:22:00] single done or an EP done, maybe once every 18 months for a full album, which is getting less and less popular now. what you typically get is somebody coming in for a single and then they go off and.
[00:22:09] Brian: Piddle around for a while and don't come back again because they're not really adamant about their songwriting and they have a bunch of unfinished songs, whatever. So what Mark Eckert did on episode 68 of our podcast, if you go back way back when we were the six figure home studio, he moved his business to a subscription model where he would work with clients on a monthly basis and. Essentially every two to three months, they would have a completed single ready to release. You'd work with them with songwriting, you'd work with them for arrangements in production, you'd work with 'em for mixing and mastering, and then you just repeat the process every three months. so the good thing about this model is it increases your customer lifetime value or your client lifetime value. If Going back to Anime's example where she has the photography business with family photography. If clients come to her every two years because they forget about her and the average headshot, I don't know what the project value is, but the average value of that is $500 per session, or a thou, let's just use a thousand dollars per session for math's [00:23:00] sake.
[00:23:00] Brian: Then her client, It's worth a thousand dollars every other year. That's $500 a year of value that that client is worth to hear. But if she puts them on that subscription where they're paying every single month, She's doing two sessions a year for them, but they're only having to pay a smaller fee every month.
[00:23:14] Brian: That client's worth $2,000 a year to her. Maybe even she discounts it to make it more incentivized to them for, to do it this way. Maybe it's $1,500 a year, but that's $1,500 every single year That triples the value of her clients every single year. What do you think that does over the lifetime of that client?
[00:23:28] Brian: It's probably five Xing or 10 Xing, the value of that client over the lifetime, cuz they're never gonna cancel unless she does something to make them not happy or unless they move away or unless the family grows up and moves on after 10, 15 years. Either way, she's probably gonna do much, much better on a lifetime value for her clients by moving to this model.
[00:23:46] Brian: go to my friend Mark Eckert. in this example. Clients typically come maybe once every six months to do a single. In this case, the reason it's taking so long between singles is because they are not finishing songs. So when he puts 'em on a subscription model, he's helping them [00:24:00] complete more songs.
[00:24:00] Brian: He's actually creating value for them by helping them finish songs and. As a producer, you don't have a client until you have a songwriting to produce. So he's helping speed things up by putting them on a subscription and helping them in the songwriting process. So those are just two examples. I'd love for anyone in this, in our audience to go back into their own business model and think through, how can I turn my service into a subscription model?
[00:24:20] Brian: What do I need to change about this? what could this do to my lifetime value of my clients?
[00:24:24] Brian: All right, so that's pricing model number four, which was the subscription or the recurring retainer, which is just someone paying you every month or every, quarter, every year, even just a flat, every single pay period. Guaranteed. It's called the Automatic Customer. In other words, there's a book called Automatic Customer.
[00:24:37] Brian: When you have a customer on retainer or on subscription, it is an automatic customer. You have that client paying you every single month. That's one less client you have to go out and find. It's a wonderful model. The fifth and final one we're gonna talk about in this episode is commission based pricing.
[00:24:49] Brian: I talk about this on episode 247, go back and list that episode. But this is a model that very few people have the guts to do. It's fascinating model if you can make this work. Some of the highest earning agencies that I have seen out there,[00:25:00] Are using this model because you have to be good at what you do.
[00:25:03] Brian: It doesn't work otherwise. So here's how the commission-based model works
[00:25:06] Brian: you go to your client and you say, unless you get this result, you don't pay me. But if I get you this result, I get a percentage of what I get you. Now, traditionally the only place I've really seen this happen is in business to business. So I'm an agency owner or even a freelancer, and I'm working with a business owner and the thing I'm helping them do directly brings money into their account as a business. That's the area I see this sort of thing happen.
[00:25:27] Brian: It's kind of a pay for performance model. just think about your service. Is there an outcome? You get your client and if they have that outcome, you get paid.
[00:25:33] Brian: Again, this is a dangerous business model because the risk is all on your shoulders. The good part about this is it makes it really easy to get clients because they don't have to pay you anything unless you get them results.
[00:25:43] Brian: back to my podcast example. A client might pay me 20, $30,000 a year to help them with podcast production for their business. Whatever the business is, we could say it's a uh, an insurance agent. I don't know. I'm just using something boring, unsexy. I'm helping an insurance agent, a life insurance agent with this podcast so he can talk about [00:26:00] life insurance and the benefits of it or whatever.
[00:26:01] Brian: God, I couldn't think of a more boring example. Either way. You, you understand what I'm saying? In this model, he could just pay me a flat fee a year, and as long as he's happy with that, he's gonna keep paying me. Or I could do a pay for performance. I could say, Hey, unless the client comes from the podcast, then you don't pay me.
[00:26:16] Brian: But for every client we get through the podcast, there's ways you can set up tracking in there for every client you get through the podcast, you pay me 10% of the value of that client. 15, 20% of the value of that client. But if you don't get clients to this podcast, you don't have to pay me. That's an example of this model.
[00:26:29] Brian: You have to be really good at what you do. You have to be very confident. The good thing about this model is you can take that sort of offer, that sort of promise for what you offer, and you get to be very picky and choosy about who you work with as a freelancer, because you don't wanna work with somebody who's not gonna be good at what they do, somebody who's not gonna get the client's clothes that you bring them.
[00:26:46] Brian: Again, this is just an example. Everyone is different. Most freelancers should listen to this show. It's probably not gonna make sense for you, so I'm not gonna really talk about this much more. But this is a definite way you can increase what you earn if you're directly close to the money and the [00:27:00] services you offer.
[00:27:00] Brian: If you're directly bringing in business clients, if you're helping them bring in leads, if you're helping them gain followers on social media, there's some way to tie incentives back to your payment structure.
[00:27:09] Brian: so that's the fifth and final pricing structure you can do. It's commission-based pricing or pay for performance. real quick, for the first four that I've talked about in this, hourly billing model, project based pricing, hybrid pricing and retainer pricing or subscription pricing.
[00:27:22] Brian: And all four of these, there's something you need to consider doing, which is called dynamic pricing. This is what hotels do, this is what airlines do, and it's basically just when when the demand for your services go up. That means the supply of your time is going down.
[00:27:35] Brian: That means you have less and less time available in your day. in that case, the only other way you can earn more money without working more is to increase your prices.
[00:27:42] Brian: So dynamic pricing just states that when I'm in more demand and my time is at limited, then I have to charge more. On the flip side, when my demand is very low and I've got plenty of time and I'm desperate, my prices go down. So if you want more on this, go to episode 230. It's called Dynamic Pricing.
[00:27:58] Brian: The Secret Weapon [00:28:00] Clever Freelancers are using to maximize their income. This is something you should absolutely review and consider if you're a freelancer, especially as we go through ebbs and flows. It's just natural part of what we do, especially if there's seasonality in what you do.
[00:28:10] Brian: either way pricing is what I consider a must when it comes to freelancers. If you want help with this specifically, you're like, Brian, these all make sense. I still don't have the confidence to raise my rates. I still don't really know how this exactly pertains to me and my business personally.
[00:28:23] Brian: Then I want to help you. You can get help with me, my team. We have a coaching program that helps with not just pricing, but the whole client acquisition thing. So if you need specific help with pricing, with marketing, with Legion, all the things that are part of being a freelancer, to get you to that six figure level, which I consider a minimum wage as a freelancer, six figures, which sounds ridiculous for those of you who have never reached that, but I promise you when you get there, you're like, okay, now I can breathe.
[00:28:45] Brian: Now I actually make a living. How do I get to netting six figures and beyond, which means typically earning multiple six figures. If you want to get to that level, you need help directly one-on-one with me and my team. Just go to six figure creative.com/coaching. We're finally opening up some spots for coaching.
[00:28:59] Brian: [00:29:00] Again, it's been full for like the past four or five months, maybe six months now. have more spots open, so if you're interested in that, just go to six figure creative.com/coaching. More information there and we can chat about it.
[00:29:11] Brian: So that is it for this episode. There will be more in this series for pricing, as long as this episode was. I'm not guaranteeing two episodes next week, but we'll see how this goes. But that is it for this episode. Thank you so much for listening to the six Figure Creative podcast.
Sign up to receive email updates
Enter your name and email address below and I'll send you periodic updates about the podcast.