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Pricing Strategies From The CEO Of A Billion-Dollar Business | With Mike McDerment

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It’s time to kill hourly pricing once and for all.

While many freelancers think hourly billing is a fair method, it’s actually the least fair method for pricing your work. 

Hourly pricing leads to an immediate conflict of interest between you and your clients, and it puts very little consideration for the value of whatever it is that you do. 

You are much much more than a bundle of hours for sale. 

You’re a creative offering something valuable in this world.

I’m not the only one that thinks this is the case…

Our podcast guest this week is Mike McDerment – the founder and CEO of a 10-figure business. His advice to the 6-figure creative community is this: 

It’s time to break the time barrier and start charging based on the value you create. 

This week’s interview is an eye-opening look at why we should quit charging per hour or day, and instead charge a flat rate based on the outcome we deliver to our clients. 

 

In this episode you’ll discover:

  • How Mike went from freelancing to running a business worth over 1 billion dollars
  • How freelancing has changed in the past two decades
  • Why you should bill per project, not by the hour
  • How you can determine what a client wants
  • Why some clients aren’t worth it
  • What to do if someone offers to pay you a million dollars per hour
  • How different clients see value in different things

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“Value, like beauty, is in the eye of the beholder.” – Mike McDerment

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Related Podcast Episodes

#84: The Pricing Masterclass: How To Charge More, Add More Value, And Win More Projects

#85: The Skill That Separates Those Who Succeed From Those Who Fail

#164: How To Stair-Step From Freelance Income To Passive Income | With Austin Hull

 

People and Companies

Jay Onrait

[00:00:00] Brian: Welcome back to another episode of the six figure creative podcast. I am your host, Brian Hood coming at you from Valencia. Spain on my little workation right now. I'm here with my 


[00:00:08] big bald. Beautiful Chris Graham cohost. 


[00:00:11] Chris Graham. I just messed that up. I didn't date 


[00:00:13] Chris. 


[00:00:13] Chris: I am having a fantastic day. 


[00:00:16] Brian: And we're also with another bald and beautiful friend here, Mr. Mike McDermott, the CEO of FreshBooks. we have an incredible interview lined up for you here. I already know ahead of time. We haven't done the interview yet, but I already know this is gonna be incredible because this is somebody we've been looking to have on the podcast for a while. 


[00:00:29] We actually had an episode, a couple episodes about a book you wrote a while back called breaking the time barrier. And I know we're going to get into all that stuff. So anyway, say, hi, Mike, 


[00:00:39] Mike: Hi Mike. Delighted to be here. Thanks for having me, Brian and Chris. Yeah. 


[00:00:42] Brian: Yeah. Okay. Hi my thing. 


[00:00:45] Oh my 


[00:00:46] gosh. 


[00:00:46] Chris: We're pumped, man. like Brian mentioned, we've talked about breaking the time barrier again and again and again. And Brian and I are both sort of a business book nerd. And so we read a lot of business books and I think on previously on the podcast, I think at one point we both agreed like breaking the time barrier is one of the best business books of all time. 


[00:01:05] And it's a free PDF that you can download it right now and read it in 


[00:01:07] 45 


[00:01:08] Brian: 45 minutes. Yeah. So the episodes that we actually did that on is episodes, 84 and 85 of the podcast go back and relisten to those where we're Chris and I really kind of go play by play. We break down. It's almost like a book study or uh, like a, uh, yeah, like with, with just Chris and I, so go reread. 


[00:01:24] If you did already go read breaking the time area, go listen to the episodes. But we have Mike here because we want to talk about some of these concepts from the man himself, the person who wrote this book and the person who I want to say. Implemented those things better than anyone. And then stair-step, we actually ended up, so last week, if you listened to Austin, hole's interview how he stair-step from freelance income to passive income. 


[00:01:41] Mike has also done that because he used his freelance business to fund FreshBooks, which is now how large is FreshBooks. Now, Mike. 


[00:01:47] Mike: we're a little over 500 people now, but 20 million people have used the service 


[00:01:50] since we got it. And if you checked the news, we just became one of those, you know, funny looking horses with a horn on its head. So that's um, you know, all kinds of ways to approximate how. 


[00:02:01] Brian: Got it. So for those who don't are familiar with the term, a unicorn, that typically just means a business that's valued over a billion dollar. So that's how, that's how stair-stepping to passive income from freelance income. Can get you after years and years and years. What did you, when did you launch fresh books at the very 


[00:02:16] beginning? 


[00:02:16] Mike: Oh, we launched in 2004, really more like 2006, because we had no idea what we were doing, but you know, almost almost two decades ago, so not exactly an overnight success and yet, you know, still, still kind of one of those. 


[00:02:28] Chris: there's something beautiful and poetic about. You were a freelancer and then you build a company to help freelancers. And now you are crushing it. That is just, that is so. 


[00:02:39] Mike: Yeah. 


[00:02:40] value privileged, privileged, very fortunate. It's a, it's all gone like this and there's been lots of hard work and lots of good things behind the scenes, but yes, you know, I w I was pretty early into it when I got into freelancing. People thought it was a strange thing to be doing, like, you know, 99, 2000. 


[00:02:55] It's like, oh, I'm sorry about that. And the world really wasn't it wasn't built for it. And so it's been one of the great sort of joys of my life is to see how it's, it's become what I don't want to say mainstream just yet, because I don't think it's even all the way there yet, but the world is starting to conform to. 


[00:03:13] Being able to work for yourself, do it successfully and have fewer obstacles, more opportunities. And, and, you know, and I have a much wider variety of roles that 


[00:03:23] kind of work 


[00:03:24] in this way, which is super exciting. 


[00:03:25] Brian: Yeah. 


[00:03:26] So kind of your background is you were doing freelancing and it. The book, at least the way you positioned it. Right. Yeah. I don't know if it's driving you crazy, but there were parts of it that was driving you crazy as a freelancer. So you, you kind of revamped your, your business a bit instead of building your life around your business, you kind of revamped your business to be more fitting to your life in the life that you're trying to build was I need to solve this problem of invoicing. 


[00:03:47] That was the problem that was at the time. It was like trying to invoice and bill, my clients was a big pain in the ass. early two thousands, I think was the time that that started happening. And you want, wanted to be able to launch this new software startup, but the problem was, you know, you need money to do that. 


[00:04:00] Especially back then, there was all these amazing tools and resources you could go to, to bootstrap a startup from the ground up for essentially free these days back then it took a lot of capital. So you, from what I gathered you. Kind of revamped your entire freelance business to where you work down to like 19 days and generated 200 K in a year. 


[00:04:17] You used that money and all the free time you had for the rest of the year to kind of get started, get fresh books started. Is that right? Or am I 


[00:04:24] way 


[00:04:25] off 


[00:04:25] Mike: No, No, that's that's right. I, I was first design firm, helping people with websites and internet marketing, and then yeah. Saved over an invoice one day. So there has to be a better way to do this. And as soon as I did that, I really liked the product building side. I love the services side for the years. 


[00:04:40] I did that, but there was something about. Building a piece of software. We didn't know where it was going to go, what it was going to be, and I'd never worked anywhere before. So it's one thing to run a service business. It's another thing to run a product company and it's it's I like to call it three layer chest, like multidimensional chest. 


[00:04:56] There's just a lot going on. You got to build a brand, you got to build a team, you've got to lead them. You've got to raise capital. In some cases, there's just so many different things to learn how to do. yeah, so I really enjoyed that. And you know, by virtue of that, I, Pretty quickly putting all my time, all the time I could into the startup. And eventually, yeah, that was doing, I did one year I did 19, 19 days made over 200 K and that, that helped kind of keep the lights on and help us hire the team and, get fresh books off the. 


[00:05:24] Brian: So I would love to, if we can, to shift the conversation to the changes you made around that time too, to maybe scale down your time, scale up your price per project. I believe you've probably changed a lot in pricing, maybe even some stuff in systems, but I think a lot of it comes down to what is covered in breaking the time barrier, which is value-based pricing. 


[00:05:41] The ability to charge an extraordinary amount of money for a relatively small amount of time because of how much value is being brought is that is in my offer. Was there more to 


[00:05:50] it than. 


[00:05:50] Mike: I will take a little of the hyperbole out of it and just say, being able to divorce how much you make from how much time you do work. And I think there's some really good reasons for that. So why don't I just take a minute, I'll set the table on breaking the time barrier, and then we can go over where you folks want to go with it. 


[00:06:07] in building FreshBooks, one of the things we did early on so I I'd run the agency. Running fresh books and we did these customer dinners. So we'd fly to a conference and I'd take a bunch of customers out to dinner in that town and literally just called them up and say, Hey, let's, let's go to dinner. 


[00:06:20] We'll, we'll pay it. You all meet each other. It'll be great. And what happened is I did those. I just, I realized people were struggling with things that I had struggled with when I was running my, my shop and, and chief among them was pricing. How much do I charge? But you know, which is really. It's kind of a big question and it's a bit of a journey. 


[00:06:39] So there's obviously like people, what I have found is most people just start charging something when they find their first call. It's a little bit, like if you're using word and Excel, it's probably because you did something for somebody to bill your clients. If you, if you did something for somebody, they probably said, Hey, can you send me an invoice? 


[00:06:55] And you're like, what am I going to do? I'm just going to build something in a Google doc or something and send it off. And honestly, that's just not the way to run your business if you're still doing it that way. Go check out fresh books. Having said that pricing is the same way. You know, it's, it's almost like an afterthought in a lot of cases first. 


[00:07:10] It's like, can I find the customer? Can I, can I, you know, can I get them to say yes to me? Can I do some things for them somewhere along the way, you might have to quote something and you scratch your head as to how to do it. You probably massively undercharge for your, for your value. so I was looking at all this and all these customer dinners, and I said, there's just gotta be a way. 


[00:07:27] Well, why don't I just share Some of the lessons I learned on my journey and I went from pricing, basically a project and kind of brochure rate to value based pricing. And, and the thing about value based pricing is it's really about, instead of thinking about how much does something cost. 


[00:07:42] It's going on a journey and doing a lot of seek to understand with your client to understand, Hey, what is your objective client? Where are you trying to get to? And how valuable is that thing for you? And then saying, okay, well, I can help you on that journey. And I will charge you a portion of the. And That's going to be my price. 


[00:08:00] And since we know where you're going and I'm committing to sign up and help you get there, me charging a small price of that is going to make a lot of sense. And so that's a simplistic way to think about it. Maybe not the most accessible, but, but it is it is fundamentally a shift from not being. 


[00:08:15] By the hour, but billing for value and at the risk of running a little bit long, I just, you know, I w w I love talking about why billing by the hour is wrong. Just to give an example, because so many people do it 


[00:08:28] Brian: That's the majority of our audience, the majority of our audience is billing by the hour or per day, which is just a glorified day. 


[00:08:34] Mike: Yeah, it's a terrible way to go. You know, because you know, a whole bunch of reasons, especially the hour of the day, maybe uh, it's still same kind of time-based construct. the billing by the hour, the reason I don't like it, the most fundamental one, is you're pitting yourself, you and your client against each other. 


[00:08:50] Brian: How 


[00:08:50] so. 


[00:08:51] Mike: when you bill by the hour, you are incented to work long. And they want you to work less. Right off the hop you're on opposite sides of the table. Personally, I like to partner with my clients. I like to be on the same side. I like to be going in the same direction. I want to win for you to be a win for me, all that good stuff. 


[00:09:08] And when you're billing by the hour, it's not like that. And you know, also, usually it's uncertain how much something is going to cost. And so people, people don't like the, I mean, I don't like to, like, if I engage somebody in contract, I'd rather know How much it's gonna cost and I will actually pay a little more. 


[00:09:23] Just to know it's fixed, it's $3,500 to fix your porch. Great. You know, it might be cheaper if they go by the hour, it might be 2,700, but the fear upfront of not knowing I'll take a little bit to just have some certainty on that. So anyways, by the way, that certainty is. Part of the value that you get to with value based billing. so. that's a little bit of a primer, some of the problems with some of the classic models. There's, there's a bunch more, but I wrote that book to, to help us. 


[00:09:49] Brian: Yeah. So I think that's probably, I think you've hit the nail on the head, right. There is people, people fear on both sides. The going over the hours thing. So on the freelancer side, they, they, they're afraid of doing flat like a project based or value based pricing, which we may get into the difference of that later on. 


[00:10:06] But they they're, they're afraid of quoting a flat rate because of the potential that it goes over an hours and now their, their hourly worth is diminishing for every extra hour they work than they thought it would. But on the, on the client side now, If you're paying per hour, they're afraid it's going to keep going on and on and on forever. 


[00:10:24] So that's scope creep where it just keeps. All right. I guess it's not scope creep. That's different thing, but the, the, the project just keep going and going and going. And you're saying that like, when you charge per hour, you are putting yourself up against the F the client, because. I just love that. 


[00:10:37] You're just on opposite ends. You want the client wants this done as fast as possible to the quality they expect and the freelancer wants it to just drag on and be perfect. And, and those dollars keep adding up because they don't have to go find another one. 


[00:10:49] Chris: Well, and there's a difference there with what you're talking about, Mike, with selling on value based pricing. You're talking about selling transformation when you're selling hourly, you're just selling labor, which is not going to transform anything unless it's 


[00:11:03] Mike: Yeah. I like to sell the house. Right. So it's like, Hey, you, you want, it's like, you want to buy an outcome client. You don't want to buy a bunch of hours that don't necessarily go anywhere. You want to know this outcome that I seek, that we're going to go there. And so it could be, I want to increase the revenue in my store. 


[00:11:20] It could be that I want to save a bunch of costs. It could be, I don't know. And by the way, this is part of the journey. You need to figure out how to instrument and measure that and align with your client around it. But, but you want the client and I feel like the client has a right to purchase it. 


[00:11:34] Not just a 


[00:11:35] bunch of hours. 


[00:11:35] Right. That's a reasonable expectation. and so, Yeah, so that, that's what they're buying and you're saying, Hey, I'll, I'll charge you for that. But, I think, and I'm sure we'll go here in a second, but I will say the magic wand is you have to do a bunch more work upfront with your client to make this model successful because you have to take the time to understand what is success to them. 


[00:11:55] And assess whether you are actually equipped to deliver it for them. And you might say, you know what, you're trying to do that. That's not me, but I can introduce you to somebody alternatively, that is very much me and I will help you. And this is going to be great. 


[00:12:07] Brian: Yeah, I think, I mean, I would love to touch more on that as determining what is value to that client. Because if you don't understand the value you're bringing to the client, there's no way you can price based on value. So w w 


[00:12:17] let's talk about that. 


[00:12:18] Mike: Well, I think, and importantly, there's no way for them to assess whether you've been valuable or not, unless you are all on the same page. And so what I always liked to do, and I started out very naturally with stuff like, for reasons of just pure intuition, I always used to in the first client meeting. 


[00:12:34] Okay. We're going to sit down and before we do anything, I would like tell me this. Tell me the origin story of your company. What's your history? What do we want to know? These are complete intangibles. Okay. But the point is I wanted to understand the client, the context in which this project lived, like where they're going, the arc of their journey and where this fits in. 


[00:12:52] And so that's, that's pretty soft stuff and it's good rapport building stuff. You can do that. Whether you're doing value based pricing. And I was not at the start, but that is something that I did do. And then once you get into, you know, started working towards, well, how much should this thing cost? I think what you want to do next is steer the conversation to asking the client, okay, what is the objective you're seeking? 


[00:13:13] And if it's, you know, often I serve businesses, but it could be consumers and businesses. You're either, you know, simplistically, you're either trying to grow your revenue usually or shrink your costs. It could be another objective, you know, figure out what it is. Maybe some kind of. brand improvement affinity with, you know, sort of target audience or something. 


[00:13:31] I don't know what, the point is you have to ask them a lot of people skip that step. And, and what's amazing is so often the clients don't know themselves. So the first part of value in working with you is often, you know, pushing them to get clear because like, I don't want to be in business with you serving you. 


[00:13:48] If you have. Unclear or unrealistic expectations for me. So let's, let's do some work. And let me ask you some questions and try and tease out of you what you're trying to accomplish. And by the way, with the client, they may have four people in the room and three different agendas. And so you gotta, you gotta pull that all apart and say, okay, okay, you all are saying different things. 


[00:14:07] You know, what is it? Can we get in a shared understanding of this? And, and that's actually. Yeah. 


[00:14:12] sort of alignment is just such a big piece of this between you and your client, by making sure your client has it within their own, their own shops. So getting clarity on what the objective is, and then, and then once you have that, it's like, okay, here's how I can help. 


[00:14:25] Or, you know, in some cases it's like, I can't help. I'm not the person for this. 


[00:14:29] Brian: Yeah. So this is one of the things that I really wish I knew when I was still producing bands back in like 20 13, 20 14, 20 15. Because I would have, and this is, this is an interesting thing for our audience. If you're not working directly with businesses because businesses it's all about revenue or costs, like you just said, when you're working with creative clients like musicians, that's not necessarily part of the conversation. 


[00:14:48] It's more about sometimes it's ego. Sometimes it's self actualization. There's nothing really inherently tied to money with their goals of their outcomes. But at the end of the day, they really haven't even thought of those. They haven't externalized what those goals were or. So having these conversations with these clients, especially on the more creative side of things, it's really important because they haven't even likely thought of these things themselves. 


[00:15:08] So they don't even know what success is to themselves. So if you were to do the project, even if it is exactly what they asked for, it may not be six. What success is to them? So what Mike is just saying. Here is essentially. Sit down with the client, ask questions for me in my day, back in the day and producing bands was like, tell me about the beginning of your band. 


[00:15:26] Tell me about your journey so far. Tell me about where you want to be as a band. Do you want to get signed? Do you want a tour? Do you want to play arenas or do you want to just, is this something you want to leave your kids as a part of your legacy? Like these are all questions you would ask a client, like what I was working with back in the day. 


[00:15:37] They'll start to lay out what the path to success is to them. And then whatever, you know, what that path to success is, you'll be able to figure out whether or not you are the one that can actually guide them there or help get them there. And if you can't, then that's, it's okay to say no to those, those prompts. 


[00:15:51] I, I imagine Mike, that there were plenty of clients that you had to say no to, because if you would've said yes, it would have been a a nightmare project that was toxic for everyone 


[00:16:00] involved. 


[00:16:00] Mike: Well, and I was just going to say. Don't get clear. Can't get clear or won't get clear. Just walk away. Just say no, thanks. This isn't for me. I don't see how I can be successful. If you can't get, be clear with your expectations of what outcome you're seeking. So I'm just going to steer clear of this, right? 


[00:16:15] That's that's a sign. You know, that's a sign that it's a problem. anyhow, it's a, it's another, it's good to have these upfront conversations and understand each other, by the way, it makes the work deeper and more rewarding as well. Once you understand, and now it's like, oh, okay, you're trying to get there. 


[00:16:29] I can help you. That's a, that's a good feel. 


[00:16:32] Brian: Yeah, I feel like going back to myself, this is me preaching to myself. What is this? Six years ago, something like that where I would just, the band would send me the client say. Here's what I want. Bullet point bullet point bullet point. It's like, I want 10 songs. I want these mixed and mastered what is your price? 


[00:16:47] And, and I would say, this is my price. Take it or leave it. And that was a scent that was extent of myself system. Like that was, that was how I did my pricing. I hope this is worth it for you. Do you like what I do? And if I would've done what Mike says, like I would have had so many more clients because I would have had more people on my team. 


[00:17:02] They would have said, oh, Brian actually gives a damn, because the last three producers I reached out to were just giving me rates based on what we said. Instead Brian's asking questions, showing interest, actually guiding 


[00:17:12] us on this, this journey that we haven't even gone through ourselves. And so I feel like I trust Brian more. 


[00:17:18] So, Mike, I, again, this is just stuff I wish I knew six or so years. 


[00:17:22] Mike: got to know if it's a concept album or not. Right? That's one 


[00:17:25] question. 


[00:17:26] Brian: that's actually, that's another question. Yeah, exactly. so that's a little bit on like how to determine pricing, just really digging in, figuring out where they are, where they want to be, and if you can actually be the one to help them. But is there, is there ever a time that, that hourly pricing makes sense? 


[00:17:39] What about like, cause we have a lot of people in our audience that are still on the beginner side of things is hourly. Should you go straight to value-based pricing? 


[00:17:45] Mike: this is one of the things. And so maybe I'll make a little plug for breaking the time barrier here. It's been read by over a quarter million people at this point, it takes about an hour to read. And it's all about how to like the purpose of the book. 


[00:17:57] The reason I wrote It was, I just saw so many people stuck in however they were billing, but aspiring to get to the other thing and no clue how to go from here to there. So the whole book is actually around trying to take your mental Headspace, your mindset from one understanding of how to price. To another, and that's the whole purpose, nothing more. 


[00:18:16] And, you know, as you go on that journey, you know, you sort of learn and you can see parts of it And you know, there's some, some it's written like a fable, so you can kind of experience it. And I know fable books are not necessarily everybody's cup of tea, but but it, it is it's only 45 minutes. So it won't be too bad. 


[00:18:33] Anyhow, the fable helps you go through. that journey is kind of a lived experience for yourself. And then you step out of the book and you say, oh geez, how would I, how would I recreate this in my own life? And yeah. And that is, that is a thing. And so, Hey, if you're doing hourly today, I'm jumping straight to value. 


[00:18:49] Might might be a challenge. And what I would say is, Hey, go read something like breaking the time barrier or there's other people who talk about this concept out there as well. and and then say, okay, what what's, what's the next step for me? And cause one of the things that's also important as you get into value based is you generally want to carve out some kind of an area of expertise. 


[00:19:09] Or as I like to say, have some kind of homogeny to your client. And that homogeny, you don't have them all to be identical and no two clients are, but if they have some similarities, maybe it's an industry that they're in. Or maybe if you're a music producer you're producing, you know, a genre of music, you, you, then you have depth and expertise on how to achieve, you know, that sound let's say, and if you become like the producer for this sound, then you know, you know how to do it. 


[00:19:36] You go deeper and deeper. You'll become more sought after over time. But, but you also have the uh, the ability to like, you basically get, you can make better things faster because you go go deeper on this stuff. And so, think a lot of people . Start out with hourly and that's totally fine. And you may find that journey from hourly to value. If you go on the journey, you know, you have some missteps, you know that that's okay. You may have some clients who refuse to make the change. And you might say, okay, I'll leave you on hourly until till later. 


[00:20:06] And then you have all your clients off of hourly and Yeah. All of them off hourly, except for the one. And then you're going to be forced to decide, do I fire this person or do I let them persist? And then hopefully the relationship is at a place where they'll, they'll transition at that point, 


[00:20:19] Chris: I have a, I think a hard question with this. So as I've been talking to my people I work with do business coaching and stuff for this conversation comes up all the time, bill by the hour or value-based pricing, project-based pricing. And one of the things that's come up an awful lot is this idea, you know, everyone says, you know, don't sell your hours for dollars. 


[00:20:39] No hours for dollars. And I hear that. And man, like, I'm the big, I'm a fan boy. I've read, read the book twice. I'm obsessed with it. You know, we preach it constantly, but I, I always wonder how much would you be willing to break your own rules for if someone was like, I'll pay you a million dollars an hour. 


[00:20:58] There's a threshold there. Like at what point you're like, okay. and I think that's the funny thing about hourly pricing is it is it's threshold. Like, I don't like to work for hourly, but at a certain price, I will. 


[00:21:10] Mike: I listen. I think that's a personal choice. I think all of these things are personal choices. If you're billing by the hour, there's, you know, there's nothing inherently wrong with you. I'm not judging you. If you're looking for another model. You know, maybe it has some advantages. Great. If somebody wants to pay you a million dollars an hour and you know, it's like, no, I want you to pay me $10,000 an hour because it's value based or $10,000 for this project instead of a million. 


[00:21:32] Like, you know, let's, let's, let's, let's not be silly. I certainly, again, no judging that might just be what they're accustomed to or, or whatever. But I do think, you know, even in that hourly rate, I'd like to think you asked these questions. And you know where you're going and you know why you're going there and you know, what the outcome is. 


[00:21:49] I, you know, whether you charge value based or not. I think that the process of, of learning how to seek, to understand your client and their goals and, and attempt to partner with them. Right where you're on the same side of the table is a good thing. And if they just insist on paying you a million dollars an hour, that's fine. 


[00:22:08] If you have to, you know, you can, but, but I, I, I think the, the whole there's, there's so much just good client relation, goodness. In this approach to billing that whether you use it to actually bill or not, it's, it's a good thing to learn about. 


[00:22:22] Brian: I'm going to touch on. Just said if, if a client's willing to pay me a million dollars an hour, I'm still gonna do what Mike just said. There's some reason that my time is worth a million dollars to them. And so I want to discover that reason. I want to discover why it's so valuable to them. 


[00:22:35] if only just to find more people like that, more customers like them, who my time is worth a million dollars to or whatever the number is that a million dollars is ridiculous, but just say 500 or a thousand. If, if someone's willing to, if one person is willing to pay me that it's because it's worth more than that to them. 


[00:22:50] So I want to find out why that is so that I can find more clients like that. So that was my thought. Whenever Chris is bringing the weird million dollar number up, but I still, I still love the question, Chris. I'm not, I'm not dogging it all. I just, this is a question. That's just the thought that came to my head. 


[00:23:01] So you, you started to touch on something Mike, that I want to go back to is you use the music producer example where you. You find a specific genre that you want to master as a producer and or really any, any freelance field that you're into. You could be a certain style of photography. You could be you know, certain you could be a videographer and you want to do music, videos, whatever that is. 


[00:23:21] And you want to, you want to master this one thing, you have a very, a very interesting example in the breaking the time barrier book of this, of the dog Walker, where she's a simple dog Walker, she's doing. $15 a dog walks, something like that. If you remember this story, Mike, and the coach, whoever that is the guru, the helper, or the person that's guiding her on this journey of like fixing this problem is giving her different ways to add value to her ideal customer. 


[00:23:46] So as a music producer, what other ways can you add value to this client that you have? And it goes above and beyond just a specific skill it's sometimes it's expanding the skills that you have or making use of skills that you already have. I don't know where I'm going with this, because this is just something that I re-read today. 


[00:24:00] And I, I just love this so much. And maybe you have thoughts on this, but I just want to talk, I look at it like the Chick-fil-A effect because Chick-fil-A does this really well with like the mommy. Drive-through where they like go through the drive through with the kids and then they'll set up the food inside. 


[00:24:12] So the mom doesn't have to lug her kids to the drive through just really interesting, unique ways to add value to clients without taking on any additional expenses. 


[00:24:19] Mike: I think that that's right is, is value. Like beauty is in the eye of the beholder, and sometimes you can construct your service delivery in a way that costs you little to, nothing more, but has, you know, has value for the other party. I did a podcast like this with a woman who does photography and hopefully I can remember this and get it right. 


[00:24:40] But basically she does family portrait. And what she does is the following, which is interesting. Is she uh, in, in a given night, she'll go out, like, after she's sort of had dinner with her family, she's got a 7:00 PM shoot and she sells the 7:00 PM shoot for like $500. if you want, you can, you can get a family shot done for one 50, but you don't know when it'll start. 


[00:25:03] Cause it's going to be after the 700. So for the person who values knowing when it's going to happen and getting their family there and being organized, that's 500 bucks for the person who is prepared to wait around until the shoot is done, whether that's 8, 15, 9, 25, you know, whatever it is, they get it for one 50. 


[00:25:23] you know, I thought that was brilliant, right? It's like, oh, I'm paying for time certainty so I can organize my life and it can fit in, or, you know, I'm happy to have a portrait and I'm flexible. And so with almost any service that you offer, like, if you're a music producer, like, is the bar stocked in the studio or not, you know, like, it could be a simple thing. 


[00:25:43] If people are partaking in those. Thanks. So I have, I have no, no idea what your thing is. You know, the dog-walker would like take photos and send photos of the weekly walk. So the, the owner could be at work and not feeling bad cause he was a great photo of my dog out getting a nice run. These are the kinds of things like you take the same service and a little bit of thinking and it's like, oh, this is, this is a better, more valuable service. 


[00:26:05] I'm prepared to pay more for it. 


[00:26:07] Chris: I want to go back to 


[00:26:07] something that you said it was like the biggest knowledge bomb we've had in a while on the podcast, you said value, like beauty is in the eye of the beholder value. Like beauty is in the eye of the beholder. That is like a little nugget of wisdom from heaven. True, because I think for us as freelancers, we're like, whoa, the industry average is blah, blah, blah. 


[00:26:32] Like Archer charge. You've got all these ideas about what you are, quote unquote, worth the w word and this idea for you to just bask in it, to marinate in this idea, that value like beauty is in the eye of the holder means that the value that you see in yourself might be significantly less. Then what a potential customer sees, and you need to align your view of your beauty, your value with their view 


[00:27:04] Mike: I would go one further and be like, you don't even have to align it. because you probably undervalue yourself like 99.9% of certainly creatives. I know you just, you just under like it's I did everybody does. It's it's just, it's almost like human nature. So that, that's why it's so good to like, forget me. 


[00:27:24] I'm just going to focus on you client, let me understand your version of value. And I'm going to come up with a pricing construct where you're going to win and I'm going to win. That's simple. It doesn't even matter how I view myself and how. Worthwhile I am. Right. That's that's the flip of it until you get that terrible, really awful client who doesn't value you and kind of degrade you and you need to fire them and move on right away. 


[00:27:46] But for everyone else, who's perfectly reasonable and you're delivering for yeah, like just figure out what their version of value is. And you know, that that's the place to focus. 


[00:27:55] Brian: Yeah, Chris, Chris, you said something that sparked a thought where you, you said that you may not even view yourself as valuable as your client. Because of the the quote that Mike, the wonderful quote that Mike sent me, that will be the default, like big quote that we put 


[00:28:07] from 


[00:28:07] Chris: Yep. 


[00:28:08] Brian: I'm sure James 


[00:28:08] will use 


[00:28:09] that. 


[00:28:09] But uh, yeah. Yeah. So anyways, but I love that. Just the process that Mike's walking us through here of having these conversations of discovery with your client. Some people call it a discovery calls. Some people try to disguise a discovery call is just a sales call. But at the end of the day, like if you're truly trying to discover your client's needs, that's what a discovery call. 


[00:28:28] If you're doing these calls and you start to determine like how much value you're actually bringing this helps reshape your own view of the service that you offer, because you're starting to, to understand yourself the value that you're bringing. And until you really put in the work to figure out how much you're helping. 


[00:28:44] Someone transformed their life or their business or their music or their, their vision or their, whatever, whatever it is that you do until you really take the time to understand the value you bring your client, it's hard to price accurately for what you do. You'll always undercharge because you won't have the confidence of understanding what it is that you do. 


[00:29:01] Chris: Well, and I think that comes back to this word transformation that I brought up earlier, understanding what the transformation is that the person you're working with wants to see how. They are this person. They want to be that person they are seen as this. They want to be seen as that, you know, that transformation. 


[00:29:18] That's what you're trying to figure out when you're doing this research. When you're doing these calls with somebody is figuring out who do you want to be? can I help you? 


[00:29:25] Brian: so Mike, I'd like to kind of shift the gear a little bit, but stay in the same vein. Leveling up clients, because I think one area that people struggle with is they're stuck in this bottom dollar world. And I think a lot of that comes with positioning. Some of it comes with not being focused on who you're helping and what outcome you're getting them to, all those things. 


[00:29:44] But some of it's just not understanding how to really stair-step those clients, because this and this ties into what we just said, because sometimes the same exact service that you all. Is worth 10 times more to one person than it is to others. I'll give a quick example and then hand it over to Mike here. 


[00:29:59] I could help just two guys talking sports in their basement, launch a podcast. I have a new podcast agency called good fortune media. I've talked about on this podcast and I could help guys talking about sports and their basement for fun launch podcast. Do you think that would be as valuable to someone like Mike D does FreshBooks have. 


[00:30:17] Mike: Well, yes we do, actually. Yes. 


[00:30:18] Brian: Okay, well, let's just pretend for a second. You didn't have a podcast. do you think it'd be as valuable for these guys in the basement launching a sports podcast? You think it's as valuable of a podcast to them as it is to fresh books. If I were to help FreshBooks launch a podcast, that would be something that is vastly more, more valuable to FreshBooks as a service than it is to two guys in a basement, launching a fund fun sports. 


[00:30:41] Mike: think that's right. You know, the, the scale of the platform, the number of people that we're reaching, we're starting out as you know, we have we're a business today. So, so I, I think what you're getting at in a big. Hey, like who your clients are, you know, does matter with some of this stuff. And, and also, you know, by the way you know, I, I don't know if, you know, like there are, there are guys who would like to do this from their basement. 


[00:31:04] You know, I, I don't know if you know Jay on. Right. And he was a good friend of my brother's. He was like that, like he came down to the states, he's a Canadian, sports caster commentary guy. Very funny. Anyways, 


[00:31:14] Brian: no shade whatsoever to guys in their basements 


[00:31:16] doing 


[00:31:17] podcasts. I was just using this 


[00:31:18] Mike: I I I'm just saying he's a guy who's presumably had seven figure contracts done. So, Brian, if like he might choose to one day do what he does instead of at the TV studio, but from his basement and then you, would charge them accordingly. And so that the point is yeah, who your clients are really mad. 


[00:31:35] Right. That's that? That is, that is, that is part of it. And you, you probably want to overtime work up. It's a process of, you may look at your portfolio of clients and say, I love half of them. I hate half of them. Okay, great. So you want to have more of the ones you love and some ones even like better than your best ones today. 


[00:31:54] And you want to move on from the other ones over time. And over time you can do that, but yes, you should not discount. It's you know, these are relationships. Right. You and your clients, and you know who you have relationships with is going to be part of, this. And then how you manage and 10 that relationship as well, because you know, the better the client and the higher, the expectations, you know, you better deliver. 


[00:32:16] Right. You're going to charge the more you better deliver. So it's, it's a two-way street. Anyhow, maybe I'm running long on that point, but I think what you're really saying is the client matters and yes, you're right. 


[00:32:26] Brian: do you know of, like, what are some things that you have done, like, especially back in the freelancing days or people that you've worked with with more recently of, of, of scaling up some of the quality of clients that they're working with? Even if that's just identify? I mean, I don't know. I, I would love to hear your thoughts on any of anything around scaling up to better clients or bigger. 


[00:32:43] Mike: Well a lot of it's networking. Let's face it. That's still the number one way. Most of us can. clients and our best clients. Right? So maybe you talk to your existing clients and you ask for a referral, maybe you're going to an industry event or something like this. And, and so it's, it's time at there. 


[00:32:58] It's meeting people. It's, it's, you know, forging a connection. It's, it's calling a client up when you don't have an agenda and asking them how you're doing what's new, you know, do you have a loose conversation out of that plops? A really nice referral. You know, you didn't go in expecting for it. You didn't ask for it. 


[00:33:13] It just kinda happened. You know, delivering, you know, most, you know, delivering doing a good job, like that's the classic. If you're, if you're in a home services business, let's say you're doing landscaping or something like the way you get more clients is you just do a great job and you serve your existing clients. 


[00:33:28] Well, over time, like that's the number one thing. Just do a good job for the clients you have. But, but I will say some clients don't lead you to better clients. And so being mindful of that and having a bit of a sniff. When you're talking with a client, you're doing that discovery and being okay with saying, you know what, I need the money, but this is not like, this is a road that's probably not leading in the right direction. 


[00:33:49] So I'm going to say no to this client and trust that something else is going to come my way shortly. And I think that's, I mean, that's like a, you know, put your faith in the universe kind of approach to 


[00:33:58] things and not everybody's super comfortable with that, but in my experience, it has a funny way of working. 


[00:34:04] Yeah. 


[00:34:04] Chris: Well, you said something else. That was another amazing wisdom bomb here. Not all clients lead to better clients. And I think for most freelancers, I know I never did. When I was learning how to build a business. I never thought to myself until I really started to read a lot of books, never thought to ask myself the question, is this client going to lead to better clients? 


[00:34:24] Or even is this client going to lead to more clients? And I think it's really important to have that distinction, to look at the people you're working with and to judge them, not just based on are they paying you, but can they get you paid by somebody else? 


[00:34:36] Mike: Well, 


[00:34:37] Chris: Thank you. 


[00:34:38] Mike, for those, for those listening, that aren't really familiar with fresh books. I want to have you pitch it to us, but I want to. How I've talked about it with people that's been so fun. When I've talked to a freelancer who is on invoicing, meaning they do the work and then they send the client an invoice and say, please pay me in a reasonable amount of time. 


[00:34:59] And for a lot of people that are in the higher echelons of whatever industry they're in, that tends to be the way that I think that I often see it. When I've explained what fresh books, at least like the initial value that fresh books presented years ago of like, yeah, you just like send an invoice and then fresh books watch watches your bank account. 


[00:35:17] And then they keep getting reminder emails until they pay you. And then you don't have to do any more. Follow-up and it's so fun to watch people's eyes go like, whoa. And then they run home and download fresh books. And I think that happened with Brandon Reich or maybe Brandon he's a guy that's been on the package. 


[00:35:34] before friend of mine, 


[00:35:35] Brian: This literally sounds like a situation that my wife is going through right now. She's like, how many, how long should I wait before following up my client to pay? Because my wife's a freelancers. Well, she's a freelance writer, so I'm genuinely interested in learning more about a fresh. Mike. I know you said like, here's the thing, Mike is a humble guy. 


[00:35:51] Everyone here, like listening so far knows Mike's a humble guy. He's like, he wouldn't even say that they're a billion dollar business yet. Like he, he had to like dance around that. He's like polite, humble guy. And he's even said I'm not really big on pitching audiences and stuff, but like I genuinely want to learn more about it. 


[00:36:06] And I'd love for him to tell our audience more about FreshBooks, because I think it's genuinely helpful if this is something that you need. So I'd love for Mike to give us a bit of a rundown 


[00:36:15] on 


[00:36:15] Chris: Yeah. And let me, let me hop on with what you're saying, convince me to stop using QuickBooks, 


[00:36:20] Brian: Yes, please. 


[00:36:21] God. Cause I I've been using, I've been using GoDaddy bookkeeping for like 10 years and I hate it and I want to move Mike, so 


[00:36:28] please. 


[00:36:28] Mike: this is Good. This, this, if you listen carefully will be valuable to you. You'll save a lot of time and, uh, He can put that to other things. If you take what you're about to hear and put it put into action. So Okay. so let's sell you on FreshBooks. So what do you need to know? There's there's just a few things, so, Hey, we're credit. 


[00:36:45] You know, we're number two for small business accounting software in America. That good job, good job, fresh books. But, but the question is why, there, there is something that makes fresh books different, which is in, instead of serving all small businesses, we just serve service based businesses. Folks who really get paid for their, their time and expertise. 


[00:37:03] So we don't do retail. We don't do restaurants by virtue of that. The product that we build is much simpler and easier to use. And it is more specific to the needs of the customers that we serve. So, so we started out our history and our origin story was just online invoicing. Can I create and send an invoice online? 


[00:37:23] Cause that was my problem. I saved over an invoice. So we, we literally just built invoicing. Then we needed estimates. So we, we, I was like, oh, I need a quote to get that one. And you know what? We built expenses into our platform. Not because I want to track expenses, but because I had to rebuild my clients for expenses, so I had to track those expenses and then get them on an invoice. 


[00:37:43] So, so the point is we come at it very much from a first principles, understanding, you know, the segment of customers that you folks serve. And what that results in is, is some of the magic you all were talking about, where you know, where you can send an invoice in fresh. Yeah. From the client views that you can tell they've viewed it. 


[00:38:00] Sometimes people will be like, well, I didn't get the invoice and you can be like, well, as a matter of fact, I can see here that you've viewed the invoice. You just didn't act on it. So please, please, you know, pay me now. The, the other, you know, other really neat thing is just on, you know, we're so receivables focused because invoicing is, is 95% of how our customers collect their, their revenue and their income. 


[00:38:22] That we, we put a lot of automation into it. So for example, you can, you can have reminders go in and at the schedule of your choosing, you know, 15 days, 30 days, 60 days, 90 days, whatever you want, you set it up. And we, we send an email out and it comes from us, but it's your business. And so what happens then is you'll be surprised by this. 


[00:38:43] Often the clients will respond to, oh my gosh. You know, I'm sorry. I, I will, I will take care of this. So instead of you having to do that, like, you know, put your hat in your hand and go and say, oh, please pay for my late invoice. We just take care of that for you. It has a strange effect of a lot of clients just being like, you know, taking it seriously. 


[00:39:01] Cause it seems like you're so organized when really you just created and sent an invoice in FreshBooks. So we could probably go on and talk about it, but. More, but I think that's a bit of the why. So it's really built for, for you, if you're you're a services based. 


[00:39:16] Brian: What's funny is if you, if you listen too closely to the way Mike explained that a it's just good. Like he's talking about it from their perspective of the freelancer. So that's just something to pick up on there for anyone struggling with, with pitching or sales, but also Mike did exactly what he just talked about. 


[00:39:30] he narrowed down to one specific type of customer, which is a freelancer or a service-based business, not retail, not restaurants and created a product that met, met their exact needs. And because of that, the result of that is they're the number two. Solution in the world for that. And they have over 500 people working for them. 


[00:39:45] They're worth over a billion dollars in, and they have reached a level that I can't even fathom. So with that, I just got to say kudos to you, Mike, for, practicing what you preach, essentially, which is not surprising because you don't seem like a guy that wouldn't be the guy that practices what he preaches. 


[00:39:59] So if anyone wants to try fresh books, I'm going to, I'm actually genuinely going to try it out. We can report back Chris later and report our findings on it because I want to start using our, for the rest of the year and then move over to it. For 20, 22 because I tend to make changes like that at the end of the year from going to, and but yeah, I'd love for you to send people where to go to, to try that stuff out or anywhere 


[00:40:17] else you want to send them 


[00:40:18] Mike: Couple of things. I didn't want just you like your wife also to be using FreshBooks clearly she needs 


[00:40:22] it. so there 


[00:40:23] Brian: it was going to be both of it was going to be a family move. 


[00:40:26] Mike: I'm just kidding. 


[00:40:27] Uh, but, But there's, there's some truth to It So uh, given those, those conversations she was, having, I think it would be helpful for her. So if you'd like to learn more about fresh books, I'd encourage you to just go to freshbooks.com. Anyone can get started with a free trial. I think alongside of the fact that, you know, we, we just serve service-based businesses. 


[00:40:46] And, and reflective of that is you can pick up the phone and speak with us. Try it you'll get a human and, and probably less than two rings. And that person, you know, 95% of the time is going to answer all of your questions. And so please, please lean on us. That's what we're here for. We are a service also, and we just think that's a better experience. 


[00:41:04] We know how busy entrepreneurs are when they need help. They don't often need help, but when they need help, just being able to get a fast, competent answer is so very important. So, so yes, go ahead and try for free@freshbooks.com and, or give us a call. And we'd love to, we'd love to serve. You have the opportunity to, so, thanks. 


[00:41:20] Brian: Perfect. Well, thank you so much for coming. 


[00:41:22] Mike: Thanks for having me. 


[00:41:24]

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