Episode 230: Value-Based Pricing For Designers

Pricing is one of the most difficult things we have to do in our businesses, especially when we’re not sure what our services are worth. In today’s episode, we’re covering everything you need to know to offer value-based pricing in your business! Listen in as we cover the mistakes you’re probably making in your pricing, how to define value-based pricing, and how to approach shifting to it in your business. Mistakes in Pricing as a Designer In my nearly 10+ years in the creative industry, I have seen this same mistake over and over again, where designers are pricing themselves based on either what the competition is charging or how much time it takes them to do whatever it is they were hired to do. We all start somewhere, but it’s time we pivot ass an industry away from this pricing mistake. When you’re pricing based on your time commitment, consider what used to take you 10 hours to complete may now take you 6 hours. Should you be charging less for it? No. When you reach a certain point in your business where you have amassed a huge amount of skill, you’re really proficient at what you do, and you’re able to work quickly and effectively, that hourly model of pricing your work actually penalizes you. Hourly pricing punishes you for being good at your job. That’s not the key to growing a profitable design business. The Spending Habits of People As you’re considering adjusting your pricing, here’s the honest truth: people buy what they want. They buy what solves their need or whatever aligns with their goals. Your pricing isn’t just about what others are charging, but this is where most of us start in this space. What we need to turn to is value-based pricing. What is Value-Based Pricing? When you utilize value-based pricing, you’re pricing yourself based on how much value you deliver to your clients, not just the number of hours that it takes you to do the work. Consider when you go to purchase something for yourself, you’re not thinking about the time it took to make or what it cost the company, you’re thinking about how it will serve you. You’re thinking about what it’s worth to you and how you’ll use it. What Value-Based Pricing Does for Your Business Value-based pricing allows you to determine the true willingness of your ideal client when it comes to your services and what they’re willing to pay. Additionally, it maximizes your profit since you’re not charging based on time anymore. It allows you to develop higher quality services. It also opens the door for you to think from your client’s perspective. How to Utilize Value-Based Pricing in Your Design Business When you’re switching to value-based pricing, you are flipping your pricing approach from how much time does it take me to do this to what value can I offer my client through this work, plus what is it worth to them? My favorite approach to value-based pricing is through actually talking to your existing and ideal clients. This allows you to build your pricing directly from your customers. Inside the Brand Strategy School, I have a sample survey that I share with my students that covers what you should be asking during these interviews. Big picture, this includes understanding how they define value within the context of your work, and then what they’d be willing to invest accordingly. Value is Subjective