Why is it that some freelancers and consultants are able to charge $5,000+ for a project while others only $500? The answer is simple. They attract customers who care about outcomes rather than the deliverable.
As an example, let’s look at the offering of two developers:
|Web Developer A||Web Developer B|
|A custom 5-page website with 1 contact form.||A highly-personalized process for getting warm leads into your inbox.|
So, you can see that one sells based on the workings of what the client gets while the other on the outcome–the desired future state the client desperately wants.
People don’t buy stuff. They buy the thing it does for them. In order to figure out what it is that people want to be done for them, you need to discover their pains.
Discover the pains of high-paying clients
A freelancer or consultant that charges more understands that high-paying clients have completely different needs and expectations than someone who is price-conscious.
Staying with the web developer example, it’s not that developing a $5,000 website means creating a site with more pages. It means creating a site that has specific, measurable goals.
For example, a web developer can either sell a website to a small business for $500. Or they can develop a lead generation package for $5,000 plus content marketing for $1,000 per month.
It’s the outcome that they want. In this example, they don’t want a website. They want the website to perform a specific job for them.
Don’t raise your rate slowly over time
Here’s some typical advice you’ll receive: Pick a niche–such as plumbers–and take on as many projects as you can and over time, slowly raise your price or rate.
The premise is that at some point in the future you’ll build your reputation to the point where you can charge what you want.
This is bad advice. When your primary lever is price–even when it’s coupled with your level of mastery–you’ll never reach your optimal rate. By slowly raising your prices you’re signaling to customers that their needs don’t matter.
The work you completed for a client yesterday has no bearing on the work you’re completing for a client today. So why set your pricing this way.
Determine the client’s ideal outcome, then price accordingly
The value returned determines the price–not the number of projects completed. If you can get good at determining the client’s ideal outcome then you’ll be pretty much guaranteed to charge what you want.
The pains, needs, desires, worldviews, etc. of a $5,000+ client are completely different from that of a $500 client. To a $500 client, the value is the deliverable. E.g. If you’re a website developer, it’s the website.
A $5,000+ client, on the other hand, will expect more from the website. In fact, they won’t even care about the website. All that will matter to them is the results that they get from the website.
How to discover the outcome people want
Okay, so you’re on board with the idea of selling based on outcomes and value. The next question is, “How do I know what people value? How do I know what outcome is important to them?”
The answer is surprisingly simple but takes time to master. You do this by driving your initial conversations with prospects in a specific direction.
There are three steps the conversation should take:
1. Discover their pain
Getting the customer to reveal the underlying pain is the most important step not only because it will help you understand what it is they need but it will help them realize the urgency of having it solved.
This helps them move from “it’s a minor annoyance” to “this is a major problem” so they realize they need to take action sooner than later. You do this by asking lots of questions, digging deeper as you go.
Here are some questions a marketing consultant would ask of an, say, accountant:
“How difficult is it for you to book new appointments?”
“You say it’s not that hard, are there any periods throughout the year where you experience slumps?”
“It sounds like that that must a tough couple of months. What are you doing to compensate for them?”
“I understand, working overtime and cutting part-timers staff is tough. Do you have a lot of turnovers?”
2. Measure the impact of having their pain alleviated
The degree of having their pain alleviated matters. If the impact is low then you need to go back to step 1 to find another pain worth solving. It’s important that the customer sees a real benefit to having the problem solved but you want them to come to this realization on their own.
Ask questions like:
“So, you said Nov and Dec are slow months. What would it mean for you if they weren’t so slow?”
“How much more new business would it take to cover the extra inventory?”
“How much would you save not having to find and train new contractors?”
3. Present your solution (i.e. your product or service)
If you’re meeting in person bring your laptop or any printed materials you have to show the customer. Review every point you discussed with them and collaborate on how your proposed solutions will help them. It’s okay if you don’t have anything to sell. Be upfront and offer them x months free or a discount if they’re willing to pay you upfront. It’s important to ask for the sale, even if it’s nominal, to validate not only your solution but also your ability to sell it.
Even if you are not able to make a sale you will want to have as many conversations as possible until you truly understand the problem from your ideal customers’ perspective. This way your solution will be as close as possible to what they’re looking for.
Four common mistakes–and how to overcome them
- Charging too little because you’re worried that you’ll lose business. People don’t walk away because of money. They walk away because they believe there’s some kind of a mismatch.
- Negotiating based on price rather than outcomes. If customers seem overly focused on price, then the value you’re selling is not defined well enough. When the biggest objection is price, then you need to reevaluate how your selling. You know when you’ve identified a true pain when customers don’t even mention the price. Negotiate the work to be done, not the price. Scale back the scope or recurring timeframe rather than reducing your rates.
- Not defining your ideal customer. If you don’t know who you’re selling to you won’t be able to offer them value. It’s worth spending the time getting to know your customers–who they are, what they do, what motivates them, etc.
- Attracting the wrong clients. You’ll never close 100% of prospects but filtering out the wrong clients early on saves you time and energy. It may be tempting to go after as many people as possible–to cast a wide net. But this is tough–if not impossible–to get right. When you narrow your messaging and direct it to the people you need your help your energy will not be lost on deflecting the wrong people.