hello everybody welcome thanks for joining us I'm excited to speak today with Eric Ralph if you haven't been on one of these webinars before this is a free series of really fun super informational and helpful information about being a freelancer or being a founder things that I thought would be applicable to people because I've seen this information coming out from members of unreal collective in our weekly calls and I've said that's something that we should make available to more people so thank you case this is a hilarious shirt that I had rush-ordered I had two of these purchased and made very quickly for the launch of the podcast yesterday and they are some of the ugliest shirts I've probably ever designed for myself but it gets the point across so thanks for pointing it out okay I see you've already found the question area if you guys have questions during the webinar enter it into the chat box or in the ask a question area we'll have time for Q&A at the end Eric's gonna speak to us for 30 to 45 minutes and then we'll save whatever time we have left for questions hopefully we get to all of them and I know you'll probably have some specific questions and we'll do our best to answer them so use the chat or the ask a question button this is part of the unreal collective membership spotlight unreal collective is a community of founders and freelancers online accelerator to help you grow your business soon we'll have a community membership too I'll share more about that soon so if you're a founder or a freelancer we'd love to talk to you more about that information at unreal collective comm but that is not why we're here today we are here to talk with Eric Eric Ralph is a finance and marketing professional with 20 years of experience in pricing products and services for companies of all sizes and industries Eric helps take the mystery out of pricing to ensure that pricing reflects the value you deliver to your customers he's also a past president of the American Marketing Association Columbus chapter and has worked for CAS Stirling Commerce and Cardinal Health and addition to his own consulting business so again remember to ask questions this is collaborative I'm gonna turn it over to you Eric and I'd love for you to give a little bit about your background and maybe even talk about the product that you had built at one point that was related to freelancing yeah thanks Jay so my training is all grants and marketing so I've always been on that order between the two and often do you think classic marketing people are necessarily most numbers oriented finance people aren't the most customer facing so I think for pricing purposes you have to be both you have to have a customer orientation and a numbers orientation so I think that's why I've always been in that kind of area but we're going to talk a little bit about pricing today how you make money as a freelancer I'm assuming most of the people on the call I'm gonna make some assumptions so first there are three ways that you can make more money as a freelancer or service business generally you can work more hours my first assumption is gonna be other things being equal you probably don't want to work more hours you can make the same money working less hours you'd like to do that you can't earn more for your time it's going to be the book of all we're going to talk about today how you manage pricing for your freelance time for your service business or you can leverage the larger team this one I wanted to mention because I think it's an important component I'm not going to talk about it a lot today unless somebody has specific questions around it my assumption is that either you're a freelancer on your own or your business is going to be the size it is I'm not going to address you know how you leverage the larger team to make money more effectively as a service business unless that is the topic you want to talk about so let me talk about pricing you know where the prices ultimately come from how do people come up with it I think there are typically three ways that you can think of Cost Plus spidah-man value-based if anyone has any other you know methods that they've you know used or thought about you know you can put them in the chat window I think most of them going by different names kind of fall into one of these three buckets and we'll talk about each of these in turn cuz I think the first one cost-plus is probably the easiest for people to get their heads around in you know a physical product and that you think okay cost me you know ten bucks to make a product I want to make money on it so I'm gonna mark it up ten bucks can sell for twenty there you go for a service business that's a little harder because what's the cost that you're marking up I think the the ultimate answer that is you do have a cost basis it's your time primarily as well as the time of you know the cost it takes you to run your business I do think this has a place in your sort of pricing portfolio if you will but it's not gonna be the primary way I think most people should price their services being yeah sorry how does it say I'm guessing a lot of freelancers probably undervalue their time right I think that's the the primary way is the reason is that you undervalue your time and so you under price your own services is probably what I see the most also since this has nothing to do with your customer you could potentially be over valuing your time and charging more and driving away customers because you're too expensive but I'll say largely I think people under value their time the sort of that the cost loss method is you know find one for certain applications but it's not a general method that I would recommend the second method that people think of when they think of pricing is supply and demand they go out there and they say okay I'm gonna go into social media you know freelancing or you know marketing whatever I already got a lawyer offer my services hang up a shingle I'm going to see what everyone else is charging and kind of charge similar prices to that that's sort of competitive element to pricing the whatever I think this again has a place in the portfolio the thing that I would always immediately think of is well you know on what basis are they charging anything your competition is different from you they might value their time differently they might have different circumstances they might have you know a better or lesser reputation in the market so they might be able to charge more or less than you could so it's an input but again it's not one that I would necessarily say should be the primary thing driving your pricing strategy as a service business this one is very easy to get into the trap of oh if I know that you know the going rate for whatever service I provide is you know 100 bucks an hour I'm gonna price at ninety five bucks an hour make myself seem attractive considering where you want to fall in that competitive set is a very important piece of the puzzle but it's not the only piece the last one and the one that I think we already got the question on is really value-based pricing how much does the customer actually value the the service that you're delivering this one I think is again a crucial piece of the puzzle it's also the one unfortunately that's difficult for many people to get their arms around it's sometimes hard to understand okay I'm you know fighting the service how much value is that service really truly delivering and we'll talk about some ways that you can kind of align on this ranging from sort of general you know trends to very very specific depending on you know what you're able to measure for your customers what you're able to prove and maybe industry statistics you can rely on you also can't you can articulate this exactly there's also a component here where that you can't avoid where if the customer values it by a thousand dollars they're not going to necessarily pay you that whole thousand dollars there's going to be some negotiation there they want to benefit from it too so if you're devoting a thousand dollars in value you might only be able to charge five hundred dollars because they want to get dollars - and some respect Eric have you read breaking the time barrier I haven't actually no it's a it ties into this value-based pricing a lot and I wanted to get your thought on this because his uh his standpoint in this I think it's like the founder of fresh books or something that wrote this and it works through this like fictional story of a couple characters one guy who's just getting into freelance and learning about value-based pricing as opposed to hourly pricing and so the examples that give is I don't is actually in the book but an example would be if you're making a website for a client a barber shop in your local neighborhood they would pay less for that website as the amount of work that you put into it that like a Honda would you know because it could be about the same amount of work but the value that is providing to that client is very different right and this is kind of I think a value-based pricing that's kind of the opposite of cost plus in a way because Cost Plus everything is internally focused to you know what's your cost what's your value of your time how much what do you want to make value based is all about the customer they don't necessarily care how much time you spend on things they care on the value you're delivering to them so to your point if you know they're you're going to be doing the same amount of work and for a really large client that might be really valuable but for a smaller application it might not be as valuable so you always have to take that into account this one again is kind of the the most you know difficult to get your arms around I think we'll talk a little bit more about this later and again isn't necessarily the way I would price ever because the other reason that you don't want to price everything with a value basis is the you know deal has to be attractive to you too so if it's going to cost you you know more hours of your time but you can only deliver a thousand dollars in value you may not want to offer that to take that kind of project so now that I've said that there's three ways Cost Plus supply and demand or competition based or value based and I've eliminated them all yeah and thus to determine wondering well you've just limited everything so what do I do which of these three methods should use waiting for your answer the answer is really all three kind of look at all three and try to align your pricing accordingly so in this graphic here on the right what I'm trying to articulate here is the the floor that you should be considering is the cost that you incur the cognate value of your time the additional cost it takes to run your business any additional costs that you're passing through to your your customers whereas the green is the additional value that you're delivering to your customer so from that perspective anywhere sort of above the red and below the ten at the top of the green is sort of fair game for pricing these braces on the side I'm kind of showing to reflect what the competitive situation might be so for any industry that I'm aware of there's a range there's low-cost providers there's premium providers there's kind of folks that go right in the middle sort of a good better best in virtually any industry if you understand that dynamic that kind of tells you okay if my costs are above you know the minimum price then I can't really be the low cost provider I have to stake out some sort of value proposition for myself and if I'm not the absolute best in the industry you know I might have to be somewhere in this range if that makes sense other things being equal now this is all you know kind of very theoretical at this point right but in a little bit we're going to talk about how do we actually put numbers to this and really get at the value your delivery before we get to that I am going to point out that while we're gonna put numbers to things these aren't necessarily coming dried things when you if you look at your competitors and you say oh you know what they're really good I'm at this and I'm really good at something slightly different different customers will value that differently so for customer a you might be here your competitor might be above you but for customer B you might be above your competitor because they like what you deliver more than what they deliver that gets into segmentation strategy all those types of things at the end of the day you just have to really understand your customer and really understand the value that you're delivering specific to that customer and that will be the best that you can do in terms of pricing Eric I think it's I think in a weird way it might be on that previous slide the value versus cost graphic I think it might be easier for us to identify the value that we're providing to a customer sometimes than still identifying our own cost since it's our time you help us think and break down a little bit more how we should start thinking about our costs and our times that we don't undervalue that but we also don't over value that yeah I'll move to the to to this which hopefully is still legible on the screen I'll kind of talk through how you determines for that cost basis for what you're doing the way then I break this down is you know typically a lot of freelancers they start off as you know it might set up as an employee if someone else then transition to freelancing and that can help you know fill out some of these things but you might think okay I want to make a certain salary and let's say you know $60,000 whatever it might be um you can't just then say okay there are two thousand no work hours in a in a year sixty thousand dollars divided by two thousand that's 30 bucks right because that salary that you want to achieve isn't the only value of your time the only costs are going to incur so there's benefits if you're going to you know buy health insurance for yourself which I hope you do there's you know taxes that you have to pay as self-employment tax and other things so then your total is already more than that sixty thousand dollars there are also costs that you incur you know as a freelancer that you don't see as an employee so for instance you know bringing stuff out you know buying yourself computer you know the value of the internet connections just monthly bills that you're paying that your employer would pay for you but now you have to end up paying yourself I just lumped all of these into it's one big number the next piece of the equation is you know how much time you want to spend working so I'm going to assume in 40 hours a week and then throughout the year you're gonna tip eclis take you know some holiday time some vacation time some sick time etc all of that takes away from your available time to deliver customer value to really do the customer work right similarly 100 percent of your time will never ever ever be spent working on customer projects you have to allocate time out of your week to market your business and really work on your business so this is time but you should have in your weekly weekly calendar saying I'm going to spend on marketing and selling and really improving my business and I'll talk a little bit about what I mean by service development time or improving your business this is things like doing continuing education for yourself and whatever it is that you that you do to hone your skills to improve your skills to add new programs new offerings to your customers that you don't before just to give because to make sure I'm clear holidays that says seven at seven days correct marketing time and service development time it says six that's six hours it works yeah I'm sorry I should leave all those a little bit clearer so what that gives you at the end is that whereas you typically thank forty hours a year or a week times 52 that'd be 2080 you actually only have twelve hundred eighty hours once you subtract out your holidays vacation days and the time to spend you know on your own billable time every week by the way I'm not telling you these are the right answers for you I'm saying these are just like an example you know so if you want to spend you know a lot of vacation time you put that in and it'll change your answer if you want to if you think that you need to spend more time marketing you can do that as well I would say you know on average these are approximately correct in terms of 15 percent of your time on marketing and 15 percent of time on your own business based on what I have seen in sort of industry statistics for freelancers and service companies but you know your mileage may vary so to speak at the end of all of that you end up with a target billable rate or what I'll what I'm going to be determining your cost to provide that service of roughly sixty two dollars if you think back to when I write a let us begin with 60,000 divided by two thousand is thirty this is you know more than double of that and so this is really what it costs you to be in business and you might be thinking but a 60,000 and that's not going to get cost that's what I'm getting and that's true but if you separate sort of the ownership of the business from doing the business so if you were just going to be an owner of this business you could theoretically pay someone a salary to do all the work that you're going to do and do these things and that's what you'd have to pay them to do it so it is a cost to you it's the value of your time anything that you get above this so we'll get into how to measure sort of the success of your pricing in a little bit but if you end up on a given project actually getting more than 62 dollars that's good that's really profit that you're making because you're doing a really excellent job managing your business if you just get 62 dollars in every every time that's okay that's certainly you're making the money you want to make and then anything below that if you're only making 50 you're not really hitting the goals that you've set for yourself you're not really hitting the value of the time that you thought you were so kind of this is also not just something that you want to set up and say this is my rate but it's something that you want to create and then monitor over time to make sure that you're hitting the goals that you have for yourself yes so let me let me break that down and make sure I'm still understanding if I were to build my time based on this calculation I said okay I want to make sixty thousand dollars this year before taxes and that's my goal if I build sixty two to sixty two dollars an hour and build twelve hundred and eighty hours a year you're saying I would hit that goal correct got it okay and so when you're not hitting the goal it could be for either reasons you might not be billing enough hours you might be actually using too many hours or you might not be sort of hitting your your revenue goal in that respect we'll talk about more of that in a second and how that gets impacted by the manner in which you price so I'm gonna go back to the deck here and really separate out your services into sort of three kinds of services and bear with me for a second because this can be a little bit you know difficult to parse out because we're not used to thinking about things this way but really think about okay what how clear is the outcome to your client is it something that they know exactly what they want but they just don't want to do it themselves or is it really more exploratory and they're really not clear on what their outcome needs to be and they want you to sort of advise them on that second is for you for you how defined are the costs how confident are you in your ability to deliver the project for a given amount of effort if it's something new that you've never done before and you've got to learn and you get new skills that's kind of undefined it's something that's right in your wheelhouse and you've done you know 50 of these projects before and you know exactly how much it takes and that's very defined right and then really what's the core reason that you're being hired are you being hired for your expertise your experience or your efficiency and the first two questions can kind of help inform the third so if the client knows exactly what you're delivering and it's very defined for you you're basically more often than not being hired for your efficiency if it's very undefined and very unclear it's you're probably being hired for your expertise otherwise you're gonna hide for your experience talk a little bit more about this because I know this is not like this is worth spending some time to get super clear so the three types of projects an expertise project you're really creating a one of a kind deliver all specific to that customer it's new for you it's new for them highly creative leading edge and really the client is really participating in that project it's you're pretty high degree so this might be you know designing you know a very custom you know building or home it might be some very advanced or actually can think of like a psychological help and then in a way as something like this where if you're really trying to get provide the service to customize to that person's problems in the experience column its might be the first time the client goes through it but not for you you've gone through this you've been to this rodeo before it's more process driven and you have a proven process for how to to execute it the client is still involved but more on the X on the specification side not necessarily the execution of it so this might be if you're if you're a lawyer it might be that you get hired because they know that they're about to you know go public and they want someone who's been through an IPO before or they're about to go through some funding round they want someone who's advised on that kind of thing before they've never been through it but you have and it's the service provider the last is efficiency we're both probably have experience with it and it's very outcome focused and it's very focused on low cost and pretty low climb involvement so this is something where if you are you know almost like an outsourcing kind of thing where it's not something that they want to do yeah as a core part of their business but they need to have done they might outsource that to you they might have experience in it but they know what the outcome they have one they want they know roughly what they pay for today and it's really about that you can provide that more efficiently than they can do themselves I know they went through a lot right there so if there any questions just let me know as we go but I really like that framework it's it's a much more you know it's a framework there's structure to it it's more of a scientific kind of narrowing down of what type of project is this right you know I I haven't really thought before outside of you know not all projects are sort of created equal as a freelancer even if you feel guess on graphic design we focus on copywriting I hadn't thought that there are this three different reasons why someone would hire you specifically for this role right and you can kind of think in your in your portfolio you probably have a mix of these kinds of projects and depending on where you are in your development as a professional you you might initially start off with very efficiency based things and then add you know experience and add expertise later and typically an expertise project won't be the first one someone hires you for they will hire you for other projects and then I'll come to you in like gosh I got this problem I don't know what to do can you help me that's a good sign that you're in an expertise kind of project do you think do you think it's fair to say that an efficiency project is sort of a lot of times competing on price I feel like I feel like a lot of people that I work with get into this almost race to the bottom and those are probably more of the efficiency related projects yeah absolutely and I think that that you deal with each kind a little bit differently for that reason the least least price-sensitive are going to be these expertise projects because they're coming to you because they trust you to solve their problem the efficiency is there coming to you because they think you can do this very efficiently but if they can find something more efficient they'll probably switch or could switch and then the experience is somewhere in the middle right these expertise projects are a little bit riskier in some sense because you don't know either how much effort you have to put into the project you don't know what your what the outcome is going to be so it's a little more exploratory for that reason I tend to recommend that you use strictly an hourly rate here it's going to limit your upside in some ways but you're going to essentially help pay for your learning in this because you're going to develop additional skills as an outcome so you're not just going to get paid the dollar amount you're going to get paid and good experience too if that makes sense the experience projects are where I think you can actually make the most money in that you're really able to leverage the fact that okay I know exactly what I'm delivering I think deliver that like learn to do that better over time I can still charge the same amount put less of my effort in and really start making more money as a result the efficiency projects these can be helpful because often if it's something that they just need on an ongoing basis this might be able to form sort of a ongoing revenue stream for you where you know every month or every year they pay you to do this and it's just kind of an ongoing thing if you think about you know a tax professional you know filing tax returns I think would fall into this you know it's it's somewhat if your returns of more complex I might get into the expertise area I'm sorry the experience area but like a lot of it is just about efficiency or like a social media and email marketing retainer right exactly so if and I kind of glossed over this but for the experience projects this is really where you would use sort of a project fee rather than an hourly rate or a monthly right because it's still a defined project in defined scope it's not ongoing like an efficiency project is but it's also not you know completely amorphous where you have to charge on an hourly basis that's interesting can I can I drill down on that a little bit then so you're saying the reason that you recommend hourly pricing on an expertise project is because it's not defined as to the entire scope of the project so you might kind of bite yourself in the ass if you don't charge high enough right interesting so like for an experience project I know okay this is gonna take me 100 hours or whatever number of hours it is so you know your cost is defined an expertise project it's very open-ended you don't necessarily know you don't have you've not done ten of these before it's kind of a new thing for you so you might not know that that's what it's gonna take so you have more rescue views do an hour oh really so this is where I'm saying you know you can kind of see some sample proposals we already kind of talked about this a little bit of how you would do this the project fee also lets you manage your business better because if you start treating experienced projects like expertise projects and you do an hourly rate the better you do at better you get at your job the less you get paid meaning if this particular type of project starts off takes 300 hours and I bill a project fee if the next time it only takes me 90 hours I'm still gonna make that same amount of money and then I just paid myself for 10 hours but I didn't spend whereas in expertise if I bill on an hourly rate and it takes me 10 percent less time now I just cut my own revenue by 10 percent as a result you want to reward yourself for getting more efficient for doing a better better job and that's really the project ease allow you to do efficiency does as well the difficulty there is that that it would be a little bit more transparent to the to the customer potentially so you might get more price pressure there and to pass that savings on to them as well so before I go into some negotiation stuff any other sort of thoughts or questions before you talk about that this is super interesting this is really turning things on its head for me you know I was I was fully in the camp of just not charging hourly whatsoever and I hadn't thought about these situations where you're kind of brought on to explore and co-create a solution you just don't even know what the scope of that project is right and your point about experience projects making you more money as you become better at them if you charge a project fee just makes a ton of sense so let's talk a little bit about negotiation this I could you guys probably spend like an entire hour on negotiation itself so I'm just going to highlight some some key points that if you if you do these three things or keep these three things in mind I think you'll be well on your way to be in the next one negotiator the first one alone I think is it's crucial which is always connect the price with the value delivered so if you quote a project fee of say ten thousand dollars and they say uh you know I can't really do ten thousand dollars it has to be you know nine buying something in that project and say okay we can make it nine but I can't do this part you're going to have to live with you know just two revisions or you're going to have to do some of this work yourself or you know whatever it might be depending on your your market it might be that okay instead of managing all your social media accounts I'm not only going to manage you know Twitter and Facebook nothing else take those out of the proposal never just lower price and offer the same exact service that you did before doing that just encourages them to negotiate further and you want to make sure that the value you're delivering is tied to that price so that if you're getting something taken away you take something away from the customer as well that will really help you keep that than value a hole that you're delivering and then the other part that I want to stress is the more unique and valuable your services are the better you are what you do the less important price becomes and you know when you think about three types of projects you get those expertise projects those are gonna be the ones where it's really not that price sensitive at all because they're really coming to you because you're that trusted trusted adviser it's it's price is less important also to your existing customers then to new customers so existing customers they know the value better than someone new the last piece here is don't be afraid to fire bad customers the businesspeople of value your time and what I mean by that is when you do projects you should always keep track of your time even if you're not billing for that time so for example if I quote a daughter project fee of $10,000 I want to know how many hours I actually spent on that project so that I can say sorry I budgeted 80 hours I spent a hundred hours that one really went over budget from a cost perspective that's what I mean by a bad customer if you see that as a pattern over time where a customer is just more demanding they ask more of your time they push the envelope on the services that they ask of you and aren't willing to pay for it it's one thing if they're like 80 you know I'll pay you an extra thousand bucks but I really need this it's when you accidentally throw those things in for free or they demand them for free where you know at some point you just have to say you know I'm sorry you're great you've been a good customer for a long time but I think it's probably best if you found someone else to do this work for you then spend that time you know marketing to find a better customer to take their place the flip side of all of this and that I just kind of referred to is time management you need to price your time for both noble and unknowable and I actually recommend tracking your time for both billable and non-billable time if you focus if you just track the hours you spend on customer projects you will spend less time than you need to a marketing will spend less time than you need to run your business on improving the services that you provide there's you know saying I can't remember you know who I first heard it from that you know people pay attention to what gets measured and so measure your time so that you know that you're spending it where you need to spend it I think that's a Peter Drucker what gets man what gets measured what gets measured gets managed something that sounds right so just to kind of reaffirm so the things that we talked about you know a good price is good for you and your customer it has to have that sort of mutual satisfaction associated with it it's not doesn't make it worth your time and it's not good for you if it's so high that no one would ever hire you for it it's not good for the customer or good for you I guess and it's long run and you know all your time is valuable so make sure that you price yourself and you don't undervalue that time you need to price your services where you have that time and if your customers always wanted negotiate then you really haven't shown the value that only you can create so now I'm gonna switch back to the spreadsheet and go to another tab on it so we got a question if this spreadsheet would be available or if you can make a copy of that's available yes will be so I have two other tabs down at the bottom here now for the expertise projects like I said you're gonna kind of use the available rate the only copy out there is gonna say something at or above your target don't target below that for your project fees this is one that I just put together to show the differences in how you would look at this this isn't how I would presented for customer or anything like that but how you might think about it for yourself so if your target I really ready to 65 bucks and you think it's gonna take a hundred and twenty hours for that project your cost for that project is seventy eight hundred dollars that's not the price you would go to your customer that's the minimum price that you would do this project for that's like the cost of your ability like the amount of billable time is seven eight hundred dollars correct but now if it's a marketing project and let's say that I'm targeting an audience of you know hundred thousand people I'm going to get a response rate of a quarter of a percent that means I'm gonna do a $250 lead and I know that leads are worth $100 to this particular customer that means when you do the math that this project should be worth $25,000 to the customer so where do you price I think the answer is it sort of depends let's $25,000 to the customer reflects the absolute maximum they would ever be willing to pay for that project if they believe in - all these numbers more than likely they're gonna want to actually make a profit on it so they're not gonna want to pay $25,000 they might be willing though to pay 15 which is almost double what you would get from your hourly rate so that's where negotiation comes in and kind of having a feel for the customer and a feel for the competition so if you know the competition is pricing these projects and you know 12,000 that gives you another data point to look at whether you price above the competition or below kind of depends on how you're positioning yourself if you're really an expert in this field compared to your hand position then you price a little bit above them or if you're just kind of like one of many and you can't really don't want to sing to yourself that way then you can kind of price to you the competition there's not a definitive right sir here this is just sort to sort of for you to know okay here's the span if we went back - yeah you got this is like you're green and red blocks here the cost of project is your red block and the project value is green the top end of the green right make sense I thought that so then if we look at the efficiency side we need to go through a similar process where we say are our cost for the project is if it's gonna take me I or they wait 60 bucks and it's gonna take me a hundred hours you know over whatever state a time trust the project $6,000 if this is a let's say this is an annual fee and right now their cost is we actually made these different numbers to make the most confusing let's say that their cost for whatever it is that you're doing is 60 bucks and this might be that's strictly like an outsourcing thing they might say well you know we currently pay someone 60 bucks an hour to do this for you you might wonder why how could this even be possible right anyway oh so the if the cost reduction of five percent of their total units is ten thousand they're doing this number of times and it's $30,000 if you're much more efficient than they are so you're spending less time it's not that your hourly rate is different if the amount of time you're spending is different you're much more efficient then this is again the range that they'll be willing to spend up to thirty thousand dollars you'd be willing to accept nothing less than six so then again that establishes the red and the green ranges and then you can kind of incorporate the competitive element to say how much I should I price my services Zack can you give me sort of a real-world example here of like what may be a situation where a company is spending thirty thousand dollars on something and I as a freelancer come in and be more efficient sure so it might be a situation where if and typically this will be an area where it's not that person's you know expertise or area that they won't spend a lot of time infinite for their company so for example I know a freelancer and what he does is IT outsourcing for small companies so he'll go to companies that have some sort of ID requirement they you know they need you know computers you know network access and Internet stuff like that and they don't want to hire ya an IT person because it would maybe cost them a lot more as opposed to just hiring someone yeah as a part-time freelancer and so what he does is since he does that for a bunch of companies he's able to be much more efficient than they would if they tried to add like if it's a chiropractic office let's make that up if the folks in that chiropractic office tried to do their own IT unless there just happens to be someone on staff that's really good at it they might spend a lot more time on these tasks then someone who knows that professional right and it could be the doctor and some of these small offices whose time is worth right a lot yeah and so every hour that he tries to spend you know figuring out why the internet doesn't work is a huge cost to him right yeah any much rather pay someone I can just come in and figure it out in ten minutes and do some other stuff besides that makes sense mm-hmm yep so I did see we had a question on yeah the question was from Kate and her question was my clients have been frustratingly lacks in tracking statistics related to any projects I've done with them things like event materials and professional documents like proposals to use to respond to an RFP or communicate information the public how can i price my services or value if I don't quite know the value I'm bringing other than anecdotal oh people love the invitation confit arrows etc so she's kind of saying how can you look at you know in that shoot you had where you could show you know these assumptions of how much value this is providing yeah how can she do how could she break this down for her type of work sure so I think the ideally you're right you you would get data from your customer specifically to say and similar projects we there's many attendees and or whatever it happens to be or you know they've got this many leads etc from this initiative whatever it is if you don't get that the ways that you can show your value is you can look for sort of industry standard metrics so if you can look for publications and whatever industry you're in to say ok for you know this type of marketing project your response rate is typically going to be you know a quarter of a percent and so if we're targeting this audience and then for your customers industry typical lead is worth this you can find those in in other sources ideally this value per lead is something that your customer gives you to say hey for every customer you end up bringing me the website via this marketing plan what have you it's worth I know what that's worth if they don't share that you can go back to industry statistics the other thing that you can do to sort of supplement that and show that you're better than the industry is do surveys of your customers I'm an advocate personally of the Net Promoter Score methodology which is a super simple survey it's just one question and basically says would you recommend my service to somebody else one absolutely not ten being absolutely every day and then the top two boxes nine and ten are really what you measure against smugglers I'd only get too much in that methodology but measure that those top two boxes in particular to say you know eighty percent of customers would highly recommend my services again and use that in conjunction with this to say I'm better than average in terms of satisfaction I think I can drive more value than this and kind of have those conversations so I think if you don't get that data directly you can align to it using available information on your industry and your customers industry and then very simple survey results and the thing I like about the NPS survey is it is just one question so four customers are willing to one question for you that's probably a sign that you're doing something wrong they should be act I also a big fan of NPS as you know and there's there's a variant that I also like which is the two question PS which is the one question one to ten and then the second optional question of why did you rate it that way oh but they only have to answer the first I think there's a huge opportunity for freelancers and something they don't do a lot is really take the the reins and lead the conversation and state these things and show you know I understand how you can measure these the results of these campaigns and if they don't have the information that they're already giving you and if they won't provide it go out do that research make those assumptions and then put the impetus on them to prove that that's not the value to them right which would then require them to give you the real information yes that's that's a great point Jay because that one thing that when I we were over this earlier I said don't show them this part but I absolutely talked to your customer about this part and you know whether you use something like this exactly or something you know tailored to your business to say how are you delivering this value and use that in conversations with either customer to say hey you want me to create a website for this you know this is or this kind of marketing plan whatever here are the metrics that we can measure the value that we're delivering and then like you said put it on them if they disagree and they say you know there's no way that's times like first twenty-five thousand dollars tell them well then you know which of these numbers is wrong because the math doesn't lie are your are your customers not that valuable you know believe that this is the industry response rate arguing for a smaller market than you're saying what can this is inaccurate and then that will also help on the back end if you set up expectations on the front end to say okay after this project is over could you share with me you know what our actual response rate was what your actual value per lead generated was so that the next time we look at these projects we can you know use that as a metric and I think yeah those like vacations upfront and we're likely to get it on the back end I think you as they might just not keep track of that they might not think about tracking it and so then when you ask on the back end they don't have any idea in this and this doesn't have to be combative it's it can be proposed as hey I want to help us make sure that we really can measure the value being created here so that we really understand where we should be focusing our energy in our folk in our you know our time right so I really like this as a tool of collaboration but also leading the client which a lot of clients I think appreciate because it puts their mind at ease like oh I've hired the right person yeah I think if you have this country conversation where you're showing that you want to deliver value to them that's only the foot the minis ultimately to say okay this isn't just someone that wants to you know get my money and they don't really care what the outcome is they really want to know great well that was our only question is anyone else have any questions for Eric and Eric while I give folks a chance to answer my question about whether they have questions or not I will get this sheet from you or a copy of the sheet from you and send out a follow-up email where can people connect with you or learn more about you and what you're working on so you can connect with me on Twitter and Eric underscore Ralph or you know shoot me an email Eric at take aim Columbus calm that is for my you know latest project which is not you know pricing related but something that I'm passion about as well which is giving kids and fun interactive art experience modeled after or it's fired by the st. Louis City Museum if your folks are familiar with that from know more about that you can also go to just take in Columbus calm but if you have any questions afterwards please do you follow up with me just shoot me an email you know it's fun to be on Twitter whatever you like I'd be I'm I like talking about this stuff so I might inflict more of it on you than your I just care about but hope it it will help with any questions that you have after the fact we just got a question from Conroy and he says in your eye t example is there an advantage to being a freelancer versus forming a company it's a great question and I think that if you regardless of what you're doing and I'm not a lawyer but I recommend if you're a freelancer talking to a lawyer about if you should form an LLC instead of just being basically a sole proprietor if you're giving any kind of advice or in terms of IT if you're giving support and you're responsible for any kind of security or data concerns I would recommend personally again I'm not a lawyer but getting not only informing as an LLC but also getting a general liability insurance so that if there's like in that example of the chiropractic office I know that there's HIPPA requirements around patient data and needing that to be secure if for some reason you're you're the contractor there and there's a breach of their their data you can be responsible as being the person that set up that system and if you aren't in LLC and you don't have insurance then your personal assets could be exposed to that I understand it so I would encourage looking into again no matter what you do if it's if there's if they're relying on it in any substantive way and I hope they are I'll look into that both of those things even there's probably less risk from like a marketing perspective but you know it's probably worth having the discussion with a lawyer in in any case yeah well we've we had this question up with a freelance group that includes a lawyer and he was like get an LLC just from the standpoint of liability and and and not assuming some risks just for me personally just uh full disclosure um all my freelance work on my consulting company we I formed an LLC for it so and I think what Conroy may also be alluding to is this question of freelancer versus entrepreneur which is sort of an arbitrary line of and I totally arbitrary just depends if you buy into this methodology or not freelancers if you're not working you're not making money entrepreneurs you've created some sort of productive assets engine that is making money and it may be a team while you're not directly working and so in in this ITA example my thought is it kind of just depends what you want for your life no absolutely and that gets back to the thing that I've said I wasn't going to talk about unless I was asked I guess I was asked is the concept of leverage is a way to make more money so one and I'll just talk about it very briefly because I realize I only have four more minutes the the concept here is that if you have other people on your team and your skill is managing that team to make them more effective and they would be on their own then you can sort of make more money that way so effectively what you have to do in those cases is charge your ally are really made of you know sixteen bucks or what have you but then you would hire people that make less than that so that any time that they your cost basis basically goes down for any time they contribute to the project it's a very simplistic way to talk about a pretty complex topic if anyone's thinking about trying to do something like that where they might engage with someone else or some of their business let me know that's probably something that we can you know spend some good time talking about yeah it becomes a question of also 1090 or 1099 versus w-2 Brian I've I've seen a lot of friends of mine who were freelancers and making good money as freelancers who thought I should build a team and scale this thing up but I trap a lot of people fall into is you're basically going down the route of an agency and so as quickly as your revenues increase your cost can increase if you're hiring dead Mateusz and then you're into a cash flow question of are you guys getting your your billable on time to actually pay this headcount that is out here and you avoid a lot of that with a 1099 but that is a topic for another day my friend covering next to 120 seconds yeah yeah all right everybody well thanks for joining us we'll send out this replay it will immediately become reviewable after we end the broadcast here but thanks for taking time we'll have more of these to come another one that we did just about a week ago was with Brad Miller who is a small business lawyer it's called it was about contracts so if you're a freelancer and you have questions about contracts I'd recommend looking at that as well I think you can find that just by clicking my face over there in the chat and it'll be another one of those but related to this would highly recommend Eric anything else is a sign oh no I just uh thanks for all the time again if you have any questions follow up with me all right thanks everybody