Pricing you

Classical economic theory tells us that the market-clearing price for a product is the one at which the last customer, the one with the lowest willingness to pay, gets exactly the value from the product that she pays for it. Her “consumer surplus” is zero: for a product that will give her $50 worth of value, she pays $50.

But what about pricing for a unique product, one that is the opposite of a commodity – things like tree-house building, editorial services, or the work your social enterprise is doing to change the world? In the broadest sense, there’s a market out there, but only if you let that happen. Really your whole job is to be un-comparable to everyone else, to make people understand that there’s only one you in the world and that you are uniquely worth paying for.

So how do you price you?

A friend once told me that that if I’d never gotten kicked out of a fundraising meeting then I wasn’t asking for enough money. It’s true. We undersell ourselves for two reasons: we don’t have enough market feedback to know what we’re really worth; and we let our fear of not making a sale overcome our desire to sell at the right price.

We can overcome this. The trick is to use each subsequent sale to build out the demand curve for our work. Each time we sell, we push a little further to find out where that ceiling is. By going beyond what feels comfortable, we discover the gap between what we’re asking for and the price the customers we want are willing to pay.

We can be told this time and again, but it often only hits home when we feel the frustration from delivering work we’ve undersold. The pattern is familiar: we make a sale for too little and then set out to do our best work. This best is harder and takes longer and requires more sweat and tears than we ever imagine – because what we do is special and we always do it with love and passion, even when today’s economics would suggest otherwise. We end up proud of the work but exhausted, because we did the work with too few resources and we know that we can’t do it this way forever.

If we can hang on to that sense of frustration, we can use it to discover our own value. This is the key step. It’s only when we truly believe in what we are worth that we can look someone in the eye and says, “Yes, this is the price for this. And what you’ll get in return will blow you away.”

I remember the first time I looked someone in the eye and asked them for a million dollars. I could barely choke out the word and my palms started sweating. I didn’t believe it the first time, but I did believe it eventually.

This happens in fundraising, and this happens whenever it’s up to us to tell the world the value of the work we do. First we must believe ourselves, and then they will too.

Because what we’re saying about what our work is worth is true.

 

Work like a freelancer

Twice in the last 24 hours I’ve come across two glimpses into the life of the freelancer / writer that struck a chord.  Chris Guillebeau, who is the author of an inspiring and useful manifesto called 279 Days to Overnight Success also sends out a weekly newsletter called “The Art of Nonconformity [AONC].”  From his last newsletter, about the life of a freelancer:

It’s always fun to go on vacation as a self-employed person because a) you still have to work, and b) no one thinks you do any work to begin with.  So then when you go on vacation they say, oh, must be nice that you don’t have a job and can do that.  Meanwhile on vacation I work six hours a day instead of ten.

And then I came across this passage in Anne Lamott’s “Bird by Bird, Some Instructions on Writing and Life”:

Every morning, no matter how late he had been up, my father rose at 5:30, went to his study, wrote for a couple of hours, made us all breakfast, read the paper with my mother, and then went back to work for the rest of the morning.  Many years passed before I realized that he did this by choice, for a living, and that he was not unemployed or mentally ill.  I wanted him to have a regular job where he put on a necktie and went off somewhere with the other fathers and sat in a little office and smoked.  But the idea of spending entire days doing someone else’s work did not suit my father’s soul.  I think it would have killed him.  He did end up dying rather early, in his mid-fifties, but at least he had lived on his own terms.

And my reflection is this: life, especially professional life, is becoming much more like freelancing.  The most important decisions we make every day – even if we have “regular jobs” – are how to spend our time, defining what success looks like for ourselves and for our customers, and figuring out who our customers are and how best to serve them.  This is where we all have the most leverage, and it’s a shift that’s happened in this last decade as markets have fragmented, costs of production have plummeted, and networks have become ubiquitous.  And it means that we all are, to a greater or lesser extent, a lot more like freelancers than ever before – and if we’re not acting and thinking like freelancers we’re missing an opportunity.

It’s easy to romanticize the life of a writer or a freelancer – in reality, as Chris reminds us, it’s hard and uncertain because you have to have the discipline to decide how to spend your time and to create the structure you need to produce your work (your art).

But what’s deceptive about “regular jobs” is that it’s incredibly easy to fool yourself into thinking that these aren’t your choices to make – because you have a full inbox and lots of meetings to go to and a boss telling you what you have to get done and when.

The moment you start looking at the 24 hours in your day and how you’re going to spend them, the moment you open the door to the possibility that you could wake up at 5:30am to do what you do best – whether blogging or writing or learning a new craft (or programming language or computer software or foreign language), or just going above and beyond for the job that you already do and love – is the moment you open the door to real possibility.

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I owe you

A good friend was recently working on a freelance job on a very short deadline. She did a bang-up job, made her client look great, and sent in her bill for the hours she worked. The client responded: “I don’t think you billed us enough for this job.”

Nice.

Most business relationships have an adversarial undertone: we’re going to be collaborators and co-creators, but let’s duke it out over the contract first, and then let’s make sure it’s under budget because that will make me look good. I win when the project makes me look like a star, and you’ll get what we agreed upon in the first place. That was our deal.

It’s so easy to go back to the contract, to explain to yourself that your hands are tied and that you’re being fair. But there are times when you know you owe someone, when you know you got a great deal.

Go ahead, step up and say, “We made a mistake. You didn’t charge me enough for what you delivered. I owe you.”

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