The Reason for Value-Based Pricing
For one reason or another, people are afraid to address the elephant in the room which is how much to charge for your work and more importantly why your prices are the way they are. A common hinderance amongst creative professionals is that they base their pricing model by what the competition is charging; usually in the form of an hourly rate or set price. To frame this topic in a perspective that might apply to more than just artists, let us use, as an example, the pricing model for a cup of coffee.
On one side of the spectrum, you have a gas station selling you a cup of joe for less than $1 dollar. As you walk out of that establishment, you have successfully purchased a freshly brewed (hopefully) beverage and your body will soon reap the benefits of it. You will now be ready to tackle the rest of your day. However, on the opposite side of the same spectrum, an independent establishment successfully sells an “artisan” cup of coffee for $5 dollars and people don’t blink an eye when they pay for it. Heck, they may even leave a tip.
Similar product, yet the gas station will have to sell at least 5 cups of coffee (more effort & time) in order to match the single $5 cup.
Analyzing this example, one can come up to the conclusion that the independent establishment may be using better coffee beans vs the generic ones at the gas station. At the same time, the presentation of the final product may also be more “fancy” in one place vs. the other. Where in one place you are self-serving, the other is serving the coffee to you. Where am I getting at with this?
It is simple; people are willing to pay for the things they place value on.
The more expensive cup of coffee may be similar to the lesser expensive alternative; however, the individual purchasing it may be receiving multiple benefits not directly implied by the vendor.
The feeling of social status by drinking a particular coffee can carry a lot of value to someone. The same can be said that they might value how the beans are grown and the impact it may have on our environment.
At the end of the day, everyone has a different definition of what is valuable and for that reason, you can’t have a “one-size-fits-all” mentality on pricing your creative work.
The idea of value-based pricing is not new to me and what recently solidified this mentality was being introduced to “The Win Without Pitching Manifesto” by Blair Enns. Enns broken down in a simple 12 step process how & why you should be pricing your work based on value. This manifesto should be a required read for any artistic professional looking to make a living from their art. It is a very quick read and for those that prefer audiobooks, the investment is only around 2 hours of your day; I truly recommend you check it out.
When someone asks me what I charge for the work that I do, the answer is simple; it depends. The reason it depends is because one needs to understand what the client is needing and wants before we can prescribe a solution for them. Better to be transparent about what the investment will be to your client upfront than to undervalue what it will take to deliver; ultimately causing you to deliver lackluster results and potentially losing future business. If you lose potential clients because they can’t afford you, that is just what happens.
What I can guarantee is that for those that see the value of your work, these are the clients that will make this artistic journey worthwhile and you’ll feel like your work is valued.