If you’re a WordPress professional, one very important thing you have to learn–usually through a painful process of trial and error–is how to price projects. That’s not just a matter of how much to charge, but how to charge. The main options are hourly, flat-rate, and value-based, and each has its place.
We had a full house for our WP-Tonic 161 live panel discussion of this subject, which was a follow-up to WP-Tonic 160 with Jonathan Stark, which I highly recommend. I joined hosts John Locke and Jonathan Denwood, along with Lee Jackson, Kim Shivler, and Jackie D’Elia to share our own experiences with pricing.
Discovery and Pricing
One of our news stories was on the subject of discovery, which provided a good lead-in to our main topic. In terms of a consulting project, “discovery” means the process of finding out what the client really needs, and why.
In WP-Tonic 160, Jonathan Stark (who prefers the term “roadmapping” to “discovery”) shares the questions he asks prospects even before starting the discovery phase:
- Why do you want to do this?
- Why do you want to do it now? Why not six months from now? Why not six months ago?
- Why do you want us to do it? Why not do it internally? Why not outsource it to another country?
Kim points out that if you start without discovery, your going to hate yourself and everybody else on the project–10 minutes in.
Jackie brings up the point that as developers, we sometimes want to provide more features than the client needs. I’ve definitely caught myself starting to complicate projects unnecessarily. If the client doesn’t need it, we shouldn’t expect them to pay for it.
Prospects ask for a “ballpark figure” without actually knowing whether the game is baseball or football.
Lee Jackson does most of his work for agencies, and those jobs have a defined scope: convert a design in Photoshop to a WordPress theme. In those cases, he charges a flat rate, which makes it easier for the agencies to price the project for the clients. But when he works with individuals, he focuses on defining a Minimum Viable Product by means of user stories.
Jonathan also points out that starting with a discovery phase before launching a project reveals any personality conflicts between you and the client, and lets you know whether you really want to work together.
Panel Members’ Pricing Models
Kim offers products, membership sites, and one-on-one training. The products and memberships have fixed prices; her hourly rate for training varies depending on where the client is in their process. She sets aside a fixed number of hours each week for one-on-one training, in order to be sure she can continue to produce content and provide support on the membership sites.
Jonathan mentions the usefulness of having a fixed-price introductory product, because most of the things that people buy have fixed prices. WP-Tonic has both fixed and custom pricing.
Over the years, Jackie has learned to add in more milestones for payments when doing project-based pricing. The success of pricing based on deliverables relies on creating a detailed scope of work in order to determine what those deliverables should be. She also offers maintenance services for a fixed monthly fee. She’s found that an hourly model for pricing sets up a conflict between the client and the consultant, because the client wants to pay for as few hour as possible and the consultant wants to bill as many hours as possible.
I’ve found myself that I don’t want to do projects that are exactly the same over and over again, so I’ve never managed to come up with a service I can offer for a flat rate. Instead I prefer to work out a detailed scope of work and come up with a project rate, paid 25% in advance. I did learn, through an experience of charging hourly for a large project, that my project estimates were far too low. (That would be on account of not really understanding how long it’s going to take me to do things.)
Over time, Lee has been able to productize his work for agencies, which fits in with their estimate grid. There’s a base fee for a home page layout, with a charge for additional layouts, and certain limits, such as a maximum of 10 custom fields and 2 drop-down menus. With big projects where they’re working directly with the client, they are extremely strict about scope and schedule. They will not do any additional work before completing their MVP unless the client can prove the value of the additional work.
You can’t just charge for every hour you work. You need to charge for every hour you spent learning to be as good as you are.
Lee Jackson, Angled Crown
The only problem I’ve found with value-based pricing is that the client needs to be able to articulate the value of the work they want done. But if you can articulate that value, and charge a percentage of it, the client will be thrilled to pay it even if it’s far more than you’d make by charging an hourly rate.
John has found that the more mature the business is, the easier it is for them to wrap their head around value pricing. The less mature the business is, the more you need to walk them through understanding the value of the work.
If a prospect is more concerned with price than with anything else, Lee points them gently in the direction of people who can do the work for a lower rate. Many of those people refer work to him later.
Jonathan points out that the two most important things you need to understand about prospects are expectations and drivers. You need to know why they want this project done.
Jackie says she’s learned over time only to do projects that are in her wheelhouse. Sticking to your niche will help you to price your work appropriately.
I’d like to give a shout-out to Liquid Web for sponsoring the podcast. Liquid Web is offering podcast listeners a 33% discount for 6 months. Head over to LiquidWeb.com/wordpress and use the code WPTONIC33 at checkout for your discount.