A Radical New Pricing System
I don’t want to sound like the main character in the Kung Fu movie, but it’s true: Sometimes the best way to find something is to stop looking for it.
I am not religious but I do study lots of religions. One of my favorite religions is the Buddhist religion. One of its basic doctrines is that you should never accept something that isn’t freely given.
About a year ago, I decided to apply this in a radical way to my pricing system. With the exception of telephone consulting, I now charge a flat up front fee of $2500 for all jobs. Then, I tell the client to pay me more when and if they think I have earned it. I do tell them what the industry norms are. I do have special circumstances when a larger up front fee is required, but generally, this is the approach I take. There are no invoices or standard accounts receivable. There’s just one check and a bond of trust between me and my client.
And yes, clients are quite often flabbergasted. And yes, once in a while, someone does try to take advantage of me. And yes my accountant thinks I am crazy. But the vast majority of my clients like this system and pay me well. And I’m not crazy because for me, the system is working.
My clients have an incentive to pay me. In addition to it being the right thing to do, they pay me because they see results from my work. If a client doesn’t pay me fairly, I end the relationship. But that almost never happens.
As for the upside? The clients that want more of my attention pay me more, and everyone gets along because there’s a mutual respect. Every dollar I receive is truly freely given.
Think of the cell phone company that locks you into a two-year agreement, regardless of service quality. Most of my friends don’t much like their cell phone provider. They just tolerate the cell provider. Since I know life is short, I don’t want to spend my time in those kinds of relationships. I’d rather know that my clients like me and are happy with me. I also don’t want people feeling like they have to do business with me because of a contract. I want my clients to want to do business with me because it makes sense.
I’d rather know that the people who I do business with call me because I perform. They call me again because I deliver. If I stop delivering, they’ll stop calling. We each have an incentive to help the other.
Now here’s the kicker. . . since I began using this pricing structure, my profits have doubled. In fact, I am running at almost 200% capacity right now. I can’t say that my pricing policies are the only reason for the increase. After all, the podcasting arena is growing exponentially. But I do believe that the change in my pricing structure has played a part in my success. So that takes us back to the beginning of this post. I suggested that in order to find something, you need to stop looking for it.
Since I pursue fun work with people I respect, working on projects that I think matter, seeking self satisfaction as opposed to financial gain, money has found me, not the other way around.