The Mistake Freelancers Make Pricing Services

rodney goldston

Most freelancers undercharge for their services/products.  Believe me I know from personal experience.  Years ago I had a group of Subaru dealers as clients and sat in a marketing meeting and discovered I was the lowest paid vendor on their list.  Not their fault, they didn’t nickel and dime me, they paid me exactly what I asked for.

The mistake I made and the mistake most freelancers/small business owners make is that they calculate their cost to provide a service or product and then add a percentage markup.  The problem with this method is that it’s not how people buy.  When’s the last time you purchased a magazine based on what it cost the producer to make it.  Have you ever complained that butter cost $5, but only pennies to make? We buy services and products based on the value they provide.

It’s really easy to see when we look at how we purchase books, or education.  Printed books cost about $2 to make but we pay upwards of $20 if we perceive that there’s something in the book that will help us solve a problem.  Many people are deciding that the value add of an MBA is just not worth it.

The key in pricing your services or products is to find out what value they deliver to your prospective client.  About a year ago I decided to only work with clients where the value add was at minimum $1,000,000 dollars yearly.  That means when I sit down with a potential client the problem that they want me to solve is worth at least $1,000,000 in revenue to them.  So when I propose a $40,000 solution I know and they know the value I bring to the situation is a bargain.

One of the biggest benefits of being a freelancer is that you get to choose the work you’ll do (might as well do something you can be proud of) and who you’ll do it for (might as well do if for someone you’re proud to call a client).  If you follow Mad Men it’s why Donald Draper tried to remain out of contract for so long.  He understood that as long as he was a freelancer he held all the cards.

Don’t Treat Every Prospect The Same

Here’s something I learned during my days of selling PBX’s (Private Branch Exchange’s), or phone systems at Lucent Technologies…that every prospect does not have equal value.

Back then in the 90’s Lucent systems were among the most expensive phone systems you could have in your business.  If I walked into a prospects building and noticed, lets say a copy machine from Xerox then I knew I had a great chance for a sale.  Why? Because they had already demonstrated a propensity for buying high priced items from an industry leader. Therefore the prospect was worth more to me than lets say a prospect with a Lanier copier. Continue reading “Don’t Treat Every Prospect The Same”

Elevator Pitch

Hey Arnold tell us a joke.

I don’t know any jokes.

In his new book Total Recall, Arnold Schwarzenegger shares a story about how early in his career he was at a celebrity party and got caught unprepared.  Fortunately Lucile Ball came to his rescue.  But preparedness is exactly why sales people are always encouraged to be ready with an elevator pitch.

The problem with an elevator pitch is that nobody buys a business product or service in an elevator.  And nobody enjoys being pitched.  But they will buy into a remarkable story, and just about everyone loves to hear one.

So better than figuring out a way to pitch someone really quick on your idea, product, or service is to figure out a way to share your story with them in an interesting way.

Elevator Pitch Example

I’ve spent the past 20 years doing sales and marketing for the big companies -Lucent , GM, Wells, and MetLife.  Now I partner with Google teaching small business what the big companies know about generating traffic, converting traffic to leads, turning leads to customers, and measuring the results.  Give me your card, I’ll schedule coffee (my treat of course), and answer any questions you might have.

Ways to persuade – The everyone does this method

Humans are wired to not want to be different.  Most of us work hard to fit in.  Turns out that playing the ‘this is what everyone is doing’ card can be one of the most powerful ways to persuade customers, colleagues and businesses to do the things you’d like them to do —such as making a particular purchase or agreeing to your position over a deal.   This is called consensus messaging.

ways to persuade

In the 90’s when I worked as a sales rep for Lucent Technologies we often joked we won many deals because no one ever got fired for purchasing a Lucent phone system.  Back then it was what almost every business did.  So if something went wrong you could always say to your boss “I went with Lucent, who could have expected this”.

Consensus Messaging Can Come Down To Semantics

Consider the small difference in the these two messages and the corresponding results.

Message 1: “75% of customers who stay in this hotel reuse their towels.”

Result: The number of customers who reused their towels increased by 26%.

Message 2: “75% of people who stayed in this room reused their towels.”

Result: The number of customers who reused their towels increased by 33%.

You can learn more about consensus messaging by reading Yes!: 50 Scientifically Proven Ways to Be Persuasive

Reverse Mortgage Marketing: The Best Social Media Platforms For Driving Business

Social Media Channels

The other day I was with my good friend Donald Graves who works as a Reverse Mortgage Consultant.  Our conversation turned to social media and Don mentioned that he doesn’t see the benefit in a social media platform like Twitter for himself.  He’s busy and he just doesn’t get what benefit social media could add to reverse mortgage marketing.

That got me to thinking about which social media platforms are the best for reverse mortgage marketing – here’s what I uncovered.  Don…this one for you dawg!

The following findings were from HubSpots 2012 research into the stat of inbound marketing.

Inbound marketing out performs outbound marketing

First inbound marketing (SEO, blogs, social media) as compared to outbound marketing (trade shows, network groups, shaking hands and kissing babies) was found to be more effective both from a cost, lead quality, and closing ration stand points.  But it turns out that the best inbound marketing platform depends on your business type, B2B or B2C.  Generally speaking  best for B2B LinkedIn, best for B2C Facebook.

Social Media Customer Acquisition by Channel

Best social media platform depends on industry

Diving deeper into the data results show that effectiveness of blogs, Twitter, Facebook and Linkedin varies by industry.

 

Social Media Channel Effect by Industry

Best platforms for Don and others marketing reverse mortgages

For banking, insurance, and financial services the research shows Linkedin and Twitter are the best platforms for building a tribe (the people who will give you permission to inform them).  But why? It’s not likely that there are very many 72 year olds on Linkedin or Twitter – but their children, grand children, accountants, attorneys, financial planners, and a host of other people who can send you leads are.

Remember what your potential clients are shopping for

For the most part your potential clients and those who can refer them are not shopping for a reverse mortgage (although they may think they are).  What they are really in the market for is a company and RMC they can trust – and you and I both know that’s not something easy to come by.  So what you need to sell is trust.

My advice

  1. Get and stay ahead of the competition by starting a blog and makeing it your primary inbound marketing platform (because research shows a direct correlation between the number of blog post and customer conversions)
    1. A blog is your digital media property.  If Twitter or Linkedin go belly up you’ve still got your Internet property to continue to lead your tribe.
    2. This will give you a platform to build your tribe
    3. Don’t be pushy – social media puts control in the hands of the consumer – they can turn you off just as easy as they can turn you on – and they will
  2. Use Linkedin and Twitter to support your blogging efforts

A few closing thoughts

  1. You likely won’t get leads or conversions overnight
  2. Don’t do it to make sales – do it because you like it – that’s the only way you’ll stick with it – and the only way your tribe will follow you
  3. Why listen to me anyway – because I’ve closed more than 100 reverse mortgage loans using inbound marketing strategies

Something to make you go – hmm!

  1. The technical information on reverse mortgages can be found on 7,820,000 different websites (the actual number of search results Google generated today for the term ‘reverse mortgage’)
  2. Find a way to give your Tribe something they can’t get anywhere else – a Purple Cow