Pricing Your Projects for Profit

In this episode of The Admin Bar, we’re joined by Bret Phillips of Sideways8 to talk pricing strategy. Bret has given this talk at WordCamp and brings a ton of experience and value to the show on this topic!

—

Kyle:               Today we have Bret Phillips here who I’m going to introduce to you in just a second, but as always, I’m joined by Matt Sebert. What’s going on today, Matt?

Matt:               Not a whole lot. Really excited about this episode though.

Kyle:               Yeah, absolutely. So like I said, we’re going to be talking about a pricing projects and that seems to be a topic that comes up in our group and every other one of the 500 groups I’m in just about every day. So I know there’s people looking for information on how they can price projects, how they can get more for projects. So hopefully we’ll be able to answer some of those questions today. So for those of you that don’t know Brett, Matt and I actually met Brett at WordCamp in Dallas, fort worth just a couple of weeks ago. He was a presenter there and we, saw him speak and then caught him as he was, I think leaving to head to the airport, catching an Uber, we caught him right where he left. He works for Sideways8 in Atlanta. He’s heavily involved in the 48 in 48 campaign, which I shared about, earlier this week on our page. He’s a musician and produces music. Right? But I, I’m just reading things off of what I could stalk you on Facebook, so why don’t you introduce yourself and doing it a little bit better job.

Brett:              I mean that’s pretty much it. So, there is a strong technical nerd inside of me and that seems to translate well into both the web space in music space. So I’ve been spending a lot of time doing both of those for many years. I do enjoy it. For Sideways8 my role is essentially project scoping and pricing. So that’s why this topic is kind of near and dear to my heart. And, yeah, and then the 48 in 48 program is, I’m only a volunteer there, but I try to be an advocate for it. It’s pretty awesome. We do 48 websites in 48 hours for 48 nonprofits. They are city specific events for the people doing the work. But the nonprofits come from all over the world. So it’s pretty cool and it’s a, it’s a good way for our, for profit business to give back and whether it has a pretty tremendous impact.

Kyle:               That’s what you actually did your talk on at word camp, as you know. But that’s what we heard you to come talk about. And I posted about it earlier on our page and I know people were interested on how they could be involved. So what’s the best way for them to find out more information and see how they can be involved in that?

Brett:              Sure. It’s a 48in48.org. So I am 48 in 48 is the whole thing. Just go there, apply. You can look around. If you want to contact me directly I’m happy to talk to you about it. It’s a passion project for sure. And it’s not a for profit project, but our for profit business does do a lot of work with larger nonprofit. So it starts to get real meta and weird, but it’s cool.

Kyle:               While we’re on the subject of free websites, tell me this burning question I have that I never can never find the answer to How much does a website cost?

Brett:              It really depends on who you’re doing the website for. So I’ve found that the same amount of work goes into a $500 website as goes into a $5,000 website as potentially goes into a $50,000 website. You know, all the people need the same thing. It really just depends on where they’re coming from, where they’re at with their current business, and how much they can afford to pay, which then they try to find somebody that matches that appropriately. So for our team to do a $500 website, that’s going to, I mean, that wouldn’t even get us on the phone. But as an individual for a long time I did those and it took me months to get those things done. So it would making no money. I’m not saying you can’t do it, it’s totally possible make money on a $500 websites, but you should be able to get that done, like, before lunch.

Kyle:               Right? Yeah. I think, all of my first few projects were about $500. Actually me and Matt and we first connected he sent me, he hired me as a subcontractor to do a job and I ended up splitting the price of the website with him. And I think we both made like 300 bucks. So it was awesome.

Brett:              Yeah, I consider it a paid education. Somebody paid you to learn that you were not charging enough.

Kyle:               Yeah. And there’s value that comes out of it too, because so much of our business is referral based. So now you got to kind of explain to somebody that, yes, I just did this website for $500 but this next website isn’t going to be that much. I’ve had that awkward conversation with people as far as having to, I just charged their buddy this much. Now I’ve got to charge somebody else a lot more. So how would you kind of approach a situation like that if you ran into something like that?

Brett:              You’re talking about specifically you do let’s say $500. I would like to by the end of the conversation we’re going to be talking about a lot more money. But you just did one for $500. Their buddy comes up and says, Hey, I got a business. I heard you did a $500 website, you know that you probably need 1500 to 2000 actually make a profit. I would, I’m a big believer in full transparency in all aspects of our business and really life. It just makes it easier. So I would really just tell them, hey, during that project I realized a lot more work goes into it than I thought, here’s the value that I brought to them. You can talk to them directly about it. And if you think that you would like to work with me, it’s going to cost x and you should already have a good idea of what that next thing is going to cost. I think it’s really, it’s tremendously helpful to have an outline of what you can do for a certain price to just have a starting point for that conversation. So, you know, if it’s a five page website, it has one contact form, they’re providing the logo and all the content, you know, that’s something you can package up. But if it’s going to require a discovery process and some custom functionality and everything, you know, it’s hard to even say what that’s going to cost before you start diving into it.

Matt:               So what are the main, or do you have like a set list of assets or needs that all have a general price point?

Brett:              Yeah. At this point, our default proposal basically outlines what it would be for, I guess, about a 20 page website. I have a whole page listed on our proposal that says here’s what’s included in the standard website. It’s regular stuff like, you know, page content is included. We’re going to install certain plugins, we’re going to make sure that, there’s some level of accessibility testing that’s done, some level of GDPR that’s done. Just the stuff that we know for sure is going to go in to every website that we want to put our hands on, and that just gives me a ballpark to start from. So when somebody is like, “Hey, how much does it cost to get involved and what does that include?” I can either just send that directly or start a conversation and try to feel it out a little bit more. But yeah, I definitely an outline of what our base website is going to cover. It fits most projects. But obviously there’s always some little something that needs to be changed.

Kyle:               Sure. So, you did talk about kind of at the beginning when I jokingly asked you how much a website costs, you had mentioned it depends on how much they’re willing to pay or what they’re looking to spend. So that leads me into kind of more like a value based pricing system, where you’re kind of looking at that company and wanting to be the right fit for them. You know, obviously you don’t want to be too expensive for somebody, then you’re not a good fit. But also at the same point, if you’re dealing with a large company and you come in with a way to cheap of a proposal, they’re not going to take you seriously. So you can’t, it’s very difficult to pick a standard pricing and say, this is what I’m going to charge mom and pop and this is where I’m going to charge big international corporation. So how does that factor into your pricing?

Brett:              There’s a couple of things. One of them is, I have a pretty good idea who our best case customer is. I know roughly how many people are on staff, what their revenue is per year, an idea of what a marketing budget would be in there. So I know that my default price point kind of fit within that, but I know that that same exact website we could probably do our cost much less and still make a profit, so as I start to feel out where their business is, how much budget they have. I’ve tried to frame it out as, alright, we can do this for this much. If you want the all-in, it’s going to be this much. To touch on all in real quick, because there’s something you mentioned that triggered this.

Brett:              What I never want to do with a customer is have them go all in with their budget to do a project for them because the expectation that they’re going to have set for whatever it is that they’re trying to pay you, you’re never ever, ever going to be able to reach that expectation. And there’s so much more that can happen. We’re a full scale digital marketing agency. We don’t just build websites, but we do other stuff that ends up driving traffic. If you’re all in on just the website, there’s no budget left over to do any of the additional stuff as well. So if there’s any tip I can give is if somebody is trying to go all in and try to avoid that as much as possible because it’s just going to be a nightmare over the long term, you never going to meet that expectation.

Kyle:               It’s kind of under promise and over deliver too, and you don’t have the ability to absolutely do that at that point.

Brett:              Yup. You’ll never deliver enough for them to get their money back unless it’s just an immediate super win and they get crazy traffic and they’re selling products or services. I’ve never been in a situation where it’s been all in and it’s been healthy. I prefer to live within the budget and know that there’s more so that we can continue the conversation and continue to work together over a long period of time. As far as identifying the price and identifying the customer, making sure that my default rate fits within that, it’s very much about doing the homework of who’s that target customer, what does their world look like, what does their budget look like? Typically if you consider an organization having 10% of their revenue as a marketing budget. If you can figure out even roughly what that revenue is. I like to do often by staff. Think about how many people are on staff… Multiply that by like 40 or 50,000 per person. Then you get a somewhat of an idea of what they’re spending on just staff. There’s just to be extra money. So just a little math in there can help you go along way with identifying the right company and organizations that fit within whatever your costs are to do the website. Does that help?

Kyle:               That’s super helpful. And it’s kind of one of those things where, you know, you walk into a meeting and you’d feel intimidated to try to just pull out of thin air. It’s better having some kind of idea of what their revenue is. But there are some ways you can do some general quick math and get some kind of ideas. Are you talking about is this a $500,000 a year company or a $10 million a year company? You should at least narrow that down a little bit and that’s going to give you a better idea of what they’re going to be willing to spend on their budget.

Kyle:               When you’re talking about not maxing out, I think it’s Lee Jackson that talks about this quite a bit. Leaving some room in there for contingency because you can lay out all these plants for somebody and have the best proposal with all the details, and that doesn’t mean the customer’s going to understand the project. So you’re going to get somewhere down the line and they’re going to say, “Oh, I thought the website was going to do such and such”. Well, we didn’t quite a quote for doing that. We obviously can and we’d love to help you out… But leaving some room in there for contingency to is important.

Matt:               So you had mentioned taking into consideration wins and that type of thing. When you’re quoting do you take a look at what a whatever product or service it is that they’re offering and what like per client or per customer that would onboard?

New Speaker:        So you’re talking kind of almost a value based pricing type of an agreement when you’re looking at it? I certainly try to, but I’ve struggled with the value based pricing thing from that standpoint. From saying “I know that if I get you two customers, you’re going to make x amount, which will cover whatever”. I think that’s certainly a cool way to go about it. And it works for some people, but I think that for our team, we base it more around what does our costs going to be to get the site done? What is the budget that’s available from this organization and can we make a decent amount of profit within that to keep everything flowing? That’s more of my approach.

Brett:              But I do talk to people about that, especially the larger organizations that we’re getting into where I know that the budgets are getting a little bit bigger. Having an idea of what that win means for them will definitely dictate, you know, how much more I could charge, but it’s not something that I do often right now.

Matt:               One of the onboarding questions that I ask frequently is, what a client or customer is worth to them monetarily. Which gives me a good starting point. And then I go on to the other things as well. But you know, it’s a good balance between the two.

Brett:              Yeah. Well, I think even just having that conversation with them, a lot of times people don’t know, they wouldn’t have an idea. They don’t even have an idea of what it costs to get a customer. Or what that customer is going to give them over the long term. So even having that conversation with them gives you positioning factor of, “Hey, I didn’t even think about that. You’re the person that’s talking to me about that. Maybe I should talk to you about more stuff”.

Matt:               Yeah, absolutely. And I mean, there’s that type of customer. There’s also the kind of client that they’re really finicky when it comes to talking about that too. A few of the clients that I’ve met with in the past, they didn’t want to really say that during the first few meetings at least. People tend to hold anything that has to do with money pretty close to their chest. But I think that the more honest they are, the more upfront they are with all of the information, the better you can quote them and the better job you can do.

Brett:              Yeah, yeah, no doubt. The better you’re going to be to help them. And like I said earlier about transparency, if you can get it going both ways, that’s going to be the best relationship. Obviously sometimes you’ve got to sign an NDA and the larger the corporation gets more muddy. But you know, tell me the number is. What’s great about working with the nonprofits is a lot of that information is public already, so they’re not scared to talk about it. They’re like, “Here’s what the budget is, here’s what the numbers are. Can you help?”. Versus maybe a private company that doesn’t want to talk about it as much, but if somebody is trying to withhold any information, that’s kind of a checkbox in the “no” section for me. Right? I prefer to work with people that are going to have a dialogue and really want to talk about it. And we’re always willing to talk to somebody, give them information for free. I don’t want to do leg work for you for free, but if you just want to sit and consult, I’ll tell you what I think about a certain thing, but I need your feedback to be able to give you a good answer.

Matt:               Yeah. That kind of plays right into a trust that goes both ways. Communication. You need to trust them, but they need to trust you almost more importantly. And building that trust is paramount.

Brett:              Yeah, for sure.

Kyle:               So if you’re trying to get some realistic idea of the real budget from a client, what are some of the action points you can give people to try to figure that out besides the figuring out how many employees and stuff like that is. You have any other on that?

Brett:              You know, I’m a huge believer in the, some call it the website worksheet, I’ve changed it to project assessment worksheet. Essentially getting somebody to go through some steps to give you more information, part of that information be in a simple dropdown. Here’s the range, where’s your budget at? a lot of times people will fluff it and say under whatever the cheapest prices you have and they may have plenty of it and they just want to get on the phone. but that typically that gives me good information. And then, as much as I’ve hated them in the past, I’m trying to re-frame my idea of an RFP because, well, let me, I’ll go on a quick rant about RFPs. RFPS are typically written by people that have no idea what is actually best practice. It’s a huge wish list. The budgets are usually too small because they don’t even know what it costs. And it’s put together by teams of people that are all doing stuff. So they’re usually crap. that being said, once, like I said, I’m trying to re-frame my view of those cause when I received them before I’d get angry.

Brett:              That’s never a good way to start a relationship.

Brett:              So now I’m like “okay, I accept the challenge”. Is what you’re asking for realistic? Does it fit within this budget? And like is there any other questions that I have? Is there a way for me to start having a conversation with you to tell you that some of this stuff may not be the right way to go about it, which then starts to do some more positioning for you, which is cool. But the RFP is almost always have a budget. Before I’ll get on the phone to really start diving into a project conversation with somebody, they’ve got to go through our worksheet and if they don’t go through the worksheet, that first call is me taking through that worksheet and I just ask the budget question and I usually save it for the end. Let’s talk through a whole thing. Gimme that 15, 20 minutes of your time.

Brett:              Let me show you that I do know what I’m talking about. I’m asking the right questions so that at the end of it I can say, you know what is your deadline for this and what’s your budget for this? And then just be quiet and wait. Silence is the golden rule there because, when I started doing it, I would be like flubbing numbers out there, but now just sit and wait. They usually have an idea already in their head. If I’ve proven to them that I’m at least not an idiot and I, and I’m asking the right questions, typically they’re pretty honest about what it is. And at that point, another thing that I like to use too is let me know the realistic budget. Because even if we’re not the right company, I can direct you to somebody that might fit within that. I already trust in those companies to do a good job. I do that a lot. So that question alone probably gets me some of that. And usually those people that don’t want to give up the budget, it’s that they have a very low budget and they’re just nervous that you’re going to tell him it’s $75,000 to work on the website and they’ve got, you know, less than, I don’t know if they’ve got 7,500 bucks or something.

Matt:               But on the flip side of that, allowing them to better understand, the low likelihood that a lower budget is going to gain them what they want. It allows them to look at the other proposals that are coming in and if somebody is like, “oh yeah, we can totally do that for this tiny amount” it makes them second guess those people for saying that they can do it. Which, you know, even if they don’t end up going with you, at least they may not go with somebody that’s probably over promising and bound to under deliver.

Kyle:               Yeah. I don’t ever want to be, if somebody is getting multiple proposals, I don’t want to be the cheapest one for sure. I did get a question here from Chris Castillo in the live stream here. And I’m gonna try to it out here, but you know how it is. When you got to like read in front of people, I’ll sound like a kindergartener, but he said, “what are some of the conversation points you have with a prospect to just to determine what price range are proposal will be in number of pages is one thing I’ve seen. But my concern is that sometimes the client has redundant pages on their website structure is poor and pages may need to be consolidated. How do you address that before putting forward a proposal?”

Brett:              So our proposal, so the first thing I’m going to do when I go to a website is kind of look at what the end of the navigation or if I can find a site map, what that site map looks like. Cause you know, and this is something I learned from 48 and 48, one of the roles I have there at least was doing there with vetting the nonprofits that are applying. And so there’s a certain level of site that is actually appropriate for a 48 hour build. Something that has three hundred blog posts. Even if you can import those blog posts, probably not a good fit. It’s, it’s got 200 pages, probably not a good fit. So I’ve gotten good at kind of diving into and finding out what a full site looks like. Our team is pretty good. If we can do something that like 50 pages, it’s going to fit within our world cause likely we can cut some of that stuff down.

Brett:              But the page page count conversation isn’t always a huge deal. I’m more looking at what’s custom about the project, what’s different than what I would assume and I would assume page content needs to be updated and overhauled the end. The way that we’re approaching proposals now too is a little bit different to where I’m giving a proposal that has a full scope price. It says, here’s what I believe from all this conversation that we had is what the total cost of the project is going to be. But the first thing we’re going to do is the discovery and the discovery is going to include these things. And at the end of that discovery, we’re going to put together a statement of work that then is a much more clear vision of that scope and what that cost is going to be.

Brett:              So if there’s anything we didn’t uncover during our first conversations, we’re going to uncover it. Then one of those roles is what we call a content coach. And their entire responsibility is to outline and approved, get approval for the site map, every page, every post, not necessarily listening every post, but if there’s like we just need to know there’s 300 posts that need to be migrated or whatever. And then also they’re working on page content for those things too. But during that discovery is where we really start to identify what the scope of the full content piece of the website is. But for the most part, that’s usually pretty much the same. And we have caveat in the proposal says “up to x amount of pages”. If we’ve realized before then that there’s more, we’ve changed that number and change the price of whatever. So that’s kind of how I handle that. I don’t know if that’s a really helpful answer for that specific question, but that’s a probing of the website happens probably before I even get on the phone with somebody after they’ve filled out the project assessment sheet.

Kyle:               No, I think that’s a good answer. And I do see some people that charge per page. I had a competitor where I wasn’t before. She, she wasn’t much of a competitor, but she was a competitor nonetheless. But everything she priced was per page, you know, so, it’s just a weird dynamic to say, okay, well now I want to make the most page as possible because that’s how I make the most money. And now you want the least amount of pages as possible because then you can pay the least amount for the website. But really neither one of us are trying to make the right website. You know what I mean? So your incentives aren’t aligned with the goal of the website. That’s where the disconnect is in my brain with counting the pages and saying “okay, this is exactly how many we’re going to do for this price”.

Matt:               Yeah. And each website page is going to have a completely different value. You know, if you were to do it that way, like you can’t really have a standard price for a page like an about page is worth depending on the company a lot less than a landing page or anything else.

Kyle:               Or even like a thank you page that you’re just tracking information from a submission form or something. You’re not going to do at the same as the homepage. So it’s kind of hard.

Kyle:               Do you do or are any of the discovery sessions you do with your clients, do they pay for those? Are Those all free?

Brett:              Oh yeah, no they pay up front. So a proposal goes out and it’s basically… and we recently changed the terms of our proposal because we were doing the 50% upfront total project scope for a while. While that is great, it is a lot more work up front before the proposal goes out to make sure everything is buttoned up and perfect. So to get them out faster, what we’ve done is change the terms to where it’s 100% payment for the discovery project and that’s the upfront cost, that’s the engagement costs and the deliverable again is that statement of work. Our hope is that we’ve done such a good job of this statement of work and any functionality documentation that they could take it elsewhere when they’re done, if they don’t want to work with us anymore. Really our hope is that they would want to continue working with us. But we’ve got a clear vision. But yeah, it’s 100% up front for that. Then the terms change based on the customer, but that’s how we engage with that first part. I try to do my diligence to be as accurate as possible before I even send the original proposal. But that’s our catch all so that if I’ve missed something or they didn’t give us some information or something changes in between the time we talked and when we start the project, that discovery process gives us that opportunity. And in there that’s when the content coach comes in and does all the site map in the page content. Search engine optimization audit is happening and we’re going through all of that stuff. There’s an onboarding process, so we’re trying to cover the cost of starting that engagement and then getting through that with them. A little bit cheaper than that 50% upfront total project scope. So it’s a little less risk for the company to engage.

Kyle:              So you’re actually sending some sort of estimated costs or range of costs that they’re having to at least somewhat agree to before you’re going into all that work and doing the discovery and all that.

Brett:              Yeah, yeah, yeah. The goal is that I’ve done such a good job on my own that the end of the discovery, the statement of works still says the same thing price wise. But you know, there’s always, there can always be something that pops up or a new need that happens because, you know, again, with the RFP situation, people are putting this stuff together and they really don’t know what they need. They know what they want. They might not know how to get it or what’s the best approach. So during that discovery piece, we’re working on strategy, we’re doing consulting. So they’re getting some feedback which may change their approach to something where they may have wanted something before. They don’t want it any more because they realize there’s a better way to go about that. And that may be cheaper, it may be more expensive, but we don’t know til we get through it. But it us the opportunity to really start engaging. We’re paid 100% for our time, so we’re not losing money he discovery. Um, and we get an opportunity to just smother them with expertise for a couple of weeks so that they’re really just like, holy crap, I have to keep working with this company because like, they’re really taking the same to the next level.