How to formulate a value proposition (and stop doing hourly freelance work)
Kaleigh and Paul explain how you can formulate a value proposition that gets you off the hamster wheel of hourly freelance work, as well as tips for positioning that get you paid for your expertise–not your time.
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Kaleigh: I think it’s important for us to discuss the topic that comes up all the time and it’s the whole conversation around per hour rates and hourly rates versus project based rates and how do you get from Point A to B or which is better. There is a lot to discuss when it comes to these conversations. I think a good place to start is: you and I both are kind of on the same page about why hourly rates are not such a great idea and why that can be a dangerous slippery slope. So I’ll let you kick that off. I want your perspective to get started on and why hourly rates are kind of a bad idea.
Paul: Yeah, I love this topic as well. Before we hit record on this. This is it, this is a favorite topic. They are all my favorite topics.
Kaleigh: There are.
Paul: Yeah. So I don’t like hourly for a lot of reasons. But the main reason I don’t like hourly because I fell like it sets a freelancer up for being a technician as opposed to an expert. And why I think that’s bad is I think experts get paid more or have the potential to get paid more. And they get more respect in so much as experts get leaned on for their advice on how to do the work and then to do the work. Technicians get told to do the work. I feel like it’s a lot less stressful where you get to have inputs and a client respects that input for the work you’re doing as opposed to just, “Hey you, go write me this copy in this way” or “Hey you, go design me”. And nobody wants to be called “Hey you” first of all.
But second of all you don’t want to be told how to do your job. And I feel like if you charge by the hour it leads to that psychologically. The best example I have for this is just this made up story about say a client comes to a programmer and says, “Hey, I want you to build me this WordPress plugin.” Doesn’t matter what it is, just a WordPress plugin for this example. He could go to two programmers and the first one she could be like, “I charge $500 an hour.” And the client might be, “What a hell! That’s a lot of money for an hourly rate.” And so he goes to this second programmer and she’s like, “It will cost you $500 for me to build this plugin.” And he’s like, that’s sounds reasonable. I would pay $500 for this plugin. It’s the same price.
Kaleigh: It’s positioning.
Paul: You’re absolutely right. It’s positioning. And I think the reason why hourly rates don’t really work is because you get punished for being good and efficient at your work. Or what always happens to freelancers I talk to do this. They get their work on fast so they just pad their hourly rate anyway. So that’s not being even an hourly rate to begin with. Oh yeah, took 8 hours to do because I want to build for 8 hours. It’s not that it took you 8 hours to work. You just want to build for 8 hours because that seems about right because you are good and fast in what you do.
So why bother doing that, you getting punished. Even like I do talk to tattoo artists about it. They are like, “As I’ve been tattooing for like 10 years or 20 years I go slower than I have to because tattoos are like build hourly rate in general.” Although some tattooers they are just like this is my day rate. You’re a good freelancer.
Kaleigh: That’s right.
Paul: And I’ve had some work that I got done. She got it done, she’s like, “That only took me 4 hours.” I’m like, “I tattoo I wanted. It’s not going to cost a day rate.” I’m like, “Ok. You gave me exactly what I ask you to give for the rate that we bought agreed upon.” We’re good.
Kaleigh: Right. I think that kind of sets the stage nicely for talking about how to formulate that value proposition and really thinking about when a client comes to you they are not paying you essentially for your time. They are paying you for the end product just like you said. And there is value in the expertise that you have as a specialist who specializes in a specific thing.
And this is why it helps to have a niche that you’re specialized in. There is value in the expertise that you have and the knowledge that you worked really hard to build up. That has a dollar value to it as well. You have to tie that in whereas when you do the whole hourly rate thing that goes right out of the window because you’re just an hourly worker. You are just somebody there who’s filling the time to get the thing done.
Paul: Yeah, and if they are hiring you as a freelancer, it’s not like we talk about the difference between employees and freelancing. They don’t get to say this is how you do the work and this is how long it’s going to take you to do the work. You have to set that and I think the way I like to work and the way we teach it in the course is that you just get to tell the client, “This is when you get the work.” You don’t have to say, “I work on Monday from 8:00 ‘till 3:00, and Tuesday from 3:00 ‘till 9:00.” If a client asks me for something I’m just going to say, “I’ll do it for this amount of money. You’re going to get it on this day.”
It doesn’t matter how many hours I’ve worked on, doesn’t matter when I worked on it. I just know I’m going to get it done for this time and then I’ll buffer that time because things didn’t take longer or sometimes things might come up. But then you’re not just, “Oh, the client knows this is going to take 8 hours. I’ve got to start now and I’ll finish it in 8 hours from now and hand it off.” That would really be a stressful place to be.
Kaleigh: It would. And just kind of to build off what I was talking a little bit about just a second ago, that’s where having a niche and specialization really comes in handy. When you’re thinking about your value proposition and why somebody should hire you, if you have something that you are super specialized in that helps you be seen as the go to person for not just the specific type of customer or client but also for the type of work that you’re doing so for example if you’re a copywriter, rather than just being like, “Hey, I’m a writer I can write stuff.” You could say something much more specific like I am a copywriter that specializes in email sequences for accounting company or for accounting software.
And so you could see how in the client’s mind it’s like, “Oh, you do this one thing and you must be really good at it because you are very specialized.” I kind of think of it as if you’re going to hire an artist to paint a mural would you want somebody who calls themselves an artist or would you want the person who is an acclaimed muralist, who is very well known for their work with murals. You want the person who is really good at that specific thing you’re trying to accomplish.
Paul: Yeah, you want Kyle Steed. He is a very famous muralist. He painted all of the [unclear – 6:08] and whole bunch of other stuffs and that’s what he does is large scale stuff because that’s a perfect point is if I’m a client. If I’m an accounting company looking to write an email sequence and I have two options, one is a writer and one is a writer who specializes in email sequences for accounting companies; I am going to hire the one that does exactly the thing that I want. If I want a mural in my office I want the mural painter. I don’t want somebody who specializes in like small acrylic work in 2×2.
Kaleigh: Yeah, that would be crazy.
Paul: Yeah, so how do you pitch your value to a potential client? You have this going in the calls. Like why it’s like a no brainer to hire Kaleigh as opposed to other writer. Who might even do what you do as well.
Kaleigh: For me a lot of it is based within the proposal stage and within the whole process of on boarding or going back and forth. It’s a potential client who is usually a referral anyways. But I think that an easy way to, even if you’re somebody who is doing an hourly pricing right now, an easy way to transition into project base quoting is to have some documents set up and this is something we talked about in Creative Class. Having these materials like a proposal or just even documents, “Hey this is how I work.” That includes these elements of social proof that basically validates that you are good at what you do and that you’re worth the rate that you’re charging.
So those are things like past results that you produce for clients or names and logos of well known clients that you’ve worked with in the past, or testimonials, and then talking about your specific subject matter expertise. So talking about how you are a specialist and you have this very unique set of skills that makes you the ideal person for the job that they are basically trying to hire for. And so for me having those elements, having those almost templatized documents that I can send over that it’s like, “Hey, I’m really good at this one thing.” It makes it hard for the client to say no almost. Because again, it’s like the muralist thing. It would be crazy to go with the other generalists instead of this person who is super specialized, who has results that shows that they are very good at what they do. It makes the whole process runs so much more smoothly.
Paul: Yeah, I used to always try to answer before I would jump on any call with somebody. And obviously, like I had [unclear – 8:23] process to use. I would validate that this is somebody that, it seems like it would be a good fit if we work together. Otherwise, I wouldn’t get on a call with them. I would always have a clear idea in my mind of why they should hire me versus somebody else. And not even “I’m the best”. Because I wouldn’t hire somebody who said, “I am the best.” But just like you said, I would kind of think about, “Ok, what similar projects that I have done that I can reference.” Because people want to see how they fit in to your service to mitigate the amount of risk.
So if I’m hiring somebody and I’m an accounting firm, it is less risky if I hire a writer who’s done work with accounting firms. And if you haven’t done work with accounting firms you’re not screwed at that point but what else can you lean on? Where can you draw connections that a potential client might not. You could say I’ve done email automation sequence writing for these types of clients. And the reason why you can apply that knowledge to your work is because X. So I would always go into every call thinking about why me and not somebody else or why me and not another freelancer has the exact same skill set. I feel like I was really good at closing sales if I got on the phone with somebody. I feel that makes me think on the best stuff. I’m an awful salesperson. If I had to pitch you on hiring me it would not go well for me. It would not just go well.
But I think why I ended up being able to close, like if I would get on the phone with somebody I knew that we probably are going to work together. That’s just the way that works. And the reason why that happened is first I had an on-boarding process where I would never get on the phone with somebody and not know that they had a $100 budget for a $10,000 project. That wouldn’t happen. And I would also know about their project. Like they would fill in a project planner beforehand for kind of the work that they wanted and I can kind of see what expectations they had. If they’ve done reasonable expectations probably would work with them because if I got on the phone with them I won’t probably able to close that job or that project. In talking to people I would never. I think it’s hard for any creative person to pitch themselves. I guess, it’s just awkward.
Kaleigh: It is.
Paul: Maybe it’s not awkward for somebody. It’s really awkward for me to pitch myself. But what I am good at was just listening to kind of what clients were saying and then repeating that back with how my skills could help with that one thing. So if they would say things like, “I understand who my audience is but I don’t think my website is really reflecting their taste.” Then in talking to them I would say things like, “I could build you a website that could better reflect the taste and the style that your audience has.” I would listen to what people were saying and then kind of repeat it back with my skills kind of smooch in there. And I would always bring it back to how my skills could help their business and how hiring me would be an investment instead of an expense.
Kaleigh: That’s smart.
Paul: Because I would always try to think, I run a business you run a business. We care about our bottomlines. If we want to make money we’re in business. So if I was thinking about that how can I turn a web design project into something that can hopefully improve their bottomline. And obviously like we talk about this before. I’m never going to promise anything because that’s a recipe for disaster. I can say what past results are. I can say how I think they could be helped with my work. I think a lot of times freelancers get or don’t get work based on how they pitch themselves in talking to clients.
And I think that’s a learnable skill. So I’m the most awkward weird person in the entire world. But I got that down to really really good. But my success rates for closing projects after a while was really good. I’m an awkward weird person even on calls where there’s money involved. Still in listening and noticing kind of what they are saying and why they are saying it people don’t write a writer because they think I wish my copy was just 10% better for the sake of being better.
Kaleigh: No, they don’t.
Paul: They just want to how my skills is going to help them. They are not going to talk about adverbs and verbs. They are just going to talk about how your writing is going to help them.
Kaleigh: I’m so glad you brought that up because I was just teaching a resume workshop last night and I was talking about that exact thing. Because that’s a copywriting tactic is to basically mirror your audiences’ language back to them. You literally you’re parroting what they said because that’s what they want to hear. Use the words that they are giving you and leverage that in your favor. Again, talk about the results that you can produce for them and talk about the skills that you have their that are going to help them where they are right now to where they want to be.
If you don’t have that language, if you are not sure quite it, if you haven’t have the change to like have it back and forth with the client go to their website. See what kind of language they are using right now. Go to their mission statement or their values or their About page to kind of figure out what it is that they are trying to be as a company or even as an individual. That’s a great starting place to kind of start formulating your plan for how you’re going to speak to the client and position yourself.
Paul: Ok, I was just going to say, if they are hiring you they are looking for a specific outcome so you got to learn that. That was just my little interject.
Kaleigh: I think the flipside of all this is that not every client, even if you do the best job in the world is going to be a yes. They still might try to like lowball or pay you less than what you’re asking for. And I think in those situations it really is ok to pass on those opportunities and to say no which feels hard and feels really scary because money is nice and opportunity is nice to have. But those clients that don’t want to pay you what you are asking for that’s kind of a red flag even if you think you’re doing a good job communicating it. They are not seeing the value in the equation here. So it’s ok to say no in those situation and let the opportunity pass.
Paul: Yeah, I totally agree because I think a lot of times if clients don’t respect the price for your services they are probably not going to respect other aspects of the work that you do. It’s probably going to end up there.
Kaleigh: Most likely.
Paul: Alright, was there anything else you wanted to add?
Paul: Good. Hope you enjoyed listening to this.Posted in Creative Class, the freelancer podcast · See more articles
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