This episode is part of a 12 days of Christmas read-along of the Selling Like We’re Human book, recorded in 2021.
The book follows a similar concept to what you’re already used to here on the Humane Marketing show with the 7Ps of Humane Marketing and the Marketing Like We’re Human book: we start with the being and then go into the doing.
The 3 parts of the Selling Like We’re Human book are : Being, Knowing and Doing (compared to Rumble, Rise and Resonate of the Marketing Like We’re Human book)
Today I’m reading a small section of Part 2 on KNOWING, Chapter 6 called ‘Calculate Your Worth’
"I’ve always disliked working with “aggressive” business income goals. Instead, I want to measure my success in joy and the difference I make with my work." -Sarah Santacroce @sarahsantacroce #humanemarketing #sellinglikeyourehuman Share on XExcerpt from Selling Like We’re Human, Part 2: KNOWING, Chapter 6: Calculate Your Worth
Time Is money. Or Is It?
The reason why many of us don’t like selling is because we are not comfortable
discussing prices and investments. There are many reasons for this, society
making money a taboo being one, our own uncertainty about our prices being
another one.
But if we have worked on our Unique Value Proposition, we have a good idea
of the value we deliver. This information now helps us calculate the monetary
compensation we’d like to ask for in exchange for providing that value.
In order to get to that number, let’s look at some different ways we can price
our products or services. Four different strategies come to mind:
1. Hourly
Despite being the most commonly used, hourly pricing has its limitations.
While it’s useful to benchmark your fees in the market, it’s also less than ideal
to convey the value of your offering. Your offer is more valuable than the exact
amount of time you’re spending with the client. For example, Cathlin offers
a group coaching program in which participants get to spend one hour on
Zoom with her per week. The program also comes with self-study material
such as video tutorials and worksheets. The value that people are getting from
this program is much greater than just the four hours on Zoom per month.
2. Cost
Cost-pricing is common among retailers. For example, the keystone pricing
method simply doubles the wholesale price. This pricing method provides an
easy starting point that is likely to ensure some profit.
Since this book is mainly read by service-based entrepreneurs, one could think
cost-based pricing doesn’t apply to us. But not so fast . . . You do incur costs
to run your business, don’t you? Your phone, printer cartridges, gas for your
car, etc. Let’s not forget to calculate these costs into our fees.
3. Market
Some level of market research is always helpful. What are others in your field
charging? Our clients are smart and savvy and they will have done some
research and seen other people’s prices. While you don’t have to charge the
exact same prices, it will help you understand what kind of prices your ideal
clients have most likely seen before coming to you.
4. Value
Value-based pricing is the fourth strategy, and the one we’ll spend some more
time looking into in this chapter. It’s a combination of all four pricing
strategies, our Unique Value Proposition, and the outcomes we promise to
our clients.
You Are Worth More Than Just Your Time
When you price your services based on time units, you get underpaid. And
you develop a very unhealthy relationship with time. Time really is money
when you’re only getting paid for your time!
#vulnerabilityalert
My early years in business were a constant juggle between taking
care of our boys, managing the house, and trying to build a
business. I felt like I was never completely focused on one task. And
of course I never had time for myself. I never had time, period. I
was rushing the groceries, getting annoyed at people who seemed
like they had time to waste, I was checking e-mails while the kids
were doing their homework, and I wasn’t fully there for my
husband Tony either. Tempus fugit was my modus operandi. It was
not until reading The Pursuit of Time and Money: Step into Radical
Abundance and Discover the Secret to a Meaningful Prosperous Life
by Sharon L. Spano that I realized that I had the same scarcity
approach to time that I did to money. I highly recommend this
book. It’s based on thorough research, and Sharon explores the
paradox of time and money from a human developmental lens that
supports people in transformational change.
So in this chapter we’ll unpack this idea of value versus time. Because you
bring so much more than just your time to your clients. You have experience,
tools, IP (intellectual property), and you’re delivering outcomes. And that
doesn’t have anything to do with time . . .
But, we’ll start with the easy part: your pragmatic costs.
Calculate Your Pragmatic Costs
In order to get to a price that’s based on value, it’s still a good idea to start by
calculating your costs. You need to figure out approximately how much it’s
going to cost you to deliver what you’re doing for your clients.
So let’s think about the different costs you incur when working on a client
project.
Used Time
There it is again. Of course, you’ll be spending time on your client. But it’s
not just time that you spend working directly with the client. For example, if
you’re giving a ninety-minute workshop, you will have to prepare for that
workshop. You have to research the client’s industry and prepare the
PowerPoint slides, worksheets, or handouts. All of this takes your time. It’s
simple math: time used x your hourly rate. You need to run those numbers so
that you know the total cost in terms of time used.
Paid Time
If you have an assistant or other employees, add their time x their hourly rate
to the cost.
Lost Time
If you’re traveling to the client’s location, or another venue, you should also
take into consideration the time that you’ve lost. To take our example of the
ninety-minute workshop again, if you’re running it online, then it really only
takes you ninety minutes, plus approximatively twenty minutes for setting up
the call. But if you have to travel to another city, you lose at least half a day,
if not the full day. Because instead of working on another client, you’re
spending the day in transit, maybe prepping for the workshop. This is a cost
that you should include in your price.
Overhead Costs
As the owner of a small business, even if it’s a micro business, you have
overhead costs. I’m thinking of your monthly rent, taxes, insurance, office
supplies, and utilities (phone bill, electricity, etc).
Of course you can’t calculate these costs to the penny; that’s why we often
just think of overhead costs as a flat fee. The important thing is that you see
that you have these expenses. Because if you forget to work them into your
prices, you’ll always end up with the short end of the stick.
Tools You Need to Run Your Business
As online business owners, we usually don’t have big rents and other
infrastructure to take into consideration.
However, there are quite a lot of costs involved in keeping the “lights on” online. Here’s
my list of monthly expenses towards tools, hosting, and other web related things:
Hosting (website, podcast, videos):
• Siteground
• Amazon S3
• Libsyn
• Vimeo
• Kajabi
Security (password and website):
• Roboform
• Vaultpress
Client work:
• Acuity Scheduling
• Zoom
Podcast:
• Descript
Accounting:
• Receipt Bank
Social Media:
• Post Planner
We don’t calculate our pragmatic costs because we want to include them in
our proposals. They are for our eyes only.
Evaluate Your Intangible Value [Growth]
Okay, we’re going from the left-brain territory (costs) to the right brain
territory (feelings).
The way I see it, value-based pricing is this dance between those two brain
hemispheres. Yes, we want to know our pragmatic numbers and costs, but
now we also need to address the area that is a bit more difficult to measure.
I once attended a round table with a bunch of really smart people discussing
the topic “what gets measured and what doesn’t get measured.”
The think tank discussed questions like:
• What values, behaviors, and things do we tend to measure? What
don’t we?
• Why do we measure what we do?
• What are values, behaviors, or other qualities we could measure but
do not?
What was fascinating to me was the conclusion that we’re facing a paradox in
this twenty-first century. On one hand, there is an explosion in data and
measurement. Artificial intelligence, algorithms, and robots are all the results
of this attention to facts, figures, and statistics. This data can be used for good,
or for evil. On the other hand, we’re also seeing a trend toward favoring nonmeasurable
qualities.
In his book A Whole New Mind, author Daniel H. Pink writes, “We’ve
progressed from a society of farmers to a society of factory workers to a society
of knowledge workers. And now we’re progressing yet again—to a society of
creators and empathizers, of pattern recognizers and meaning makers.”
How do you measure empathy, purpose, and meaning?
I’ve always disliked working with “aggressive” business income
goals. They just never worked for me as I was not motivated to
work harder just to get to that certain monthly or yearly goal. But
that was another thing you just did in business. In December, you
had to sit down and come up with your new income goal for the
next year. The manifesting people took it even a step further and
came up with mantras that you were supposed to repeat in order to
attract that magical goal. Again, it never worked for me and instead
was cause for frustration and self-doubt.
So at the end of 2018, my friend Valérie and I decided that we were not
going to work with business goals anymore. Instead, we wanted to
measure our success in joy and the difference we make with our work.
How do we measure that? Well, the happiness of our clients is one statistic
we can look at. Referral rates are another. Our own happiness of course as
well, reflected in our nightly gratitude journal. But as you can see, this area
is less black-and-white, less numbers and more feelings related.
This was a long-winded intro to intangible value. Another way to explain
intangible value is the value that you give to your clients, but it’s invisible
right now. So on one hand you have your tangible value that’s visible to your
client right now. For example, the time you spend on Zoom with them, the
“Done for You” LinkedIn profile, the copy for your new website, etc. But
now let’s get into the intangible or invisible value.
I’ll leave you with a Cliffhanger here…
This excerpt is from Part 2: KNOWING, Chapter 6: Calculate Your Worth
If what you heard today resonates with you and made you curious about the book, I invite you to get your copy of the new Selling Like You’re Human book at humane.marketing/book2. You can also download the whole 1st chapter for free to see if it resonates.
And I’m also planting a seed about my ‘Marketing Like We’re Human’ program that I’ll run in its live edition starting at the end of January 2022. This is where we take all these concepts from the two books as well as the 7Ps of Humane Marketing to a much much deeper level in an intimate group learning experience. Find out more at www.humane.marketing/program
Get your copy of the ‘Selling Like We’re Human’ book !
Sarah’s Resources
(FREE) Sarah’s One Page Marketing Plan
(FREE) Sarah Suggests Newsletter
(FREE) The Humane Business Manifesto
(FREE) Gentle Confidence Mini-Course
Marketing Like We’re Human – Sarah’s first book
Selling Like We’re Human – Sarah’s second book
Authentic & Fair Pricing Mini-Course
Email Sarah at sarah@sarahsantacroce.com
Thanks for listening!
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