1) No startup or small business has a budget for marketing
Let’s face it. Spending $3,000 on an okay website, or $300 a month on PPC, is not really within a budget of a bootstrapping startup or small business. Most businesses will not pour any money into marketing if it does not bring an immediate return on investment. Instead, they try to do everything themselves including building a website that is lacking in basic SEO such as page titles, headings, meta data, links, etc., and oftentimes do not have it mobile optimized.
2) Projects will usually take much longer than expected
Current service or consultation pricing models are hourly based or project based. If the job is hourly based, the professional will try to squeeze out as many hours as possible to get the highest possible pay out. The hourly based professional is not incentivized to deliver as quickly as possible. If the job is project based, let’s say $500 for a logo, the professional will do a certain amount of revisions, for example 3 revisions during each stage of the logo development process. The project based professional is not incentivized to deliver the best possible product but rather to finish as quickly as possible and cash out.
In both examples, 9 out of 10 times the project will take more time to finalize than expected. In a Pay What You Want pricing strategy, the customer proposes a pricing for a service that he/she feels comfortable paying for. The professional will be incentivized to deliver the best possible product in the shortest possible amount of time. A win/win for both.
3) You actually get paid for your quality of work
A service or consultation professional should be paid for their quality of work. It seems to be obvious but often times this is not the case. I’ve seen companies pay thousands of dollars for a poor branding service from one of the many providers online that outsource their employees from Asia. I’ve also seen talented people provide top-notch branding and design services but are underpaid.
With a Pay What You Want pricing strategy, the client will pay you what you are actually worth. We cannot disregard that some clients will simply underpay you even though you have delivered a top-notch product or service, they simply want to save money. But you will come across many clients that will appreciate your quality of work and actually pay you what you agreed on and most likely will pay you even more.
4) Clients pay for customer service more than for the actual product
You go to the restaurant. The waiter/waitress greets you with a smile, you immediately smile back because it’s contagious. He/she goes above and beyond to make your experience at the restaurant as good as possible. The food is okay, it’s not bad but not amazingly good either. You get the bill. How much will you tip? Will you tip them based on how much you liked the food or will you tip the waiter/waitress based on what service they provided. Of course you will leave at least an 18% tip.
Your clients will pay you based on how much customer service you are willing to provide. Customer service can be in many different forms. You could be on the phone with them until 1:00 am, you could do unlimited revisions until they really like the product, you can include a service ‘out of charge’ that is relevant to the assigned project. Clients will notice this and pay you extra for customer service.
5) You get paid more than what you agreed on
If you provide a shitty experience, if you get annoyed by your client, or if you deliver a lousy product, DO NOT use this pricing strategy. You will most likely not get paid, let alone getting paid more than the offer.
Deliver quickly, deliver a top-notch product, and deliver exceptional customer service. Those are the three characteristics of an effective Pay What You Want pricing strategy. Follow these three basic guidelines, and get ready to increase your revenue & good reviews.
6) Clients feel LESS comfortable to work with a stranger
Company A offers you to build a website for $4,000. Company B offers you to build a website for $800. And there are ten thousand options in between. What do you do? Do you go with the more expensive one and spend your last dollar on a maybe okay website or will you try to save as much money as possible and get what you paid for?
A new client that wasn’t referred to you doesn’t know you and doesn’t know if you are worth their hard-earned money. You will get more inquires and job offers by allowing your clients to propose a price for their needed service that fits their budget. Once a client knows you, he/she will feel more comfortable to come back for your services knowing that they will receive their desired product. That is, with this pricing strategy, you give yourself a chance to build your customer base. Based on all offers, you should prioritize the highest bids so that you can maximize your own revenue.
7) The perfect pricing strategy for someone just starting out
I am launching Juschin Inbound Marketing (www.juschin.com) because recently I had a few side projects. Why not turning this into a full-time job or at least some extra income? But how will I attracted my clients and differentiate myself from all of the ten thousand other marketing service providers out there? I will do it by delivering the product as quickly as possible, deliver a top-notch product, and deliver exceptional customer service, while allowing my clients to offer a price they will feel comfortable paying for.
Hey, these 7 reasons are all hypotheses. I haven’t actually made this experience…yet. These are the 7 reasons why I decided to try a Pay What You Want pricing strategy. If this works out well, get ready for a follow-up post with the actual experience I’ve made.
Waldemar Juschin, @wjuschin
PS - Don’t wait to improve your website, content, SEO, branding, etc., waiting means losing customers.
Act now and get in touch with me: www.juschin.com/pay-what-you-want