Episode 183: FreshBooks’ Matt Baker on Value-Based Pricing
Most freelancers struggle BIG time with pricing — and with good reason. There’s so much more to pricing than the money.
This year, we’ve talked a lot about pricing on the Small Business Boss podcast, and let me tell you, there’s a good reason for that. As long as this podcast exists, I don’t think I’m ever going to stop talking about pricing because, let’s face it, pricing is hard. I’ve spent my entire career working on pricing, and while it’s gotten easier, it’s still a struggle at times.
I wanted to bring a “fresh” (pun fully intended) perspective on pricing with today’s guest Matt Baker from FreshBooks. Years ago, I read a free ebook from FreshBooks — Breaking the Time Barrier — that was incredibly helpful in seeing how I should be pricing for value with my services. Since then, I’ve been a big fan of FreshBooks and how they support freelancers and agency owners with their easy-to-use invoicing and accounting software. (And, no, this is NOT at all sponsored; I just like the company. Plus, Canadian, so they get bonus points from me!)
Here’s What We Discussed:
- A quick rundown on what FreshBooks does and what Matt’s role is.
- Why he thinks that one of the biggest challenges freelancers and service-based business owners experience is pricing their services.
- Why we should price for value and not the market.
- How to move to a value-based model if you’re charging hourly right now.
- How to shift our thinking as freelancers to focus less on hours worked and more on the output and value we deliver to clients.
- Some productivity strategies we can use to ensure we’re making the most of our time.
Matt Baker is a money strategist and business coach who’s passionate about helping entrepreneurs solve their most challenging problems. As VP of Corporate Development and International at FreshBooks, Matt is helping millions of self-employed pros grow their businesses and get paid faster.
As a reformed management consultant and ex-Google strategist, Matt loves asking the tough questions that lead to tipping points in business. When he’s not helping businesses grow, you’ll find him teaching a Change Management course at UC Berkeley or giving back via his seat as a board member at the Next Step Learning Center, an adult literacy program based in Oakland.
Three Lessons on Value-Based Pricing:
- Pricing for value is about what it’s worth to the client. Understanding what’s of value to the client gives you leverage when it comes to pricing. It lets you price things in a way that gets you paid for not just your time, but the experience you bring and impact you make for that client.
- Raising your prices doesn’t have to be scary. It’s an experiment, and as Matt pointed out, you should raise your prices responsibly. The key is that you don’t “pull a Maggie” and leave your prices the same for eight years.
- Charging by the hour isn’t necessarily wrong. Pricing for value isn’t always about project pricing. You can charge by the hour and be charging based on value. It can be tricky, but remember, high-priced lawyers and management consultants charge by the hour, and they’re not worried about their value. Take a cue from them.