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Why Your Customers Would Be Happier If You Charged More

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Re: Why Your Customers Would Be Happier If You Charged More

#21

Post by creativename »

thaumaturgy wrote: post #14

I've only just skimmed this -- won't have time to fully read & listen to it until much later today. But I wanted to bring up something that I didn't see mentioned anywhere in there. You have to charge more. Aside from all of the arguments in terms of value and avoiding pathological customers and so on, there's one more really good reason to charge more: you need the money if you want to be awesome. I've been running…

That's a pretty interesting scenario, though it sounds difficult. Is there any possibility of hearing more about what specifically you are offering? I would ask because it sounds like there would potentially be an opportunity to get those who can afford to pay more to do so and then in a way use that to subsidize lower-paying customers. This all depends upon the nature of the business, of course.

Re: Why Your Customers Would Be Happier If You Charged More

#22

Post by graeme »

thaumaturgy wrote: post #14

I've only just skimmed this -- won't have time to fully read & listen to it until much later today. But I wanted to bring up something that I didn't see mentioned anywhere in there. You have to charge more. Aside from all of the arguments in terms of value and avoiding pathological customers and so on, there's one more really good reason to charge more: you need the money if you want to be awesome. I've been running…

On a personal level, raising my rates has let me outsource lower value tasks I used to have to do myself. Or buy a better computer + scanner that let me do my work faster.

With all this extra time, I've been able to do more higher value consulting. It's a virtuous circle.

Re: Why Your Customers Would Be Happier If You Charged More

#23

Post by jd »

thaumaturgy wrote: post #14

I've only just skimmed this -- won't have time to fully read & listen to it until much later today. But I wanted to bring up something that I didn't see mentioned anywhere in there. You have to charge more. Aside from all of the arguments in terms of value and avoiding pathological customers and so on, there's one more really good reason to charge more: you need the money if you want to be awesome. I've been running…

I think you're trying to do both business and charity at the same time, and that doesn't really work I think. If you run a great business and make lots of money (by providing even more value to customers) you can then put that into any pet projects you may have. It will even go much faster.

You can now commit to help 10% of all your customers for free, for now into the future, and charge a sensible rate to everybody else. Your business will do better and it will grow more quickly. The 10% portion you help for free will soon be much larger than your total customer base now.

Re: Why Your Customers Would Be Happier If You Charged More

#24

Post by danielweber »

patio11 wrote: post #16
jiggy2011 wrote: post #10

Whilst I agree with the basic thesis of "charge more and compete by providing value". The difficult part for me seems to be finding people who have money they can part with in the first place, you can't really sell somebody on the benefits of something they can't afford. I've recently been trying to pick up some part time freelance work to supplement my income and pick up a wider range of experience. So first stop wa…

1) Don't use the freelancer sites. They're markets for lemons. 2) There are a variety of networking mechanisms besides networking events. Anything pitched as a "networking event", explicitly, is going to self-select for people who have nothing better to do than go to networking events. Successful businessmen largely don't go to that sort of place because they have networks . They go to places which promise value to t…

First time I tried to get a consulting gig, it was a group of college or just-out-of-college kids trying to sell what we today call Incognito mode.

IIRC I mentioned a price of $5000, and the eyes nearly bugged out of one guy's head. Clear sticker shock. They wanted to spend about $500.

As the podcast is saying now, it was a very very good thing that I did not end up doing anything for them. People who want cheap are to be avoided.

To date I have yet to successfully get a contract gig, but I have succeeded tremendously in not getting bad clients, and that's something good.

Re: Why Your Customers Would Be Happier If You Charged More

#25

Post by majormajor »

patio11 wrote: post #7
zackzackzack wrote: post #5

Earlier quoted context omitted.

Fun observation: Ramit is fond of using the word "gamut" to describe his experience. In both this post and the first one, he uses the word at roughly the same point in the meeting to describe roughly the same idea: going from $x/(unit of work) to $x0000/(unit of work). Some google-fu and http://bit.ly/OJALPO It seems to be a word he likes and uses well.

You'll find that many authors have words, analogies, literary devices, etc that they go back to. It's part of having a voice. I'm occasionally downright embarrassed by HNSearch. Easy example searches to demonstrate include [ROFLstomp], [pathological customer], [patio11 "charge more"], etc. Or, if you want things that take a little effort to spot, you can see that I really, really like parenthetical statements (one En…

I'm curious, what do you mean by "extended surprise expectation inversion"? Google didn't turn up much.

Re: Why Your Customers Would Be Happier If You Charged More

#26

Post by patio11 »

thaumaturgy wrote: post #14

I've only just skimmed this -- won't have time to fully read & listen to it until much later today. But I wanted to bring up something that I didn't see mentioned anywhere in there. You have to charge more. Aside from all of the arguments in terms of value and avoiding pathological customers and so on, there's one more really good reason to charge more: you need the money if you want to be awesome. I've been running…

The market will, indeed, tend to allocate scarce resources (like the time of skilled engineers) onto the projects which get the highest return from utilizing those scarce resources.

(I'm not saying this to nosetweak: despite this being one of the most important ideas of the last several hundred years -- a reproducible technique for ameliorating scarcity, holy cow -- it's either buried under the mechanics of demand/supply curves or presented as a political statement alongside others which sound like "scarcity: kinda groovy, particularly when you can steal scarce stuff.")

Re: Why Your Customers Would Be Happier If You Charged More

#27

Post by adrianhoward »

jiggy2011 wrote: post #10

Whilst I agree with the basic thesis of "charge more and compete by providing value". The difficult part for me seems to be finding people who have money they can part with in the first place, you can't really sell somebody on the benefits of something they can't afford. I've recently been trying to pick up some part time freelance work to supplement my income and pick up a wider range of experience. So first stop wa…

I build websites , computer software and mobile apps

too.... do what?

My top tip would be to stop talking about building web sites or mobile apps.

Instead talk about what those web sites and mobile apps are doing for the businesses you built them for.

When you have that mom and pop operation who are stressed out about meeting their mortgage payments you need to sell them something that will reduce their stress.

You're 100% correct they're not looking to "drop a chunk of change on any kind of bespoke software".

They might be looking for something that's going to regularly remind their existing customers of the great service they had last time, with almost no effort on their part, bringing old customers back into the store so they can focus on new sales. How much did that run of paper leaflets cost them to print and deliver? How many of them do they do a year? How much time and money would they save by trying an electronic newsletter / customer reminder service?

People don't want software. They want solutions to their problems. Sell those.

(This does involve doing lots of "talking to and understanding customers". This is not writing software. However - if you want to have a business writing software you, or somebody else, needs to do it.)

Re: Why Your Customers Would Be Happier If You Charged More

#28

Post by ttcbj »

I did not read the full post, but the basic gist reminds me of the book 'How to sell at margins higher than your competitors.' I wasted a lot of time in my early 20's reading business advice books, but that book is well worth the time. It transformed my perspective on prices, what customers you want, and how to sell. Although it was written for salespeople in commodity markets (think lumber supply), it transformed my small software company. I highly recommend it.

Re: Why Your Customers Would Be Happier If You Charged More

#29

Post by patio11 »

majormajor wrote: post #25
patio11 wrote: post #7

Earlier quoted context omitted.

You'll find that many authors have words, analogies, literary devices, etc that they go back to. It's part of having a voice. I'm occasionally downright embarrassed by HNSearch. Easy example searches to demonstrate include [ROFLstomp], [pathological customer], [patio11 "charge more"], etc. Or, if you want things that take a little effort to spot, you can see that I really, really like parenthetical statements (one En…

I'm curious, what do you mean by "extended surprise expectation inversion"? Google didn't turn up much.

Explanation by way of example:

Teen pregnancy. School stabbings. Teacher abuse scandals. Classroom mayhem. Flat test scores. Declining graduation rates. It's enough to make Japanese parents wish their kids went to school in America.

(That is pretty much verbatim from an essay I wrote in college. I use this trick a lot.)

Re: Why Your Customers Would Be Happier If You Charged More

#30

Post by danielweber »

malandrew wrote: post #8
patio11 wrote: post #2

This is the 2nd part of the interview mini-series with Ramit Sethi on starting a consulting business, though we both talk products in this interview as well. I'm happy to answer questions, as always. P.S. I normally try to space out publishing things, to avoid a) reader fatigue on my favorite topics and b) imposing on HN goodwill by showing up on the front page too often. That said, the next two weeks are going to se…

I think it's awesome how aware you are of your own impact of appearing on the front page more than normal and how considerate your attitude is towards the impact of that on the experience of other HNers. Total. model. citizen.

"Be nice to the people you meet on the way up; you will meet them again on the way down."
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