Live data from Hacker News

Why Your Customers Would Be Happier If You Charged More

kalzumeus.com

41–50 of 89 posts

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

#41
I am right now contracting, and I am learning a variant on this lesson that I have reason to believe will prove very valuable to me and hopefully others.

1. If the value of what you contribute can be measured, people are happy to pay you ridiculously more on a pay for performance model than they are with hourly consulting rates.

2. A/B testing can provide a way for them to measure the value of your contribution.

Why is this? Well in pay for performance, the company takes no risk. Furthermore it lines the incentives up correctly from everyone's perspective. Suppose that compensation model inspired you to spend 2x the effort that you otherwise would for 1/3 better performance. Odds are that they've just covered the amount they have agreed to pay you and are laughing all of the way to the bank. But if you are compensated hourly, and they are not sure it will work, there is no way that they want you to spend 2x the effort up front, even if there might be a slightly better return.

I am not at liberty to share specific numbers. But keep this fact in mind in the future. It may prove valuable to you.

(I should think about writing this up in a blog post, along with lesson #3. That lawyers systemically fail to place a value on your opportunity cost...)

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

#42
post #38

As a freelance developer myself, and thanks to Patio11, I've always had the charge more mantra firmly placed at the front of my head. So it's a little disheartening to hear on the basis of what was said in this conversation, that I'm still selling myself short. Without the advice I've read here, I doubt I'd of lasted the four months I have so far... The hardest part of this "charge more" philosophy is finding the cli…

Would Patio11 be able to charge the same rate as a developer as he does as a "I will help you sell more software" consultant? I charge the same rate for software development as I do for making graphite etchings on paper in aesthetically pleasing patterns. Consulting clients buy both of these things from me, in isolation or combination, on a regular basis. So if that's the way you're asking the question, "Yes, I could…

Thanks again Patrick. You know what, I think I'm finally starting to get your point in its entirety.

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

#43
post #26

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/s…

That's a little tautological, and kinda glib for me given the dilemma he describes.

As you surely know, you're using "returns" in a technical sense. I'm awfully fond of free enterprise as well, but it is important to note that there are a lot of kinds of scarcity it doesn't fix, and many sorts of returns that it ignores or can't handle well.

Infant mortality, for example, isn't well served by market mechanisms; babies have no money. So we solve it through other mechanisms. I don't know what particular sort of good this fellow is doing, but I feel for him.

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

#44
post #37

Earlier quoted context omitted.

Thanks for the reply, certainly some food for thought there. I guess there are a few things at the crux of this. Having worked on mainly typical "line of business" type software and CMS type systems I've tended to find myself on projects where the number of voices has meant that everything tends towards mediocrity and anything approaching an innovative idea gets shot down immediately. In other words it's difficult to…

Also as very much a generalist (everything from server admin to dev to SEO) it's difficult to find an area where I would feel confident speaking as an "expert" on any particular subject. This is a common worry in our field, even for people who are absolutely drop-dead world-class experts in things! You do not have to be absolutely drop-dead world-class expert in things to teach hugely valuable things to people, becau…

In my last job I wrote several automated backup systems for MySQL servers, and they continue to run as part of a SaaS hosting service. Holy cow, I'm an expert! Thanks for reminding me! ;)

Of course, one never feels like an expert, because part of being an expert is that one knows the names of some real experts, who are better than you. In this case, some real experts in MySQL backup work at Percona. Hire them. Alternatively, buy the O'Reilly book High Performance MySQL, which is partly the work of Percona's founders and has chapters about backups.

(If you are the foremost expert in a field, of course, you probably don't feel like an expert either, because you're at the frontier, where everything is confused and all the other experts are most lost than you. I don't understand this field! The references are irrelevant and confused and make no sense! I don't know how to make progress and I can't find anyone else who does! I must be really stupid!)

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

#45
post #43
post #26

Earlier quoted context omitted.

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/s…

That's a little tautological, and kinda glib for me given the dilemma he describes. As you surely know, you're using "returns" in a technical sense. I'm awfully fond of free enterprise as well, but it is important to note that there are a lot of kinds of scarcity it doesn't fix, and many sorts of returns that it ignores or can't handle well. Infant mortality, for example, isn't well served by market mechanisms; babie…

Infant mortality, for example, isn't well served by market mechanisms

I disagree more with this statement than any other statement ever made in good faith on Hacker News. Kids not dying is an outcome we urgently desire, right? There are a variety of products which support this outcome. One is "soap." Soap scarcity is a real phenomenon: some rooms that children are born in have no soap. Those rooms kill lots of children. Soap scarcity was a quite common phenomenon until very recently, historically speaking. The reason that I keep having to mention that soap scarcity is a thing at all is that market mechanisms are so effective at allocating resources to production and distribution of soap that educated Westerners could be forgiven for not knowing that it doesn't come from the same magical fountains supplying the infinite, free, clean drinking water often found co-located with infinite, free, effective soap.

In the real world, some kids will die this year for want of soap. Some people believe this is because the market has taken the soap from their rooms. These people are fools, because the natural state of nature is "no soap." Children die because, almost universally, someone has strangled the market that would otherwise be allocating soap towards their rooms.

There are more complicated reasons for child morality than lack of soap, but to the extent that they involve scarcity of resources, they largely reduce to the soap case.

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

#46

Earlier quoted context omitted.

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'r…

Sure, there are plenty of solutions I could build that would help these people in some way. The issue really is that you can't charge high rates to these people simply because they probably don't have that kind of money sitting in the bank. In reality most of the gains you could give to these people by improving their online marketing through various means are going to provide more benefits in the long term than the…

The issue really is that you can't charge high rates to these people simply because they probably don't have that kind of money sitting in the bank.

You may be surprised if you dig a bit.

One of the problems with selling software solutions is that so many companies don't understand that they need software solutions - because they don't understand what software can do.

To pick some examples from when I was dealing with that sort of client I've seen folk: * spending days every week manually copy/pasting email addresses into spreadsheets * manually adding name/address info to a 1k+ paper mail out campaigns * spending a monthly four digit amount to a print shop to do layout work that a basic template in Pages/Word could do.

... and none of those people understood that the addition of a piece of software - even an off the shelf piece of kit that just needs configuring - could take that pain away. It could save them hundreds, sometime thousands, of dollars a week - every week.

That's a difficult sell to businesses that are worried about short term survival.

Those clients really understand the value of their time. The tedious stuff that you can automate away is usually the stuff that is stopping them doing what they want to do. If you can show them ways for them to stop wasting time on things they are not making them money, and back that up with case studies / references, they will happily find ways to pay you.

But you have to show them the value first.

Back in 1999 when I started my first business my idea of sales was something like "I do X. I need to get really good at X. I need to find people who want X. Ideally rich people who can afford to pay more for X". Much like you this ended up with me wandering around various places going "Hi - I do X".

Having gone through.... some learning experiences... since then - and having seen some excellent sales folk do their thang I finally figured out that this is totally arse-backwards way of going about finding work.

You start by looking for people who have problems that you can solve. Ideally big problems that cost them lots of money/pain. Then you figure out how to get yourself to the same place as the people with that problem. Then you then sell them their life without that problem (and incidentally that you do X that can make that problem go away).

You don't network to let folk know that you're a developer looking for work. You network to understand other peoples problems, and to help them understand that they're solvable.

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

#47

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…

Any bright ideas on how to break through this firewall?

One trick that worked for me.

I created a description of my ideal client. In fact I created a few descriptions of different ideal clients.

(If you've a UX background - I basically researched and created personas for my clients http://en.wikipedia.org/wiki/Persona_(marketing) )

I then figured out where those clients hung out.

Then I hung out there and listened to their problems.

(For example - there are reasons I am now very happy to spend multiple thousands of pounds attending some conferences - outside of the personal development stuff I get from attending :-)

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

#48
Best quote:

"If you got into this business to make peoples’ lives better, and you have produced something which will succeed with that, and you are aware of truth about reality such as “better marketed products beat better engineered products every single bloody time”, then you have an obligation to get better at marketing yourself."

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

#49
post #7

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…

> Or, if you want things that take a little effort to spot, you can see that I really, really like parenthetical statements (one English teacher of mine estimated that I used them 20x more than her reference sets... oh, there I go again)

And I thought I was the only one (I have the same habit). It does make Lisp seem more familiar, though (rather than "ack, too many parentheses!").

P.S. Was surprised you didn't give out your summoner name on the last article. You probably could've gotten enough free RP for Midnight Ahri or whatever.

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

#50
post #37

Earlier quoted context omitted.

Thanks for the reply, certainly some food for thought there. I guess there are a few things at the crux of this. Having worked on mainly typical "line of business" type software and CMS type systems I've tended to find myself on projects where the number of voices has meant that everything tends towards mediocrity and anything approaching an innovative idea gets shot down immediately. In other words it's difficult to…

Also as very much a generalist (everything from server admin to dev to SEO) it's difficult to find an area where I would feel confident speaking as an "expert" on any particular subject. This is a common worry in our field, even for people who are absolutely drop-dead world-class experts in things! You do not have to be absolutely drop-dead world-class expert in things to teach hugely valuable things to people, becau…

Mysql Backups:

Ghetto solution is to find a service that will allow you to rsync files to them and take care of offsite backups etc themselves. Once you have done that it's a simple case of setting up mysqldump to create timestamped .sql files and setting that up on a cron job to rsync to the remote server via SSH (you need to generate a key pair and copy the public key to the other end).

If you are using characters from weird character sets you definitely want to make sure all of your unicode settings are correct which may take some trial and error and I've never entirely trusted mysql in this regard.

If you are paranoid you should have a separate job that automatically downloads and restores your backups after a period of time and runs a few test queries on the data. Of course the hard part is knowing what the results of these queries should be.

Of course the problem here is that this will chew up increasing amounts of your remote storage over time, so it depends if you can afford to delete backups of over a certain age.

You can also enable binary logging in mysqld and do incremental backups by writing the binary log to the remote host at certain intervals (I think this only works properly with InnoDB databases), though I have no practical experience doing this because frankly I've never needed to. Nightly dumps were always good enough so my boss wouldn't want me spending any more time on it.

That's the crux of the problem with working for a non tech company, most of the time once the solution is "ok" it's time to move onto something else so you never get a chance to really kick ass which is what you need to do to justify a high rate.

These are really commodity skills though, you could have figured all of this out yourself by reading a few blogs (that's basically all I did). Alternatively if you had posted "Mysql backup solution needed" on eLance you would have probably had at least 20 offers to do the whole thing for $20 or so.

Post reply on HN