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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

#51

Post by edanm »

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…

The only problem is that this is all coming out when I'm on vacation :)

By the way, I'm subscribed to your new mailing list. I don't think it includes updates about new articles that appear on your blog. Is there a separate (non RSS) way to subscribe to your blog? If it is I'm missing it (admittedly, didn't have much time to look since I'm on vacation).

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

#52

Post by edanm »

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…

My favorite patio11 word is "motivational", although it's possibly a really new one.

Pet example: "They paid me motivational sums of money".

(Oh, and yes Patrick, you're starting to develop a serious cult following).

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

#53

Post by patio11 »

jiggy2011 wrote: post #50
patio11 wrote: post #37

Earlier quoted context omitted.

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…

you could have figured all of this out yourself by reading a few blogs (that's basically all I did)

Could have. Didn't. Was too busy building my businesses to care to do the research. Many people are like me. Would listening to Jiggy teach me about MySQL in a nice, packaged, Jiggy-does-the-work-so-I-don't-have to format provide value? Yes, clearly. You already quintupled what I know about the subject with an HN post, think of how entertaining talking for an hour would be.

These are really commodity skills though... do the whole thing for $20 or so.

You are no longer a commodity after you've successfully convinced me that you are the expert who can e.g. listen to my particularized needs and tell me a solution which will work for them. In fact, even if I were non-technical and stark-raving insane and thought that $20 was a reasonable price to pay for this, the fact of having read the above would convince me that eLancelot wouldn't have his uni-codes sorted on the cronSyncServer or whatever that was, so I should entrust the future of my business to the guy who seems to know what he's talking about who is quoting numbers closer to what I pay for e.g. insurance than what I pay for toilet paper.

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

#54

Post by sedev »

patio11 wrote: post #45
wpietri wrote: post #43

Earlier quoted context omitted.

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 childr…

I think one thing people often miss about markets is that they tend to allocate resources efficiently ... over time. Sometimes over lots of time! As someone recently reminded us all, the market can stay irrational longer than an individual can stay solvent.

There are definitely things markets don't allocate efficiently - but those are "public goods," and they rarely look like infant mortality.

Along these lines, I'd love to hear what you make of John Robb's argument that the concentration of wealth and influence in the hands of Goldman Sachs and their ilk amounts to a shift to central planning, with the predictably disastrous consequences.

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

#55

Post by thaumaturgy »

creativename wrote: post #21
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.

I don't want to be a distraction here; this is a better time for people to get feedback from Patrick on the interview. So, very briefly: we solve (technology) problems for people. Probably my favorite story so far is that we successfully recovered all of the medical documents & pictures from a cancer survivor's failed hard drive. Total bill was $90. I'm open to talking about it further off-HN.

You're exactly right about subsidizing a set of customers, but there are all kinds of technical and psychological details that make it a tough problem to solve. I've really only just started thinking about it, so I don't have anything smart to say yet.

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

#56

Post by jaredsohn »

patio11 wrote: post #45
wpietri wrote: post #43

Earlier quoted context omitted.

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 childr…

child morality -> child mortality in the last sentence.

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

#58

Post by alpeb »

Great advice but gotta be careful this is really only applicable to freelancing/consulting as an individual. Building a self-sustained company is a very different beast. There certainly are scenarios where you're well enough positioned to set the price you want (Barney's), but if you're not targeting a very specific niche prices are already set for you (for example .99 in the Apple store and zero in Google play) and it all comes down on having a great novel and well presented product with tremendous operations efficiency and low cost. Unless you're running on VC free money of course :)

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

#60

Post by mechanical_fish »

patio11 wrote: post #53
jiggy2011 wrote: post #50

Earlier quoted context omitted.

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…

you could have figured all of this out yourself by reading a few blogs (that's basically all I did) Could have. Didn't. Was too busy building my businesses to care to do the research. Many people are like me. Would listening to Jiggy teach me about MySQL in a nice, packaged, Jiggy-does-the-work-so-I-don't-have to format provide value? Yes, clearly. You already quintupled what I know about the subject with an HN post…

Something about this exchange reminds me of the old Monty Python "Motor Insurance" sketch:

http://www.youtube.com/watch?v=kO2R_DDZPCM

Well, Reverend Morrison, in your policy… [pause to remove wadded-up document from the inside pocket of an old tweed jacket] …in your policy it states quite clearly that no claim you make will be paid. You see, you unfortunately plumped for our "never-pay" policy, which if you never claim is very worthwhile!

(Incidentally, it's fun how well this sketch holds up today if you imagine that Michael Palin's character is playing the role of the Internet.)

Anyway, the point is that it's not buying the insurance that's hard: It's ensuring that you can collect when the emergency happens. The same is true for backups. When you try to restore the backup, and you can't find the guy who set it up in the first place, and the second guy you hire for $20 from eLance tells you that the first guy messed up the Unicorn settings or whatever, or that his script broke four months ago and nobody noticed, now you're screwed, and you don't even know which of your two $20 minions made the mistake.

How much will someone pay, as a monthly retainer, to avoid that nightmare? Well, how much is their data worth? How quickly will they want to restore it when disaster strikes, and do they already have a full-time employee with a pager who knows how to perform the restore?

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