The Focus 53 Podcast: Business Systems, People, & Processes
About This Show
The Focus 53 Podcast in your one-stop shop for all things related to business operations. We focus on the systems, people, and processes needed to run a successful business. If you’re looking to improve your business and need practical help, this is the show for you. Ryan is a business coach and strategist that has had the privilege of working with companies of all sizes from Microsoft, Sports Illustrated and Time Inc. to hundreds of small businesses in the last 20 years. We focus on Business Operations and helping business owners identify and solve opportunities and roadblocks with the people and processes in their company.
Most Recent Episode
F53-061: Pricing Models - Price Based on Value, Not Time or Cost
3 days ago
This show is about pricing models and to make it simple, this is a podcast so we're not going to have a bunch of Gantt charts and spreadsheets and all sorts of funny business. We are going to talk about value-based pricing. For this, we're going to focus on service-based businesses as well, just to keep it nice, simple, and clean. There are basically a couple of pricing models: Value-based pricing model This is the way you value your service that you deliver to your customer based on value. That, in and of itself, is tricky and this is certainly the model I like. Hourly-based pricing model You’re trading your time for a set dollar amount. Project-based pricing model You have a certain amount of time or a certain deliverable and you deliver a project. There are benefits to all of these but I believe there are less benefits to the hourly model for the position in life I am. For someone that needs a predictable income and they need a guaranteed linear rate of what cost me $2 an hour to provide this and I know I'm making $15 an hour, therefore, for every hour I provide my service, I'm making $13. This works for some people. Looking Into Value-Based Pricing My position or argument today is that if you haven't, I hope you can or look at or consider a value-based pricing model. I don't have rose-colored glasses on. I realized that this just doesn't work for a lot of businesses. You can't just value something or price something based on value. However, there are circumstances and the businesses that do justify it, I really believe that it should be considered. I also caution you to think outside of the box a little bit. For example: The first car that rolls-off where it's sold costs way more than $40,000. You're paying way less than the first value of that car as a rolls-off. However, for the 5 millionth car that you bought, you're paying $40,000 but its cost went significantly down. In a little form or fashion, you're paying for the value-based pricing of that vehicle. If you're a service-based business, I challenge you to look at what you deliver and how you deliver it. If you're really in tune or in touch with what you provide to the customer, see if there is a way that you can base your services on value. So if you're a house painter (something that's commoditized) or someone that does roofing, it's hard to do value-based pricing. The person simply gets a