18 Replies
Bruce Graham

You should NEVER charge a price for eLearning modules.

You charge for the value you will bring to a company.

If you charge a price, you will forever be in a price war.

Example...

I just got signed for a project where there is a budget of around $10k per FOUR MINUTE micro-course.

However....

If I settle on a per-course price of around half that, (for example), the client has money left in the pot to launch more effectively, and therefore create a longer-term market for more courses. So...I need to consider more than just "price per course".

Also - you want to consider how you flex your price with the client.

That is all a discussion about value, not "price per course".

I would suggest you get some books about value and solution selling, and het your head around some of those concepts first. It will help you in the long run.

Hope that helps - and I fully appreciate that there are many other opinions.

Bruce Graham

@Matthew - that is a GREAT introduction to Value Selling, I have not seen that before

I think many people are scared of the value approach.

It's much "easier" to bill by the hour, and allows you to stay in a "learning" silo rather then having to learn how a "business" runs, how businesses measure success, and charge accordingly.

Love the phrase "I want to be seen as an investment, not a cost...", and that requires talking a COMPLETELY different language.

Matthew Bibby

Yeah, it is a great little book. I've read it a few times and recommend it to others regularly. 

You are right that many are scared of the value approach - not sure if that is due to a lack of confidence or what it is; but I think if you are fearful in your approach to your clients, then it is going to be tricky to create real change and you'd ultimately be doing everyone a disservice.

I've also learnt a lot about the value approach from Patrick McKenzie and Brennan Dunn (among others). 

Bruce Graham

I have been thinking about this thread, and question a bit more...

Pricing scares people - on both sides, and part of value selling is partly about taking away "pain".

Here's another trick (?)/technique I use...

Someone rang me up this week and asked "I need x courses built, how much would that cost?"

My answer was "Absolutely no idea, because we have never worked together, and I do not know your content etc. etc."

I then added this....

"However...why don't we do the first one on a time and materials basis, and then once that is done, we can sit down, figure out what the real workload is as opposed to what you THINK it is, and on the basis that you are new to eLearning, we can work out a programme and an approximate total price for the other x courses?"

He agreed, and I quoted what I think will be a figure that will cover what I require, (because you DO have to know what you want...)

So...what was the VALUE here?

I got him started quickly, (that was a requirement), I asked to be allowed to speak DIRECTLY to the SMEs, (takes away work for him, but ultimately means he can still take the "glory"), it means he gets an initial product (probably a deliverable on his objectives...), without any major budgetary impact, and he can see a complete roadmap, because I explained what I do, how I do it, and set him a "vision" of his success, and the part I played in it.

I got a covering PO for the first course within the hour, and a mention that if it all goes well we can potentially look at other consulting-based services.

OK - so we have set an approximate price, and sometimes a price is necessary, HOWEVER...the discussion had nothing to do with money/rates/prices.

THAT is the sort of thing I mean when I say "Never sell on price, sell on value....".

Does that make sense Sharron?

Nancy Woinoski

This is the way I sell even though I had not realized until reading this post  that it was called Value Selling. There are a couple of things to keep in mind when doing this. You have to be able to walk away from a prospect if all they are interested in is getting the cheapest price or if what you have to offer is not the right solution for them. 

Bruce Graham

Nancy Woinoski said:

This is the way I sell even though I had not realized until reading this post  that it was called Value Selling. There are a couple of things to keep in mind when doing this. You have to be able to walk away from a prospect if all they are interested in is getting the cheapest price or if what you have to offer is not the right solution for them. 


Absolutely correct. Hard to do when you are starting up though - the bills need to be paid.

I think there is probably a "pragmatic" path - you CAN sell on price if there is a chance to build that into a value proposition later on, which is possible. I would walk on by if they were looking for cheapest price, HOWEVER, if it was a question of "...what is YOUR cheapest price?" then it's a different question.

I guess that my point is this - it's all a lot more complicated than just setting a price. It's all about business, and understanding the dynamics of business selling in terms of VALUE, rather then just considering the price.

Bruce Graham

Nancy Woinoski said:

Agreed, the key is to establish your cheapest price. What is the minimum you are willing to take for the work. This can be a combination of dollar value (or sterling for you UK types), potential for more work, potential to add value to the organization, and project satisfaction.  


Actually - most of my work is quoted in $s as I mostly work for US companies.

I normally work things out in $ and then convert it back to £, it always looks bigger that way .

About $75 per hour, give or take.

Joshua Love-Mensah

Alternatively You can decide to prove YOUR INTELLECTUAL WORTH/PROWESS to the potential "freelancee". With that the "freelancee" gets to choose how much He/She stands to loose If He/She does not pay a good fee for Your excellent tuition and coaching. In mine opinion this' the best strategy,

Benoit David

Quite true: it's all about "value selling". Too many times we're asked to spit out amounts without proper consideration. And then they turn around and compare prices that are not comparable because they are not based on common ground. It's all about clear expectations.

Doing Time & Materials is a good approach, but can still be risky especially if it's a new client: things can get out of hand and you end up with a bad reputation.

If the client is interesting, if the project is interesting, you can always propose a two-project approach: first define expectations and scope, then produce the proposed solution. This way both you and your client are protected. If something goes wrong in the first project, then you can realign for the second one: if you still want to work with this client of course.

Matthew Bibby

Bruce Graham said:


Absolutely correct. Hard to do when you are starting up though - the bills need to be paid.

This was one of my big concerns before starting - that I'd be in a position where I felt as though I had to accept a low rate in order to pay the bills ... then I'd get referred to other clients who are looking for low rates etc.

It was only when I had 6 months living expenses saved that I had the confidence to negotiate properly as I was happy to walk away from any project that wasn't a good fit regardless of the amount offered.Sometimes I decline high rate projects (I have a rule along the lines of 'I don't work with mean people'  but involves more swearing) in order take on low rate projects (either for strategic reasons, or because I'm passionate about what is being taught).

When I have a client who is pushing for the cheapest price, I often used a variation of this question that I picked up from Nick Reese:

"Listen, I'm into creating results, but I can see that cost is important to you... How big of a factor is that really? Now, I know that everyone wants to save money, but how important are the kind of results we are talking about to your business?”

Bruce Graham

I thought I'd add something here...

I'm doing some sales training work for a multinational, and they wanted to introduce us to their concepts on Monday, so we went through 2 days of sales training in 90 minutes.

It was the best sales training I have ever been on and/or crated as a Global Sales Training Manager myself.

One of the examples they used was this....

  • Imagine you sell sacks of gravel - small stones used for road building.
  • Loads of people sell gravel, and you sell it quite well.
  • People come to your yard, and queue up to buy gravel.
  • You see one of the companies turning their truck around from the queue, and leaving, so you ring them up and ask why.
  • After finding out why they left, a few days later, you open up a VIP gate around the back of your yard, which that customer pays a premium to have access to - you add a % to your base price because their REAL business driver is not "cost of gravel", it is the cost of sitting in queues, and getting the gravel to customers faster. They will pay more for your product.

That is what value selling is about. Find out what the customer REALLY values from you, create a market for it, and then sell value, do not "...sell courses for a price..."

Matthew Bibby

Bruce Graham said:

 

  • After finding out why they left, a few days later, you open up a VIP gate around the back of your yard, which that customer pays a premium to have access to - you add a % to your base price because their REAL business driver is not "cost of gravel", it is the cost of sitting in queues, and getting the gravel to customers faster. They will pay more for your product.


That is brilliant! I'd be interested in hearing some more of their concepts if you are able to share. It is always interesting learning how other people approach selling. I also think that there is real value in getting someone to condense 2 days training down into a 90 minute session and is makes one get really clear on what the core concepts are.

Jonathan Y

I think these concepts are very useful and would love to see more examples. What Im struggling with is when the clients asks me how I came to that price and want a break down of hrs etc, also the proposals is a tricky one for me and haven't seen any examples.

Say for example the client needs to produce 7 hours of training material, I come up with a value of £1200. How do you write your proposals and invoices to explain the cost.