MBA1922 A Different Way to Charge for Services + Free Ride Friday

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Hey oh. Welcome to the Hundred Dollar MBA Show. Because a better business begins with you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Free Ride Friday. Make sure you hang on to the end of the episode to hear who won this week's free ride. We're giving away a free ride to our automated webinar challenge, a 99 dol course showing you how to automate your leads and sales with automated webinars. If you want to win a free ride, just leave us an Apple Podcast rating and review and you enter our weekly random draw. Listen in on Friday, like today's episode to hear who won. More about that later in today's episode. In today's episode you will learn a different way to charge for your services if you're a service based business where you deliver any kind of service, whether it's developing websites or you're a videographer or a photographer, a lawyer, performer, whatever it is. Many people price their services in a very basic fashion, in an hourly fashion. They may do a group or package deal, but in today's episode I'm going to explain to you how you can price your services in a more creative way. They can earn you more money and diversify your clientele. It's called value based pricing and I'll get into what it is and how you can implement it in your own business. I'll also share some examples of how I implemented this type of pricing. Value Based Pricing in my own service based business in the past. But warning, this type of pricing requires you to bet on yourself so you can cash in big time when it's time to get paid. If you're tired of knowing if your pricing is working or if you need to increase your hourly rate, you're going to love today's episode. So let's get into it. Let's get down to business. Hey Fidelity, how can I remember to invest every month?

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Whether you are offering services now or you plan to in the future, you're going to love today's episode because this innovative way of pricing your services really works and actually can result in you getting paid more money. Many people think that services has to be paid by the hour or by the task. What I'm here to tell you is that at the end of the day what people are hiring is a result and you should price your services by the result. Let me give you a real example. Back in the day when I had a service based business where I was developing websites for small business owners. I had a client one time asking me to design their new website and I told them it's going to cost them between 5 and $10,000 depending on what they need. Immediately I got resistance and they said I can't afford that. I love your work but I just can't pay that money. This is when I offered them a value based price. So I said what are you trying to accomplish with your new website? And they said, well I want a better website that will convert more customers. I want more people to buy my products and services and my current website just does not look professional enough. So I made this offer to them. I said listen, how about you don't pay me anything, nothing up front, but I design your website, we launch it to the world and if it helps convert more customers then I want a percentage of the additional sales. Basically I became sort of an investor of their business and they're like well how is this going to work? Well I said well how much money are you making right now with your current website? And they quoted me their figure and I said okay, anything above that figure I want 50% after we launch the new website. If you launch a new website and it Helps convert more customers and get you more sales. Exactly what you want. I want 50% of all the sales that come in. They were kind of shocked that I offered to do this, something they never heard of before. But then they said they're not sure. Then I was like, well, why aren't you sure? You just said that you don't have five to $10,000. I will do it for you without you paying anything right now. If the site generates more sales, I want 50% of all the new sales above what you're getting now. Well then they said, I'm afraid that you'll do an amazing job and you're going to generate so many sales that I'm going to end up paying more than your orig flat fee. So I said, let me get this straight. You're afraid that I'm going to help your business tremendously and you're going to get all the sales that you want and you're going to end up paying me for that, but at the same time you don't want to pay me up front for the work that's going to help you grow your business. They said reluctantly and kind of laughing, yeah, I guess. And I said, well, that's the choice you need to make. I'm going to take on all the risk. That means I'm putting in all the work and all the time putting betting on myself and betting on the fact that I can help your business get more sales. And if you believe in that, then we can move forward. And in all honesty, they counter offered and said, hey, so what if we do this until I pay you $5,000, meaning that I'll give you 50% until it equals $5,000. I said, no, I'm not a bank, right? This is not a loan here. I'm taking a risk. I'm taking a risk. I can launch the site and your sales might not increase, so I need to be rewarded for that risk. You could see me kind of like as a founder in your business that is taking equity for the time I'm putting in and the work I'm doing. That's a major part of your business. At that point. They kind of saw it and they're like, yeah, I guess you're right. I can't have my cake and eat it too. And then value pricing was born in my business and I did this with all my other services as well. And I actually passed this on to my friends who had other service based businesses, people that ran Facebook ads for their clients. And they said, hey, I'll run your ads for free, but I'm gonna use my affiliate link and get 30, 40% commission on all the sales. Is that okay with you? That sounds great. I'm making money and you're making sales for me and you're running ads for me. So at the end of the day, value based pricing is based on what the outcome is. What does the customer actually want? Give them the outcome and get yourself a better price. Even if that price is not sort of like an investment or you get a commission even it's helping the customer and you can show the benefit. A good example of this is a service that Profitwell offers called Retain. And it's basically a dunning service, which means that sometimes when you're running a business, credit cards fail. Customers have a failed transaction because maybe their credit limit or their card is expired or various reasons. Their job is to chase that down and try to secure that payment, try to recover that payment. Normally without the service, you're just kind of doing it yourself or you're just losing money. Retain recovers this for you and charges you a fee for it. And their fee is based on how much they recover. So it's like a percentage, like 20% of what you recover. So if they recover $1,000, they charge you $200. And for the business owner, this is a no brainer. You're making me $1,000, you're recovering $1,000 I didn't have before. Paying you $200 is a no brainer and in fact they recover the cash first and then charge you. So this is a great way to offer a service at a no brainer type of pricing. At the end of the day, the job I need done is somebody to recover my payments and therefore when they do it, I'm happy to pay it because the value they're giving me is way more than what they're charging.

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To wrap up today's lesson, what you're trying to do here is offer your client a no brainer deal. Now, if money is tight, meaning that your cash flow, the income you make in your business, is super tight, I recommend you don't take on all your clients in this Fashion you maybe do it with one of your clients, see how it pans out and move on to maybe two clients, three clients. This is what I do with my business. And you can start out with maybe just one of your services, not all your services. You can actually do this with so many things. You can even do this for courses. I've seen coaches and trainers offer their courses at a discounted rate in exchange for a percentage of profits from the actual student's endeavor. Let's say for example, you're coaching dentists how to improve their dental practice and you're teaching them a specific marketing technique in the course. You show them exactly how to do it and you offer at a discounted rate in exchange for a percentage of the profits of sales. When they use this marketing technique, you could be introducing them to Facebook ads or YouTube ads and basically it becomes like an incubator. It's beyond a course because now you're an investor in the company. You get profits from the work that you have taught them and in exchange the students benefit because they get more sales, they're using your techniques and they're learning from your course, but also applying it and getting the benefit. So your job is to look at your service based business. Take a look at what are the opportunities that you can exploit, that you can take advantage of using value based pricing. Thanks so much for listening to the $100 NBA show, but today's episode's not over. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is. Diana Mitchell. Diana Mitchell says great, easy to digest podcasts with usable insights. Everything about this podcast fits perfectly with my life. I'm trying to take my company to the next level and my personal development is essential to that growth. The tips and insights you offer are excellent and the length of each episode is just right. Keep up the great work. Well, thanks Diana for the great review. You are our Free Ride Friday winner. Make sure you email me over at omar100mba.net so I can hook you up with the lifetime membership to our automated webinar course so you can automate your leads and sales with automated webinars. It's a $99 value. Yours for free for winning the Free ride. If you want to write a free ride, just leave us an Apple podcast rating and review just like Diana and listen in on Friday to see if you want. It's that simple. Thanks so much for listening to today's episode. But before I go, I want to leave you with this. Whenever somebody doesn't buy from you. It's a golden opportunity to learn. You want to know why? Why didn't you buy? What about my product or service or pricing did not work for you? You're going to learn a ton about how you can change your offering to cater to customers like that. Or maybe there is a misunderstanding. Or maybe there's a new way you can offer your products to to attract customers that are on the fence. There's a ton to learn when you get a no. So ask questions, send them an email, get on a call. It's worth your time. Thanks so much for listening and I'll check you on Monday's episode. I'll see you then. Take care.

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