>The dream it seems to tap into is "You don't need to deal with the arbitrary whims of 5 different groups of web designers, just talk to one thing and get a single response."
Except that's the business' perspective, because it means paying less people, rather than consumers, who generally wanna talk to and haggle with humans, which requires a business to pay more people.
> That said you will have to find the type of customers who will fall for something like this.
I don't think customers that who accept (and find value in) this proposal are necessarily fools. Writing code is a cheap commodity. Making business decisions is not, and development cost is inversely proportional to how precisely you know what you want.
A business owner who has made all the business and technical decisions, and approaches developers with extremely detailed photoshop mockups and specs can probably successfully get an app or website made for $10/hour on elance.com, and keep all the extra value.
A client who has made all the business decisions and knows what development they want on an approximate "outline" level needs to hire a 10x more expensive local developer who is willing to meet and push back on any technical assumptions. They are paying 90% for the decision-making expertise on understanding what they want, and writing code is a tiny part of the service.
A client who may see value in a $40000 website offer is one who has not or cannot make the business decisions themselves. They are paying primarily for the business or marketing strategy consulting, and the entire development side is a tiny part of the service. Perhaps the client should make these themselves to be able to use a cheaper developer, and keep more of the value - but if they can't, then an expensive offer may still be profitable.
> I feel like everyone's just trying to make a buck with their tiny spin on the same idea.
Lol, exactly. My first thought after seeing the landing page was "there has to be a Pricing link in the top right menu".
From a rational perspective, there's absolutely nothing wrong with people wanting to get financial reward for their work. But subconsciously there's something about it that really annoys me, I'm not sure what.
>I can’t see how charging less would help with running a sustainable business. I would imagine charging more would help with that.
I believe you focused on the wrong half of the sentence. This is the part that they mean:
>that benefits as many people as possible.
The benefit is the utility people get.
So say you run a matchmaking app. You can charge $500 to create a happy couple and create 1,000 happy couples (you have just 1,000 customers worldwide) or charge $1 to make a happy couple and have 75,000 happy couples.
If you look at your profit, $500k is way higher than $75k. Plus you only have to deal with 1,000 users which you might do by hand whereas 75,000 overwhelms you personally so you have to hire dedicated customer service reps. The 75k users require bigger hosting and service fees.
At the end of all this you net just $20,000 from your 75,000 users whereas you would have gotten $450,000 if you had charged $500.
So why would you pick a $1 price point?
Because you enjoy hearing from the 75,000 happy couples you created, getting sent their wedding pictures, heartfelt thanks, etc.
You think you are giving a service, and you'd rather give it to 75,000 people than 1,000 people.
That's what OP means by "help as many people as possible." The higher the price, the fewer people can afford it. If you want your app to help more people, you have to lower the price.
> to create a cool website for them for a few hundred bucks
I think this price range will push away serious businesses. I knew a consulting company that had hard time getting customers when they were charging under $1000 for simple WordPress sites. They had better luck when they raised their prices to $5000. It was 10 years ago for simple WordPress sites.
> how much money they saved using your pricing model
Ah, that's a brilliant idea!
> If they are looking for a 1-3 page website, the price is going to be an immediate turnoff
That might actually explain what could be happening at the moment. Potential customers are scanning the content and not noticing the headline explaining that its for mobile services.
Our designer is taking all this feedback and making changes, we'll probably roll it out early next week.
>> Rates also have to do with where you are, who you know, reputation, and what other offers you have on the table.
Rates have nothing to do with where you are. I don't live anywhere near any of my clients. They get charged the same rate, regardless.
I also don't change my rate for different types of work. I'm not a different person doing the work. I don't care if $100/hr is ludicrous to make a WordPress theme. If <theoretical client> wants me to make that WordPress theme, it'll be $100/hr. If <theoretical client> doesn't like that, they shouldn't ask me to make WordPress themes for them. That simple.
Moral of the story: you charge the rate that gets you out of bed in the morning. If the only rate that got me work was $5/hr, then I'd not be in this business. I like programming, so I will probably always do it for myself in some capacity, but I work as a programmer only in so much as it pays.
Who you know is correct, which is why going through eLance- or Odesk-like sites don't work. You make the big money in consulting by getting in some where and delighting the hell out of your client, to the point that they want to hire you as an employee but you stick to your guns and say "no, but I am jacking up my rates on you."
The three pillars of sales are: 1) get customers in the door, 2) get them to buy, 3) get them to come back again. You make the most money, in consulting, on the 3rd pillar. You can successfully ignore #1 and #2 for most of your career if you get lucky with a good client and continue to hit #3.
> You learned that people value effort over results.
People still value results, but they expect the price of things to be vaguely related to the cost of materials + time + small profit margin.
And in an efficient competitive market, prices are related to costs. If there were 5 identical providers of "web page updates", then the maximum you can charge would end up close to how much of your time it takes to run the script, and the customer would get to keep the surplus value.
If you are in a position to get away with value-based pricing, then you have to be careful to keep your costs secret, because otherwise you make people irrationally angry about being ripped off.
He's saying that consumers are less likely to pay you for web product features than he thinks you think they are. He's also saying that he thinks the way to get money from small business customers is to have a quantifiable value proposition: he thinks you need to be making them money in a way that you can clearly spell out in terms a company controller would believe.
If you put a price on your website you lose everyone who doesn't want to pay it, and you get that price from everyone else. There is no "perfect" price. You either undercharge on average or you lose some customers because they can't afford it.
If you make people call you can charge each person the exact amount that they are willing to pay.
I'm not saying it is "morally" optimal. But there are a bunch of legitimate reasons to try this strategy.
> Designers think they need to charge for those things. They are wrong. Lots of customers are quite happy taking what they're given if the price is low enough.
In my experience this is not the case. The projects I've done which have dragged on for longest and been the most trouble are the ones I've done for free or less than the usual amount.
Charge a low price and the client will assume your time and skills are worthless.
"The one huge assumption they make is that you have good clients who aren't on a budget and won't go shopping. Those clients are much harder to find as a freelancer."
Agree. And it's not even so much budget as "not a schmuck" (sorry not a better way to put that).
When I saw this, I laughed:
"As an example, if I was proposing to build a website capable of creating an additional $100,000 of profit annually, I would ask the client to make an investment of $40,000 in their website."
So we are taking a totally speculative number of profit ($100,000) and charging $40,000 to get there. You would have to either be working for a large corporation (using OPM) and have no clue to buy into a proposal phrased like that or be new in business and totally naive. The entire presentation to me smacks of naiveness.
But here's the good part. I can totally see how things like this could and do work. That said you will have to find the type of customers who will fall for something like this.
Most business people who have been around can smell a sales presentation a mile away and to many of them (me in particular) it's an instant turn off because it reaks of "you are going to be paying a lot for this that's why we won't tell you upfront the cost. Because we are going to do some smoke and mirrors to make you go for it."
Lastly, one of the reasons in favor of discussing pricing in advance of a presentation is also to qualify people. I've seen to many salesman stupidly come in and not qualify people in advance simply not realizing that the local small restaurant simply isn't going to part with $10,000 no matter what you promise or tell them (or will have contract signers remorse and back out.)
> The big schools have more funding and more spare cash.
There you go. Honest businesses don't make their prices with regards to how much "spare cash" their client might have.
> How do I put all that into a single price on the website?
You divide it into parts that can be priced. If there is a bespoke part you put an hourly rate for that implementation, or daily rate, or any way of counting the rate that suits you.
You can use the projects you have finished to publish examples for future potential clients, where they can compare a little bit and get a rough idea of what it would cost them.
Just getting any kind of price information out there is much better than nothing, because then a potential client knows if it's within their range. You also avoid people who cannot afford your product.
> Key is to set the price. If the job is a hassle, you're not charging enough. That will also filter out bozos.
Sure. Just, there are some verticals where charging a "positive-ROI" amount gets you no business at all, because all the potential clients in that vertical are businesses that operate on such razor-thin margins that they don't actually have the cash-flow to pay for the extreme requirements they also have. They've been getting along until now purely by begging/tricking/manipulating people into doing negative-ROI one-off tasks for them. If forced to get contract all the services they need out on the free market, their business would cease to exist.
(Therefore, you say, they should cease to exist. I'm not arguing!)
I believe they're suggesting - in line with the point about not charging $5-$10 - that you should not build lower value SaaS products for eg freelancers (with the author implying that customer group doesn't have much money to spend). And that you should instead target larger business customers that will pay more.
> is it basically to charge each customer a custom price?
Yes. You just have a "contact sales" type of stuff on the website and promotional materials instead of an actual pricing page. Very common in high ticket B2B.
I don't understand the product or use case too well to suggest how to price it. But I understand that usage would vary widely between customers. Hence price should vary greatly too.
I don't know what's your situation and how well connected you are in this industry. But generally at this price point people won't just come on your site and buy it. There will be some back and forth either way. And you probably will have to do outreach. So going to have a lot of opportunities to discuss price.
At this point it sounds to me like your greatest priority should be to actually talk to some customers.
> Awesomic does not re-sell human hours like Upwork. Instead, we guarantee a business result.
I don't know what that means though, as a buyer. Like the pricing refers to me getting a dedicated designer, so I assume that means that they are non-shared, i.e. they are only working on my account, however the pricing seems way too low to justify that.
So then I assume they are juggling loads of clients (although in that case, I'm not entirely sure what dedicated means) but then I can't get a feel for how busy these people are and if I'm getting a lot of support or not a lot of support. Particularly considering the prices/savings are benchmarked against a full time employee.
Maybe this is just me though, I would totally use this service but the pricing model is just too opaque and puts me off (but maybe it will work for others?). Is it just me that can't understand what I'm getting?
Like if I want a pitch deck done, which I can estimate will take a great designer a few days, and I want it done by the end of the week, what subscription level do I get? Or do you just name your subscription level price and I have no way to estimate it prior to you giving me a quote?
But again, it's probably just me not 'getting' it.
=> "makes you wonder about the level of competency of the average web development company"
Our competency on projects where we are being paid a full domestic consulting rate is quite high, thank you.
Now, if you're asking us to compete with cut-rate bids from some online freelancer exchange, we will reduce the level of service and QA to match our competitors in that space....
Eg. you may have Nordstrom's service for a Nordstrom's price. Wal-mart service for a Wal-mart price. But don't expect Nordstrom's service for a Wal-mart price; that usually isn't going to fly....
Except that's the business' perspective, because it means paying less people, rather than consumers, who generally wanna talk to and haggle with humans, which requires a business to pay more people.
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