Value-Based Pricing: Charging for Expertise, Not Time

Are you selling yourself short with hourly billing? This could be the most profitable conversation you hear all year.

When that expert plumber fixed a commercial leak in just 15 minutes and billed $15,000, the client demanded an explanation. His response? "$75 for the labor. $14,925 for knowing where to hit the pipe based on 30 years of experience." This perfectly captures the core problem most service-based business owners face – undervaluing their expertise by focusing on time rather than outcomes.

Dave and Duarne tackle this head-on, revealing why hourly rates fundamentally misrepresent your true value. They show why clients don't actually care how long something takes – they care about the results you deliver. The conversation unpacks why your accumulated knowledge, behind-the-scenes work, and ability to solve problems efficiently are worth far more than the "face time" your clients see.

Beyond just theoretical concepts, they provide practical frameworks for transitioning to value-based pricing. You'll learn how to break down your services to demonstrate full value, how to communicate that value effectively to clients, and why maintaining the same rates year after year is actually choosing to make less money for the same work.

The episode also explores essential business fundamentals like planning for holidays, implementing KPIs early, creating policies for scalability, and focusing forward rather than dwelling on past experiences. These practical insights will help you not just price more effectively, but build a more sustainable business overall.

Ready to stop undervaluing your expertise and start charging what you're really worth? Listen now, then take the challenge to review your current pricing model and see if it truly reflects the value you provide.

Chapters

• 0:00 Show Introduction and Today's Topic
• 1:44 Planning for Holidays and Time Off
• 5:28 Policies and KPIs in Growing Businesses
• 9:25 Looking Forward vs. Dwelling on Past
• 17:24 The Problem with Hourly Rates
• 25:01 Value-Based Pricing and Customer Perception
• 39:06 Raising Prices Annually and Final Thoughts

Transcript

Dave: 0:23

Thank you very much, hey hey, everyone.

Dave: 0:33

Welcome to another episode of the Business Unscripted Podcast. I'm Dave Ward and I'm here with my business partner, dwarne, and this is a place where we keep it real about what actually takes to grow and build a business from scratch. Be it well, because we're doing it right. So we're not here with guru talk. We're not going to fluff anything up for you. We're just going to have real conversations about leads, sales, money and everyday stuff that we are all deal with as we're trying to grow something that lasts. So if you're a business owner who's tired of hearing the same old advice that doesn't necessarily work in the real world sometimes, you're going to think we're going to like it here. So grab your cup of joe, kick back, let's jump into the show. Duaron brother, welcome to another episode and I appreciate you being here. What's?

Duarne: 1:22

new brother, Dave, thanks for having me back. I'm starting to get used to turning up here every week, so you know, I think this is definitely becoming a more permanent thing, right? Hey? I love it Look this week's been fun, right.

Duarne: 1:37

I mean this week's been fun Short week because it's Holy Week over here in the Philippines and you got Easter over there as well. So I mean that's tough for business owners sometimes having the short weeks, right. I know for me, like we had staff out for four days in a row and you know we've got clients who've had staff out for a different four days because they fall into the US time zone or the Australian time zone. So just trying to get our way and we've had had like periods of up to five days without some staff in the office. Um, so things have been sitting there. So we found ourselves with urgent tasks to basically take care of on tuesday, uh, and was rushing those out for our clients and stuff that we probably should have got out a little sooner in the week didn't get out just because of the long uh weekend that we incurred did you get away.

Dave: 2:28

Yeah, no, not I didn't get away, um, but it was one of those where, you know, I I get it. You got people that are out of the office and I think that's a problem that a lot of people might struggle with is they don't plan accordingly for it. You know, um, and and it sneaks up on them and they're like, oh crap, and I mean like, marketing, branding, anything when it comes to specials and holidays. I was just talking about this with a client earlier, like, really, like it's April when we're recording this. You should be focusing on all, right, what am I going to do at the end of June, end of July, right, like July 4th holiday? You should be planning now with, like, knowing what am I going to do at the end of June, end of July, right, like July 4, you should be planning now with, like knowing that you're going to start marketing this like beginning of June.

Dave: 3:09

If you wait until like a week before a holiday or a week before a special day in your country, like your back to your holiday week, right, or holy week, you end up behind the eight ball and you don't have time to create something on the side, to market something you don't have time to market something. You don't have time, so you should always be. You're kind of focusing, like I say, two to three months in advance, uh, to really plan out your operations and specials and offers and all that kind of stuff. So is that something similar? You know that you do yeah, like totally.

Duarne: 3:36

I mean like in an ideal world, that's perfect, right. But I mean, how many of our listeners are actually living the ideal dream world, business owner environment? Um, they're probably not. They're probably, like you know, sitting on the edge of their seat just getting by day to day making sure they get things done on that to-do list. But, um, from a marketing perspective, we try and come at it from at least having all of our information, social media, planned out at least a month in advance, if not further. So when you do special events like these, you're covered. You've got some stuff created. You can get it up and post about it, talk about it in the way you need to, and I guess that really comes down to just planning out better and having the systems in place, like we've talked about before and like you were saying, to do that. But, um, it does get tough, right, it does get tough, especially like east is a funny one because it moves around a lot. You know you, it can be sometimes in april, sometimes in march.

Dave: 4:39

It moves around the other day, yeah, the weekend that it falls on all that stuff, absolutely oh, oh, exactly.

Duarne: 4:45

So I guess you know, like, staffing is one thing, planning for it's a whole other thing. It can get a little bit tricky, but yeah, we get it. But yeah, like I love that advice, try and plan it out. If you can Maybe sit down in January when you're doing your planning and just sit there and work out all the holidays that are going to come up for the year and just put a plan in place. What am I going to do on each of these? What's affected? For each of these, which departments need to be, you know, coming up with a strategy and a plan on how they're going to handle each of these things?

Dave: 5:13

and two, depending on your size, your organization. So if it's something where, like, you're a solo or maybe even one or two people, obviously understanding who's responsible for what, like you know, and just having that conversation of like, okay, well, you know you're gonna have the first day off, like these things may go wrong. And we talked about this in last week's episode, where you know you get an email right before you start and like, here you find out, like your, your website's been hacked, like that stuff doesn't take holidays off, right, you know hackers don't take, you know, holidays off, anything like that. So you always got to make sure it's with that.

Duarne: 5:41

Right don right, don't they take the time off?

Dave: 5:43

I know right. Can't they respect that we have holidays?

Duarne: 5:46

So inconsiderate.

Dave: 5:47

Right. But ultimately, I think, when it comes down to team members too, and if you're a bigger organization, like leading team I've led teams of up to like 20. Ultimately, you got to make sure that everybody's job is covered in terms of the day-to-day what's manageable and that needs to happen, that stuff is covered. If somebody has a job where they can be caught up when they come back, then great, you don't have to worry about covering it. They can take the time off. But answering the phones, that's a big thing. Who's going to cover if Jane is off? And she's the one that normally answers the phones. So having that, as you said, in place ahead of time, hey, you're you're, you're Jane's backup, right? So when she's on vacation, you do this, and so everybody's on the same page. It's documented.

Dave: 6:36

That, I think, is what's important and where you find that a lot of businesses struggle when people take vacation or time off, it's because they don't have that in place and they wait until like the day before jane's off on vacation to say like, oh crap, we never actually set up anything to cover for her. Now you're scrambling. So really, having these things in place ahead of time helps you and saves you time, saves you your hair. So you don't look like me, right? Clearly, dave didn't take this advice previously. No, and if you're, if you're listening to the audio, only I'm a bald guy, right? So you know. You don't want to have all your hair fall off or pull out all your hair or have all your beard gray like my beard.

Dave: 7:16

You want to look like dwarn full color, both beard and hair. Full head of hair you know you don't want to be like me. I'm the old guy, you know it's like it's funny.

Duarne: 7:25

You should say that dave. I mean not the hair part. I mean I appreciate the compliments, of course. Um, and for guys who don't know, dave has a glorious gray beard. It is magnificent. Um, now, in relation to industries that do this really well and plan for these occasions, I'd have to say retail and hospitality. They do such a great job normally of planning for this as an industry. I remember working retail as a manager for a large store. I don't know what your equivalents would be there, but it's like a hi-fi store TVs, gadgets, music.

Dave: 8:00

Yeah, probably a Best Buy Like a Best.

Duarne: 8:02

Buy. Yeah, like a Best Buy, I guess guess would be probably about right actually. So I remember being in there and I'd had a uh, probably one or too many drinks, too many uh, on my new years and I pulled the short straw and I was the manager on duty for first of the year and of course this store happened to be open and I remember feeling really bad about the 20-odd staff who had to come in on that day and they turned up and I'm sure they weren't going to perform as well as that they should have or could have if they hadn't had a nice celebration the night before. But you know, we pulled it, it off, we got the job done, but it was a consistent uh thing that we would see that those rosters were planned out months, a month in advance. We had that, we knew what days were going to work and we knew what to expect. And I guess that's the big difference if you don't know what to expect and you aren't planning for that sort of thing and then you're dropping it like we've got one staff member legitimately just put a request in for leave on friday and we have an internal policy that you need to put relief requests in two weeks in advance, just so that we can move things around, we can plan for it.

Duarne: 9:19

And we ended up negotiating with him. He's a groomsman in a wedding. Apparently it was in the afternoon and then he got his digital invitation and they changed it to the morning. So he's like, well, how about I do a half day? Like, sure, do your half day. So we negotiated with him to sort that out, but at the end of the day it was, um, just one of these things that could have been planned out better, and we think about like those industries right, and you and what you could take to a small business.

Dave: 9:44

Is it a system that we talk about? A system, but they have policies and that's the other thing that I think a lot of business small business owners don't think about is setting those policies in place now and you can even hold yourself accountable for that.

Dave: 9:55

You know what I mean, or your, your, your partner or whatever. But you guys develop the policies when you're small because then when you're larger, it makes it easy, instead of trying to implement policies when you have a staff of even five to 10, that culture shock and that implementation of a new policy can be difficult sometimes if people have been used to one way for the last two or three years that they've been working with you, it's true.

Duarne: 10:17

I mean, like scalability is generally not as smooth or possible if you haven't got the policies in place in the first place. We've witnessed this in the past where we've had policy changes that came later. After starting. We've been flexing around about the 8 to 12 staff for a couple of years and then we pushed over, and when we got over the 12 staff, it just got a really, really rowdy and hard to manage. So we realized at that point in time we needed to put these hand policies in place uh, staff handbooks, all that sort of thing and one thing we'd learned was wow, you guys are getting really strict. Wow, this is, you know, this is really tough. Like we didn't used to do this.

Duarne: 10:59

And these were the sort of feedbacks that we got, and we did have some attrition during that time, because people started to realize. We started to realize when we put these policies in place, people were actually laxed, they weren't doing what they meant to do, and these policies like I mean in a small business can be something as simple as just start with some kp your eyes all right. Get people to be accountable for the output they put that they're meant to be doing in their job and watch what happens when you put kpis in place. For some people, suddenly it's like oh, you want me to actually do something when I come to work. You want me to actually show that I've done something. Wow, okay, what? What is this? Is this the?

Dave: 11:35

this is why we always we always teach and mentor people to have KPIs, and you can start with yourself. So, if you're a solopreneur, you're listening to this. Like you start with yourself. Like what is your weekly number of conversations you want to have? What is the weekly number of emails you want to have? You know what's your weekly revenue number. You know what's your weekly proposal number. Like all these things are KPIs that you can set for yourself as a solopreneur, and weekly proposal number, like all these things are kpis that you can set for yourself as a solo printer. And if you don't, why? Like you can start.

Dave: 12:08

We're not saying that you're, you're behind because you can't make up the past and I say this all the time like your past is your past, like you can't change it, like you can acknowledge it. Look at it. But just like driving, if you spent your entire time looking at your rear view mirror which is what's behind you, right, you can't change it, right, how often? Or what's the actual chances of you actually knowing where to go into the future, slim, because you don't know what's in front of you, you're probably going to get into an accident. You'll probably go off road, right?

Dave: 12:37

So you only glance at your rear view mirror. You only glance at your rearview mirror, you only glance at your side mirrors. But 90 of your attention when you're driving a car is forward. That's got to be the same thing in your life. You have to spend 90 of your time focused forward, not in the past, not side by side, like comparing your life to somebody else right now, like that doesn't matter. What matters is what's ahead of you and that's what you should be focused on, and so yeah, and look, can I add something to that day?

Dave: 13:04

yeah, man absolutely, man.

Duarne: 13:06

The only time that I think looking in the past is a good thing is if you're looking at game tape just like those football teams do. Right, where they're gonna look at game tape, they're gonna see where they could have improved. They can see where they can do better. You know medical uh, doctors generally gather, look at you know past patient experiences and procedures and then talk about what could have changed to change an outcome or given a better outcome and that and those sort of things are great and you should definitely do that sort of stuff in your own business as well.

Duarne: 13:37

Look, at experiences but don't get caught up into the drama in the back. You don't have to get caught up in the stress of it.

Dave: 13:44

Just keep plowing forward, because you know, because that's that's your focusing forward part. Right, like learning from something. Is the focusing forward? It's like, okay, I did this, but this is what I'm going to do tomorrow. Right, here's how I'm going to focus forward with that and I'm not going to dwell in the past. I'm not going to like say, oh my god, like I, I don't have the income that I have now, so I'm never going to have the income I have. Right, stop using, never stop using. Right start using, like I will have. Right I had, like I had. Like that's a big thing that you hear from a lot of people is the power of affirmation, of attraction. Is you start feeling the feelings of you're gonna, you know that you're gonna have. When you're in that mindset, when you're in a successful business, like feel that. Don't just say like I wish I could or I I might, no, you have, you do like that's the power, that's your power.

Duarne: 14:35

absolutely. You're gonna have those thoughts, right, we're gonna have those thoughts like I'm not good enough for this, I don't deserve this. But you know what, don't try and ignore those. Just grab them and put them somewhere and go. You know what I'll deal with you later. Right now, I'm going to get to work and I'm going to just get this shit done and then by the time you get to them, they don't even matter anymore because they're just down there. They're out of the way. You know you can't stop yourself from having those thoughts. It's not going to happen. You know you can be as positive as you want, but you're going to have those thoughts and it's okay to have those thoughts. That is really fucking normal. But what you don't want to do is let those thoughts control how you, you know, spend your day, you know, find a way to stay.

Duarne: 15:17

all of that Like you know, grab them, throw them down I'll deal with you later, you know and then focus on getting the work done, getting in and doing the work, cause we all know running a business it's bloody hard work and it takes time.

Dave: 15:32

And one thing, and it really isn't time you and.

Dave: 15:37

I right, Like we, we, we at the beginning of the episode we talked about like people having days off and all this stuff. Like we're growing right, so we don't have, we're not like at the level we want to be at, so we don't necessarily have that time off Like we were working over the weekend. We're. We're doing things as a business owner. If you're not where you want to be, you shouldn't be talking about oh my God, I had a week vacation, I took a week out of my business. No way, you literally have to be on all the time For me. I'm always thinking I was at my son's baseball game. I have a thought. I have my phone. You have so much capability in your hands. You can still pay attention, absolutely. But when a thought hits you, the more likelihood if you wait to act on that thought you're going to lose it and you're going to forget it, Even if it's a good thought. It happens to me all the time.

Duarne: 16:30

So one or two things Happens to all of us, Dave.

Dave: 16:32

If you want to be present, absolutely, either take your phone out and use your notes app and make a note right, or google. I think google, google has a good you know keeper thing. You know what. You could take a lot of taking capability right or a voice memo something quick. If you don't want to like act on it right, then make it a habit to write it down, put it in your phone right so that you can come back to it, or you know what I do chat as an alternative to that.

Duarne: 16:59

Actually, yeah, 100, I use chat gpt as my note taker. Dave, I go and grab it and I'll use the voice recording on my phone, because the cell phone version on chat gpt has the ability to record and it'll dictate and it'll do the text, or you can do the voice direct. So what do I do? I don't want to talk him back to me while I'm out, right, so I just record and go. Okay, drop that in. I'll come back to that later or I'll drop it in. Go, can you prepare a summary or some concept ideas or whatever I was thinking. Get it to do it and then I close the app and I go back to doing what I'm doing and then I'll pick it up on the pc later. Um, and that's really, really powerful for me. Because that one little thing I'm not great with note taking. All right, I. I go into a meeting. I'm one of these people who will bring a notepad and a pen and I look down at the notepad and pen at the end of the meeting. I've written nothing, nothing.

Dave: 17:53

And so I just don't do it.

Duarne: 17:56

I'm like this is just dumb. What I do is I recall the information and as soon as I get out of the meeting I jump on ChatGPT and I just like voice dictate everything that I just spoke about. Well, that's where like for me that I've been kind of researching.

Dave: 18:09

They have like the I think it's like Claude or something like that is one of the ones that I've looked at, but it's like an AI, like a net bliss, or like it's like a little note card that can go in your pocket. Or I think there's like a high dock thing, like if you write your desk, but it records everything that you do and then it summarizes in the notes. So like Dwarven, like you, like you don't want to take time and write notes, like you know, but this will listen and that's what I love about it is it listens and it'll take the notes. And that's what I'm looking to kind of look into there. Or you know, if you do all of your meetings online, like you can use like there's fixerai, you know, and stuff like that that actually like records and then links it to like the video recording.

Dave: 18:48

There's so many options out there that you and again we talked about this in a previous episode as well Like your weakness is taking notes. Okay, how can you supplement the weakness by filling it in with some sort of ai software or or ai support and you can do it and that's the beauty of it absolutely, and you know what's interesting about that is I just had this thought probably about 10, 12 years ago, there was this product that was demonstrated um.

Duarne: 19:17

When I was working retail. In that role, I was at a product launch and I was like this thing's incredible.

Duarne: 19:24

This is going to take over the world. And it was a pen with this notepad you'd get, and when you would start writing in there you would actually record the audio in the room so you could start writing notes and what you could do is you could hold on the pen and it had like a little play, stop, pause, skip thing at the bottom, like a, and you could touch on the pen and it knew to play that on the audio so you could put a set of headphones in that plugs into the pen and you could listen to the audio from the meeting. At that point and I remember this is amazing I had one. I never bloody used it because it was cumbersome and awkward and annoying for me still, and I was like you know what my didn't? I didn't write enough notes to actually know what was relevant for anything. So the key for me is like I think you've got to find something that works for you. You know I love the idea of these. You know AI recording tools that can come in. I love the fact that they can come in and take notes for you.

Duarne: 20:27

There's sometimes like I get meetings, like when I have a meeting with you, other clients, where I will get an email after the fact saying, hey, here's a summary of the meeting and I'll go through. Oh yeah, that was talked about. I forgot about that. And that's super handy, especially when you're having to send a summary. And how impressive is that when you can create a summary after the meeting and then send it to the customer that you were talking to. Hey, these are the things we're talking about. Just in case you didn't take notes, if you had any feedback or more information you want to add to that, just reply back and share it back with me.

Dave: 21:07

And to that just reply back and share back with me. And here's how I take it. One step more is then, before the next time you meet with that person, you can go back to the summary of your notes and like, drop it right, you can either read it all yourself or, if you don't have time let's say you have five minutes before a meeting drop it into a chat, gpt or whatever software that you use and say, hey, here's a summary of our last conversation, what were the action steps, what are the follow ups that we need to talk about in this conversation? And then it summarizes it for you and you can hey, give me an agenda or give me bullet points, and you can have that information at your fingertips. And here's the thing I don't remember when we talked about it, but I know we talked about either on a recording or we talked about it ourselves, and it was from an Alex Ramozy video, and he talked about the power of being prepared and how, just taking five minutes before a meeting, you sound more educational and like an expert to prepare yourself, to look at somebody's website, to review notes, right, instead of you going into a conversation and be like hey, what did we talk about last time. What were we supposed to follow up this time about? Like I don't remember. Do you remember? You're not. You're losing your expertise. You're losing your you know professionalism too in that conversation. So if you can be prepared, you know great.

Dave: 22:18

And how he used it in the video was he talked about. Look at the length of the meeting and the focus of that meeting and then that's how much time you invest to prepare ahead of time. So if it's like a 20 minute touch base or connection call, like take five minutes to prepare. If it's an hour presentation that you have a lot of people that are going to be listening to you that could be potential clients, well maybe now you should be spending two, three hours in preparation for that hour. Or if it's an hour client meeting that's already a client that you're just having a session with or a mentoring session with, then maybe it's 15 minutes ahead of your 60 minute meeting. So it's ultimately who you're meeting with, the topic of that meeting and what you hope the outcomes to be to how much you're going to be preparing for that session. That's an interesting Sorry, dave.

Duarne: 23:07

I mean that's an interesting point and that kind of gives me a segue into something that I wanted to discuss. If you're a coach and you're out there and you're giving a one-hour front-end session with somebody, but you know you're doing an extra 30, giving a one hour front end session with somebody, but you know you're doing an extra 30, 40 minutes in the back end. But if you're charging a client by the hour, what does your client see? They only see the hour they're on the phone with you. They don't see the work and the prep you put into that and what.

Duarne: 23:38

This is one thing and I found very intriguing is so many businesses go out and I've done it myself where we'll charge an hourly rate for what we're doing, only to realize that we might have to learn new skills to do it.

Duarne: 23:53

We may have to implement, use different team members. So whilst we get a job done in a one day turnaround, we've actually put in three different individuals work, so that's now three times their salary, three times the hours that to achieve the task. And when you bill a client and you say, look, that took us 16 hours to do and they're like well how, it's only been eight hours since I asked you to do it right. So what we tend to do is we start to. We've started to move away a while ago to project based, where we don't necessarily declare the hours because there is going to be behind the scenes work, there is going to be things, times like you just described, where it's probably not viable because it diminishes our value. It diminishes what our time it took to get the skills that we have to be able to offer those services right. Yep.

Dave: 24:49

And it reminds me of and I can't remember where I saw it. I'm going to paraphrase the story right. But it's a plumberumber right for a big commercial. You know operation and but everybody on the job is inexperienced. So they there's this leak. They couldn't figure out how to fix it. You know, they spent hours and hours, like days and days, trying to fix this thing, but nobody knew how to do it. So they call in an expert plumber and the plumber comes in, fixes it 15 minutes, leaves the company, gets a bill for $15,000. And then the company's like well, wait a minute, why is it 15,000? Can you please itemize why it's $15,000? And he goes sure, 15 minutes of time, $75,. Knowing where to knock on the pipe, based on 30 years of experience, $14,925.

Dave: 25:43

And so the idea here is that when you charge by the hour, you're assuming that your client values their time versus the outcome. And so if somebody ever comes to you and asks you what is your hourly rate, my response is well, I don't necessarily have an hourly rate. But let me ask you this If I was able to kind of give you an outcome that you're looking for in our weekly sessions, would you pay me for that same outcome. If it took me five times as long, would you pay me all the extra hours that it would take you? And more often than not, they're going to be like well, no, no, I want you to do it in the five hours. Well, that's so. You don't value the time it takes, you value the outcome. And by getting them to see it in a different light, that they're valuing the outcome, you can get that conversation away from the hourly rate. Right, because, as you were saying, you have back end experience. You have all these things that make you able to provide this in a quickly manner.

Dave: 26:43

So, like for yourself, you could say well, what's important to you? Is it a low hourly rate that may take the project three, four times as long, or is it getting a new website, for example, getting a new website up in seven days? Right, and that we use all of our experience to provide that outcome to you Right In seven days. Like what? What do you value more?

Dave: 27:03

And also, you can turn it into does it make it less valuable to you by me getting it done in three days versus me taking 100 hours? Does it feel more valuable to you? No, as long as the outcome is exactly the same. You necessarily don't value time, you value the outcome and the value that you're providing. So that's how you can kind of shift away from that conversation and I've given that kind of talk to a bunch of people as well, as once you give the hourly rate and then you say, well, hey, I could do this in 100 hours. Right, they're gonna be like, well, I'm not gonna pay you for that, like I only want to give you the outcome, like you know. That's it.

Duarne: 27:40

I don't know how much it's going to cost me to get this done right, and so you need to understand the scope of the project to be able to quote it, but at the same time doesn't mean we need to quote you on an hourly rate to do it. And realistically, if you're a solopreneur business owner, I dare you to actually work at how many hours you really spend on a task that you've quoted out on an hourly rate and see how accurate you are with it. See if you're as happy with the rate at the end of the day that you charge versus a fixed rate to do the job. And if you are going to do this like there is processes you need to follow. If you're going to do fixed rates, you need to establish exactly what the scope of work is, because you don't want it to be something that goes beyond the scope of work. There's going to be things that are going to be just ad hoc work. You're going to do an hour here, hour there.

Duarne: 28:34

But take, for example, you do tax returns for somebody. It might take you three hours to do a tax return for one client and then an hour and a half for another client and then six hours for another client. Do you necessarily charge them all the same sort of rate or do you charge them an hourly rate. It depends on the situation you're going to be in. But most of the time you're going to you're going to charge a rate that you're pretty happy and you assume is going to cover the cost of your time involved. But, like for us, when I look at you know, I look at um people who come out and do lawn care, for example. Do I want to hire the kid down the road who can do it for three dollars an hour but takes, you know, a day to do the job? But now my, do that or do I want an hour?

Dave: 29:22

in the philippines is like 15 18 an hour here, so jordan's not paying some kids in fact I have a concrete, I have mostly concrete.

Duarne: 29:37

I don't have grass, so there's nothing to do but like, yeah, 100, okay, so let's make it 15 bucks an hour. You're gonna pay the kid 15 bucks an hour to come in. He's gonna take six hours to do the job. Or do you pay a professional to come in who's got a team of two to charge you 120 to get the job done and they're in and out in under two hours? You know, at the end of the day you're probably going to pay similar rates anyway. The job's probably going to get better done based on the fixed rate, but it does. Do you care if it took him two hours or an hour and 47 minutes the second time he turns up, if it takes him an hour and 15 minutes the fifth time he turns up to do the lawn? No, because you're not paying him for the time he spends there. You're paying him for the outcome that he delivers for you and as long as you get a consistent quality outcome right the hourly rate does.

Dave: 30:26

And for you internally is where you have to understand your hours right and where your hourly rate is. So internally, you have to set your pricing. Okay, If the average. Let's go back to your tax return question. Right, If the average tax return takes me two hours and I want to get at least a hundred dollars an hour, you know that on average, you have, or you know that your tax return price is going to be $200, like for a basic tax return right? So you're going to have some of them that are going to be a half hour, so you're going to make more than your hourly rate, right, and some of them are going to take a little bit longer. But on average, across the board, you have to do and this is where we talked about the data, the time study and all these different things that you do internally you set your base rate at what the average is for that base product and then that's what you charge everybody. So it's going to give you that overall, you're going to have the outcome that people are going to get their taxes done, but on your end, you know that you're going to be profitable, and I think that's where a lot of people miss out is they set their hourly rate too low and they say, okay, I'm going to charge you $25. And what happens is they get a lot of these smaller term projects and they're not getting the real value out of what they're providing, because the value of your outcome is worth way more than the time.

Dave: 31:40

Because what you're saying is, then is that you don't value all the education, all the experience you've gained to provide the service today to your client for your last 10, 15 years of experience that you've gained. You have to charge yourself at an effective rate that builds all of that into one. Just imagine if you stayed at a company and all they did was kind of pay you what they initially did for your base rate and they never gave you raises or they never gave you promotions. Well, they're not valuing all the experience you've gained, all the efficiencies you've gained for them over time. Right, To make them more profitable, you also have to increase your rate. So you would never say at a company to do that. Why would you do that to yourself and your business? So every year you should be upping what your minimum is. Every year you should be upping everything.

Duarne: 32:28

And look, take that one step further. Right, if you're a let's say, for example, you are a plumber, like you used before the example, you probably have an admin person who's answering your phone calls, doing the invoicing, ordering the parts, giving you you know, calling your customers and telling them that you're running late because, let's face it, no tradesman or woman ever runs on time. Um, it's just how it is. So. When you're doing your hourly rate, if you're charging 75 bucks an hour, for example, or you're actually might feel that pretty good about that, but are you covering the cost of everybody else involved in your business?

Duarne: 33:09

Because you've got people in your business in admin roles who are non-billable, fronting customer billable rates and there's certain businesses I've seen where they're given itemized. They go project manager 16 hours, designer 87 hours, qa tester 42 hours, developer 190 hours, and they'll break it down for you. But at the end of the day, when you're quoting something, you have to understand that your value and this is something you need to portray to your customers as well is there might be more people in the back end that they don't know about. There's going to be work in the back end if you take on a website, for example, one thing we have to factor in is we have to do an audit before we even get the sale. We have to prepare pricing and quotations and proposals. We have to create contracts. We have to then get that out. So we factor all of those costs upfront into winning the project as well.

Dave: 34:11

And these are all value ads that you're doing for them, right and so when we talk about creating an offer.

Dave: 34:16

You create an offer by adding all these value ads and all these increases into the outcome that you're going to give them, and you give a price. So in your case, your case, you're not just doing a website. So when and here's the thing that I remind people about you're the expert in your industry. So, dwarin, you're the expert of websites. You're the expert in SEO and automation. So when you talk to Jim right, who's a plumber he doesn't know all that stuff, but he has a he thinks that he knows what it is to build a website. He sees a website. He thinks, oh, it's just a website, how hard can it be? So when you just tell him, hey, I'm going to build you a website, it's going to be two grand, he's like, wow, that seems like a lot.

Dave: 34:58

But when you also then take the moment to say, well, here's what we're going to do for you, john, we're going to do an audit of what you need. We're going to make sure that your, your forms are created on the back end so that when somebody submits a request form, you know everything's done. We're going to design your website. You're going to have up to two revisions of your website. So if there's anything you want to change, we're going to host it for you and we're going to give you an hour a month, uh, to make any edits or make any changes that you need to, and you break everything down and you say, hey, by the way, now what do you feel about the two grand a month plus the 200 ongoing monthly charge? He's like, oh wait, now I understand it right.

Dave: 35:34

So or same thing I say the same thing, the bookkeepers people feel like they don't understand that there's bank reconciliations, categorizing all your expenses, you know, making sure your credit cards match right, creating the financial statements, creating the analysis when you break you. Break all that down instead of just saying, hey, I'm going to do your bookkeeping, but you say here's all the tasks I'm going to do for you that you normally have to do. Now you're creating that value for yourself. So don't simplify what you do. Actually break everything down. Tell them everything and, as Warren was saying, those extras that help you be more successful.

Dave: 36:07

So, like doing an audit which is going to give you an idea of what you need to do to make the website more successful, make those things to make the main core service more successful. Add them as bonuses. So Dwarin your audit instead of saying it's part of the core, just be hey, by the way, because if you make the decision, I'm going to do this extra audit which is actually going to make your website even more successful. I'm going to throw it on as a bonus. We normally charge a thousand dollars to do this. Right, it increases the value of that offer. That's where you can, you know, kind of truly begin to see some value I think that's great, that's a great option there too.

Duarne: 36:41

I mean, because, as a business owner, we typically look at very linear ways of billing, very linear ways of charging, and it's only in retrospect, when we look back at the game tape, we actually see wow, I didn't make as much out of that deal as I thought I was going to. I didn't make as much out of that deal as I thought I was going to make. And one of my good friends he was a contracts director for a lot of big companies mining companies, construction companies and his job was basically going through the contracts from the contractors, making sure they understood what their obligations were to the company which he worked for and what that meant. And he many, many times he would say have you factored in this? No, have you factored in this? No, if this happened, would you be okay with the, with this tender? No, well, I think you need to revise your tender right, go back and revise your tender and resubmit it, because at the end of the day, that would you've got people out there who understand all of the probables, and that's the thing you've got to make sure you build on those probables in. You make sure that you've got a quality scope of work that you're willing to go by anything that falls outside that scope of work. Make sure you add it in as a value add and give it a real value so people understand what it really is.

Duarne: 38:06

But I love the idea of just people starting to think it's not about an hourly rate all the time. Sometimes there's a lot more to it behind the scenes and you just have to know that. But so my takeaway for today would be go back and work out what your actual if you are doing hourly rate. How much work are you putting into that and are you really charging out a full hourly rate? How much work are you putting into that and are you really charging out a full hourly rate for the work you're really putting in? Or is there a lot of behind the scenes and other people involved in getting you paid that hourly rate, and how good do you feel about it at that point?

Dave: 38:38

Right. And the one last thing I want to say too about it. You know I kind of mentioned that you want to increase. You know, increase every year the price you're going to charge if it's a recurring thing. And the reason why is because your costs are going to go up every year. Your expenses are going to go up, it's a given. But if you keep your price the same because you're like I just want to keep it the same, what you're saying to yourself is I am willing to do the same amount of work for less money. Because what happens is, obviously, as your expenses go up right and you keep your revenue the same, your gross and your net profit becomes smaller. So what you're telling yourself by saying I'm not going to increase my price, is that I am willing to do the same amount of work that I did last year for less money. And if that is not how you want to do it, then you need to increase your price accordingly as your expenses go up. So that's my closing thought. Consider it like this.

Duarne: 39:33

I love that. I think that's a great thing. Think about this when you go to the supermarket three years ago, how much were you filling a grocery cart for versus how much you're doing it today? That's what the real cost of living is. So if your product and service is charging the same three years ago as it is today, you really need to evaluate and look at your supplier and look at your P&L and see if you're really getting the same margins that you were before, because there's a good chance everybody's charging you a little bit more for everything you know, because I guarantee your power bill's going up, your rates have gone up, your taxes, your insurance all of these things go up and you have to factor this in. And if you're not factoring it in, yeah, you might lose some people. But you know what? All the competitors out there who are going to be re-quoting are probably factoring that in and probably factoring the next two years worth of extra costs into their pricing too.

Dave: 40:30

Yeah, so if you're doing a one-year program or a two-year program or a three-year program, you have to factor that in. But you also let your client know hey, we're locking this in for three years or we're locking it in for a year. Maybe you have an early out clause or something like that, which we can get into a lot more in depth later. But I think ultimately, Dorn, we wanted to cover the pricing thing, the hourly. I think so many people really got to get stuck in that hourly kind of mindset.

Dave: 40:57

And hopefully today you were able to kind of see and begin to think a little bit more of how do you value yourself, how do you increase the value of your product as well, and stop giving people an hourly rate and really kind of help them kind of see the value of the service that you're providing versus the time that it takes you to get to accomplish that. And on your end as a client or, sorry, as a business owner to your client, your benefit and where you make the most money is how you can then provide that same value, that same outcome for the least amount of time. But you also have to value all the experience that you were able to build to actually make that happen as well, Not just the hour that you know is client facing. There's a lot of backend things, as Dwarin said. There's a lot of backend time spent that a client doesn't necessarily see.

Duarne: 41:41

And that backend like can also just be your experience, like Dave has said, and that back end can also just be your experience, like Dave has said, you might have 10, 15, 20, 30 years. You might be so good at what you do and you could work in a machine shop and be really, really good at what you do and know how to fix a problem and charge a small fee for it because you know how to fix it Right. But are you underselling yourself Maybe? So, yeah, on a closing note, I challenge you, if you're listening to this, to go look at your hourly rate if you are charging one, and just see if it really is as good as you think it is, or if it's the same is sustainable, and check if you haven't increased your rates for a while. Maybe give it a check, just review it. Not sure how to do that. Reach out we can help have by having a chat.

Dave: 42:31

yeah, and I was going to say too and hey, like, reach out to us, put a comment down below the video, just like all that fun stuff, like, do all the fun algorithm things like the video, share it with somebody who they'll might potentially have you know, this question or this, this you know kind of problem in their business. But also, if you have a specific example, reach out down below in a comment and maybe we'll bring you in your business live and we'll kind of talk you through and help you actually solve it on a future episode. That's one of the other things we want to do is actually do live problem solving with you all as you're listening. So, duarn, thanks again for joining me. Brother, I hope you enjoy the rest of your week and everybody if you made it this far. We love you. We appreciate you being here again.

Dave: 43:10

Like, subscribe to get notified. We go, we're going to go live every single Friday, once a week, and we are definitely going to be releasing the new mastermind information here at the beginning of next week. So stay tuned If you want more, you know you know more support, more conversations with you, your favorite guy with a big career and the guy from the Philippines, dwarin. So look forward to seeing it. I hope you have a great one. Dwarin, thanks for joining me, and we'll see you in the next one.

Duarne: 43:38

Thanks, dave, take care, everyone See ya.