It's that time! Time to plan 2017. Maybe you started doing this last month. How did you approach this. We hear a lot of talk in the professional services world about value pricing. Have you done this? Are you considering it?
Proponents of value pricing say you should price your services based on a flat monthly rate. I agree. It's a much better way to "partner" with your clients, and provide them with real value, instead of worrying about the hours you're billing them.
Proponents of value pricing also say that you should price your services based on the value of what is being offered. This is where my thinking departs from theirs. Value is too subjective.
How about pricing your services based (a) on your goal for the year, and (b) based on what gets you excited to do the work?
This is the very premise for how I've planned my 2017 year, and I want to give you some insight, into what I did, and how I've approached this.
To illustrate, I am going to use the "dreaded spreadsheet." There just isn't a better tool yet, that I've seen (my opinion of course) for laying out your goals, especially when we're looking at revenue.
The first objective is to set a goal. Start off simple - how much money do you want to make this year? Dollar one gross. $100,000? $500,000? $1,000,000? More? Set that number down as your goal for 2017. Never mind how you'll get there. That's next. First just put done a number that gets you excited, without going so far above and beyond, that it's impossible. Set the bar high, but don't go over the top. It should be a challenge to get there, and also enough that even if you don't reach it, you'll still be doing very well.
My goal for December 2016 was $40,000. I didn't even come close. I did $23,000 but I'm still very happy.
Next, you want to list the services you offer. Maybe it's just one, or maybe it's ten? List them. This is the list of your revenue streams - all of the ways in which you earn income.
Mine look like this:
- Training / Writing / Blogging
Next, we're going to build the model for how we will get there (to your goal).
We lay out a schedule of the months, the monthly amount that you will earn, per client, the number of clients, and the resulting monthly revenue. We extend that out for the entire year, and see how that compares to the goal you've set.
Not enough? Increase the assumption about how many clients you'll have each month.
Too much? Think about whether or not it's realistic/achievable.
The trick is to set the bar high, without setting yourself up for disappointment.
Take your monthly goal, for each month, and figure a daily goal for the month. Take the total revenue goal, and divide it by 30.
Finally set that number somewhere, that you see it first thing every day when you get to your office. Every day, that goal should be the first thing you look at.
Haven't hit your target yet for the day? Then get off of Facebook ;)
Hit the target already? Keep going, so you can get ahead on tomorrow's goal.
Didn't make the goal for today? It's ok. Many days you won't, but then you'll be in one new project that more than catches you up. For this reason, within any given month, I have my model accumulate the daily goal cumulatively. This helps light a fire under you know where so I stay focused, and motivated.
Whatever you do, don't let it discourage you. Set the bar high, like I did, so even if you only get halfway there, you're still doing very well!
The video above will help you get started on the layout of this model - post your comments and questions below, if you need help.