Today, I’m going to talk about selling based on value instead of just an hourly fee. Once you master the art of adding and realizing your value, charging what would seem outrageous prices for minimum amounts of work to regular people will be a walk in the park. Now let’s get started, because I’m assuming you all want to know exactly how I turned $500 into $150,000 in about 20 minutes?
As you might, or might not know, I have “coached” or mentored entrepreneurs from 13 different countries, and I have a small group of really motivated individuals that I have weekly calls with. They are all in different stages of their entrepreneurial careers – a couple just got started, and a couple own international multi-million dollar businesses.
Anyway, one of the guys who just got started, let’s call him Jack, was up until recently a bit unsure about what he should focus on. All he knew was that he was tired of working mundane jobs, and of having a boss.
Let me also mention that Jack is from India, and he has lots of family over there, and you’ll see why this is important soon.
During one of my conversations with Jack, I asked what his family is doing over in India. He answered that his uncle works for the city administration in the city he’s from, which is a major city, and his other uncle is a politician. So I naturally asked if his one uncle could assist businesses with getting business licenses to open offices and hire people in the city, and he said yes.
I told Jack that tons of companies outsource their work to India, and with his connections, he could save them time and money, and that he should look into helping US companies get set up in India. He said he would think about it and get back to me.
The week after, during our scheduled call, Jack says his wife works for a medium sized company that needs to outsource coding/dev work. His only worry was that he didn’t know how to pitch them or what to charge them. I asked if he knew how much they would save? What kind of value would he bring to the company? Of course, he had no idea, but said he was thinking about charging $50 per hour, because he didn’t want to overcharge, and that the project would probably take about 10 hours.
I told him to hold his horses, because if they are saving a bunch of money, his services would probably be worth more than $500. He wasn’t sure, and he was very nervous about overcharging and losing out on the $500 (this is a guy that had never made more than $35,000 in a year).
I told him to let me do the call, as I felt like this was an opportunity for him to make way more money. Long story short, here is what the 20 minute call pretty much sounded like:
Both: Introduction, hello, how are you, great weather…
Me: So, you’ve been thinking about outsourcing your coding?
Me: How much would you save, considering you’d be paying probably 25% of what you’re paying right now for coders?
Client: We’d probably be saving about a million dollars.
Me: What would you be able to do with an extra million dollars per year? (get them to paint a positive picture in their minds)
Client: (explains how they would expand, do more, hire more people, etc.)
Me: Well, you are lucky you found Jack, let me tell you. He’ll have you fly over and meet politicians, city administration executives, and he’ll make sure your business licenses are expedited, so that you can open your office and hire people there as quickly as possible. The retainer is only $50,000 per month, with a minimum of three months. Would it be worth investing a mere $150,000 to save over a million dollars just this coming year, not to mention the millions you will be saving the next 5 or 10 years?
Client: Yes, definitely.
Jack was flabbergasted and couldn’t believe his ears. He had never thought about selling something based off of the value you provide, as opposed to just charging an hourly fee.
He called me a week later to tell me that he was flying to India, first class, with a bunch of executives to help them get started. He was so thankful and so happy.
This is all happened in February 2016, but in my world, this is not an unusual scenario at all, it happens all the time. Do you think I charge the same amount for coaching/mentoring for someone like Jack vs. someone who is making millions every year, and then I help make even more millions?
Do you think I charge a small, local business the same as a Fortune 500 company? Hardly. The thing is, a 10% increase in sales for the local business might mean an extra 50 grand, while a 10% increase for a Fortune 500 company usually means tens of millions of dollars. Always find out what you are adding to the table, and charge accordingly.
If you had to pay $100,000 to make an extra million, wouldn’t it be worth it?
How could you sell your services or products based on value? Let me know in the comments below!