The Virtues of Being Expensive

How much to charge is the thing about which many designers I know, myself included, have the biggest doubt. We don’t (mostly) doubt the quality or value of the work, or our ability to complete it and exceed our client’s expectations…we just don’t know how much to charge. Here’s my advice:

Charge More. Here’s Why:

1. It’s an interesting (and useful) piece of consumer psychology that people value the things they pay a lot for more than things that they pay less for. They are more likely to be certain that they made the right decision if they chose to spend as much as they could conceive of.

1.1 An interesting corollary – For many, the fear of choosing a good or service that doesn’t fit their need far outweighs the fear of spending too much money. Spending more is almost like an insurance policy against fault. After all, no one is going to blame you for hiring the best attorney in town, no matter how much she charges. Even if you lose, it’s not your fault.

2. People are less likely to waste something valuable. If they’re paying you a lot for your time, they’re less likely to waste it by making you sit through unnecessary meetings, making needless fear-based changes, and making you interpret meaningless twaddle like, “It just doesn’t pop,” or “I want it to be edgy.”

3. It weeds out the cheapskates. People who don’t think the thing you do (in my case, design) is worth what you’re charging won’t hire you…and that’s worth something. To illustrate, let’s look at a client of mine as a case study:

For the last year, I’ve been working with a company to brand a luxury shaving cream. Early on I was convinced that they were going to underprice their product, so I assembled a case for raising it. I ended up recommending that they price their product at $32/8 oz. tub (which is enough to last me for over a year). In the end, they were scared price it above the traditional English creams, which normally sell for ~$30 for a 5.3 oz tub, so they priced it at $27.50.

Now that it’s been on the market for a few months, the reviews have been rolling in, and they’ve been overwhelmingly positive. Most of the reviewers compare the product not to the $30 English creams, but leapfrog them and go straight for the $60-80 French and Italian stuff.

Sounds good, right? Mostly, yes.

Remember when I said the reviews have been overwhelmingly positive? Note that I didn’t say ‘Universally Positive.’ There have been a (very) few people who have reviewed the product negatively. They’ve criticized it, principally, on price. Their reviews routinely go something like, “I don’t know how they can charge $27.50 for this when I can name a half dozen shaving creams that are better, for half the price.” They then rattle off a list of much cheaper products that aren’t really fair comparisons, and clarify their primary concern even further: Price.

The error my Shaving Cream People made here, in my opinion, is pricing their product low enough that a cheapskate can rationalize it as a good value. (Which, it is. I’ve been using my tub for 4 months, during which time I would have normally used 4 $8 tubes of Neutrogena junk, and mine is still about ~70% full.) If they had priced it at $32 as I recommended, or at $40, as my analysis revealed would have been a reasonable $5/oz. for a Luxury Shaving Cream of this caliber, the chance that the people (or person) who have negatively reviewed it would have bought it all would be much, much lower.

Of course, it’s not a mistake that is unique to my Shaving Cream people. It’s a mistake I see all the time, and have been guilty of myself. People assume that pricing is all about competition, and they a low price is an edge, but pricing is a blade that cuts both ways. Lowering prices attracts consumers that don’t understand the value of your good or service. PC manufacturers have successfully run their industry into the ground by consistently lowering prices, which forced them to lower quality, which lowered consumer expectations, which lowered the value of their brands, lowered the perceived value of their products, and lowered the amount of money people were willing to pay for them, which necessitated further lowering of prices, ad infinitum, until no one can make money off the damn things anymore. If big companies with armies of MBAs, like HP, Dell and IBM can make the same mistake, it’s hard to ‘blame’ a small business for underpricing.

Pricing, however, is about much more than figuring out what people are willing to pay. It’s also about Positioning, which is to say it’s about figuring out how much which people are willing to pay. It’s as much about understanding who you want to buy your product as it is understanding who you don’t want to buy it.

I’ve told people frequently that every time I take on a cheap project, for whatever reason, they require the most effort, make the most revisions, and are the least interested in participating in the process than any other clients. The reason is simple, and it’s the same reason, regardless of the good or service: Perception of Value.

Some consumers, no matter how much you try to ‘educate’ them, will never understand the value of your good or service, because they don’t value whatever additional value you offer over your competitors, and they never ever will. So price high enough that they won’t consider hiring you (or buying your product) in the first place.

Let them scoff…and then leave you the hell alone.

Drink Your Own Kool-Aid™

A few days ago Seth Godin (an author whose writing I have read quite a bit of, and feel has some really interesting insight into nature of creating value, despite the fact that he occasionally says or writes something that’s just bonkers) wrote a short blog entry on spending money on your business, and how hard that can be.

He’s right. It’s hard to spend money on something you can spend time and effort on making an end-run around. I work with small businesses all the time who waste a lot of time because they want to save a buck. I’m guilty of it too. Anyone who has ever had to do without because they are building a business knows what it’s like. You work long hours to do a thing you could outsource or automate because you are time rich and cash poor.

The problem I have with Mr. Godin’s post is that he didn’t title it something like, “The Value of Your Time,” or, “How to Go Broke Saving Money.” He titled it, “Ad Agencies Don’t Run Many Ads for Themselves” and then tried to assert that it’s because they don’t want to spend money on themselves…and that’s not it at all.

The reason ad agencies don’t spend money on ads for themselves is not that they don’t want to spend the money, but that it’s the wrong tool. Ads (print, TV, radio, web, whatever) work great when you’re trying to reach a large enough group of people who will consume that media. It won’t work when a) your target is tiny, and b) they don’t reliably consume any one media source.

Reaching top decision makers in sizable companies isn’t as easy as reaching your average potential Coke drinker or Nike wearer or iPhone user because most people wear shoes, drink soft drinks, and would love an iPhone. Maybe .001% of people have any interest in the selection of ad agencies, and I would bet that a fairly small percent of them are tuning in to American Idol for any given episode.

Ad agencies instead spend their marketing dollars on different tools, which are also really expensive, but will work way better for their target market.

However, there is something to be said for drinking your own Kool-Aid. We did a little experiment in walking our own talk this summer, and it worked out really well and provided a solid case study. We wrote and designed a series of postcards. Seven in all, as I once read a study that suggested that it takes seven exposures to form a brand impression. We kept them simple, typifying the “One Nail” philosophy we preach to our clients. We gave a single, clear call to action. We set up simple and clear ways to measure results. We also built the mailing list from scratch, and voice-verified the details for the points of contact to eliminate gatekeepers.

Guess what? It worked. 60% of people who got the postcards went to the microsite. 30% of them asked to be contacted. 9% of them set appointments. 4% signed on as new clients after that appointment.

So, while I think Mr. Godin missed the mark with his title and its implication, I do think there is a case to be made for drinking your own Kool-Aid. I would certainly hope that the Kool-Aid you’re serving to clients is delicious enough to drink yourself.

Playing Chicken

Almost everything worth doing is scary as hell. It’s like playing chicken.

That’s why you need a plan.

If you don’t have a plan you have to make important decisions in the moment that you are least capable of making them well – when impact seems imminent.

That’s a great way to lose at a game of chicken.
Or screw up an ad spend.
Or make a website that sucks.
Or create a brand that no one cares about.

The plan is SO important that it’s become the focus of my business, much more than the artifacts that are created to support the plan…because it doesn’t matter how awesome the artifact is, if the plan sucks you’re going to lose your game of chicken. You’re going to flinch and waste the resources you’ve already devoted to the development of the artifacts.

You lose.

Idols & Mentors

Here’s a little secret – I love Top Chef. We can get into that some other time. 😉

Anyway – I’m sitting here watching Top Chef tonight and the episode features the mentors of the finalists…and I’m profoundly jealous. Each of these amazing chefs has an amazing mentor. No wonder they are the finalists in this competition.

Like I said: Profoundly Jealous.

I don’t have a mentor. Never really have. I have peers who are further along in their career than I am, whom I am extremely thankful will allow me to bend their ear occasionally, but no one that I would look to the same way as a mentor. There is no one in my professional life that I would give the kind of authority that I see these people giving their mentors. There’s no one whose approval I would want as badly as I see here. There’s no one that means as much to me as these people’s mentors clearly do to them.

As a more developed professional, I’ve sought out mentors at various times, and ultimately been disappointed in those relationships…so what makes those relationships so powerful? Maybe it’s because I’ve never worked for any of those people. Maybe it’s because those relationships didn’t start when I was fresh and new and didn’t realize that everyone is flawed and almost everyone is full of shit.

Early in my career I had mostly negative influences, by which I mean I had a lot more people whose failures I wanted to avoid than people whose success I wanted to emulate. I didn’t want to be like the disorganized drama magnet who ran the design department. I didn’t want to be like my former partner who couldn’t manage his money and got himself into trouble with the IRS. I didn’t want to be like my father and work a job that he hated his whole life until he had a stroke and found himself unable to perform the job that completely defined his personality for his whole adult life.

The other thing I had was idols: Paul Rand, Saul Bass, Massimo Vignelli, Chip Kidd and Roger Black among others. There are a few problems with having idols instead of mentors. Idol worship is a one way street. They don’t give you the validation, the feedback, the insight that a mentor will. When you need a voice in your head besides your own, you don’t have one based on real understanding, you just have your made up crap.

So, when I have a tough problem to solve, whose voice do I hear in my head? What do I ask myself? What would Massimo Vignelli do? Probably put on some black pajamas and lay stuff out in Helvetica on his gigantic desk that has a pyramid for a leg.

I need a mentor. And some black pajamas. 😉

The Golden Rule

One of the things I have a big giant problem with in client-service businesses is ‘The Golden Rule. Not the one you learned in kindergarten, the stupid one that goes something like, “The one with all the gold makes all the rules.”

Of course, that’s utter bullshit.

In any economic transaction, the equation must balance. By definition, whatever someone is willing to pay for a good or service is its value. By trading the gold for the service, the one with the gold is admitting that their value is equal. That’s how it works.

So, why then do so many clients get away with acting like jerks to the service providers they hire?

Mostly because it’s a lot easier to find sellers than it is buyers.

Unless it’s not.

If you’re the type of business who has a lot more opportunities than capacity, then the script is flipped. You have the rarer form of value, and you get to set the rules.

After all, money is fungible.

Talent is not.

The key, it seems to me, is to setting up your relationship so that everyone thinks they are getting the same amount of ‘a good deal.’ Keep the equation in balance, but let everyone feel like it’s in their favor just a little. 😉

The Squeaky Wheel…

…gets the grease.

The problem with this is that many times in the client services game, the squeaky wheel isn’t a wheel that needs grease so much as it’s a wheel that feels that it deserves a ton of your attention, despite the fact that they’re paying you the same as every other wheel you work with.

Alright, even I’m confused now.

Here’s my point: Sometimes the best clients, who deserve the most attention, get less attention than the clients who are better at being squeaky.

That’s a shame. Try and fix that.

The Thing You Dread The Most…

…is the thing you must discuss first.

As I gain experience in dealing with people (by which I mean not only clients, but family, children, other people’s children and family, vendors, partners, collaborators…whatever) the thing that has been most helpful for me is the realization that the thing you’re most nervous talking about is the thing you MOST need to talk about.

Of course, it’s also the thing you want to talk about the least, so it’s often the last thing you talk about. Sometimes, you want to talk to people about it so little, that you stop talking to them at all.

With clients it’s usually money or (closely related to that) expectations. We don’t want to scare people off, or seem greedy, or set ourselves up for failure, so we avoid talking about the things that matter most; The Budget and the Timeline.

Clients don’t get upset because your work isn’t as good as you promised, or because things take longer than they think it should, or cost more than they think it should. Clients get upset because you let their expectations be set by their imagination instead of setting them based on your professional experience. They’re working under a set of assumptions that is based on their perception or experiences, which are probably limited compared to yours.

You are the professional in this relationship, after all. That’s why they hired you.

By avoiding talking with clients about the money and the timelines for projects, we set ourselves up for failure. Even if we don’t fail by our own standards, it’s nearly impossible to meet the expectations clients set based on fantasy.

Hello, World

Instead of jumping right in to the actual topic of the blog I thought I’d take a moment to explain WTF you can expect to find here, why I decided to write it, and why I didn’t just put the content over on http://blog.ohtwentyone.com.

Well, it’s pretty easy. The stuff I write on the ohTwentyone blog is for clients, and the stuff on here is for designers. That means we’ll be doing a little talking about client relations, and about running a design business, and the actual practice of the craft. You know, things clients don’t really care about.

I decided to write about the stuff that clients don’t care about because, as it turns out, designers do. The more I talk to people in the industry, the more I realize that practices in the industry are really varied, and while many complain about the results of their practices, which they are normally inheriting from mentors or learning from school or making up as they go along, not a lot are working on improving them very much.

So, once or twice a week I’ll be talking to another designer about a project or client or the way we decided to handle something, and they’ll say, “Do you have a blog?” and I’ll say, “Yeah, but I wouldn’t want to write about that there. Clients read that.” And, while I have no problem with clients potentially finding this blog, and the things I’ll write here, I don’t know that I want to lead with “here’s how I handle PITA clients.” You know, in case they are one.

I’ll be writing about design, sure, and running a business, and the things I learn from my clients, and working with them, and the people I collaborate with, and the things that I read, and the things that I make for my clients.

I hope you enjoy it. Or find it informative. Or both.