Episode 38:Pricing Your Services
How do you price yourself as a consultant? What’s the difference between pricing as a consultant and a contractor? What’s the difference between pricing on time versus on outcome?
Summary
Nick and Kai walk through how they set, raise, and defend prices for both consulting services and information products. Nick traces DraftRevise from $650/month to $9,000/quarter; Kai explains how switching target markets let him double his retainer rate overnight. The running argument is that the first price is almost always too low, that price signals quality to buyers who have no other information, and that discounting rate rather than scope costs both money and credibility.
Highlights
- Nick’s rule: if a service sells out quickly, raise the price. If it doesn’t sell at all, lower it, or reconsider whether the problem is expensive enough to justify the work.
- Nick launched DraftRevise at $650/month. It now starts at $9,000/quarter. The core offering is materially the same; the main addition is significant research.
- Kai took the same outreach retainer from a $1,000–$1,500/month ceiling with e-commerce clients to $4,000/month with information-product creators. E-commerce stores had physical margins and needed to move volume to break even; info-product creators had none of those constraints, so a high-ticket service was an easier sell.
- Kai’s floor for an information product that solves a meaningful problem is around $49. Smaller products that save 10–20 minutes of research price between $5 and $15.
- Neither Nick nor Kai discount rate. Nick’s rule: compromise on scope, not on rate. Cutting the rate without cutting the work means you have no integrity as a consultant.
- Discounting trains buyers to wait. A friend of Kai’s ran a 10% abandoned-cart email; buyers figured out they could add items to a cart, leave, and get the coupon automatically. He had to restructure the entire sequence to fix it.
- Promo code boxes in checkout send shoppers to Google hunting for a code. Nick opens a new tab every time he sees one. Removing the box eliminates the behavior entirely.
Read the transcript
Let’s talk about pricing. Let’s talk about pricing. So, in your business, and I Closely read everything you make, as you might have noticed. That’s terrifying. I know. Please be afraid. You’ve changed the pricing for your services. At different times, depending on different factors. I guess I’m curious within the draft ecosystem, how do you first arrive at a price for a new service you’re offering? When do you raise the price, and how do you know what to raise the price to? And there’s a lot there to unpack, but I guess that’s what I’m curious about.
I’ll tell you a story about DraftRevise for a little bit. So I launched DraftRevise. People are going to love this. six hundred fifty dollars per month, and you were grandfathered in. So you didn’t have to pay quarterly. That’s changed. And it was only six hundred fifty dollars. At the moment, it starts at nine thousand dollars a quarter. Right. The price has gone up a little bit. And the rule that I’ve had with DraftRevise. And I think this works as just a general rule for productized consulting services. So this is actually like a guideline that’s helpful to our audience for once. If it sells out quickly, raise the price. That’s it. If it doesn’t sell out quickly, you’re good. If it doesn’t sell at all, lower the price. Or think about, more likely, think about whether or not you’re actually solving an expensive problem that’s commensurate with the amount of work you’re doing. I another general hard and fast rule about consulting. I guarantee you your first price is too low. Guarantee you. For one, you probably should be doing a price that’s too low because that way you get people in the door and you prove your service. Once you’ve proved your service, then you hike the price, right? But for another, you’re too scared and naïve to dissuade clients from coming in the door, so you lower your price and you undervalue your services. You don’t do it so much that it kills your businesses, but you do do it so much that you leave a crap ton of money, like on the order of hundreds of thousands of dollars on the table every year. Now if no if you have if you launch with what I axiomatically believe to be a too low price and nobody buys it You have either failed on your content marketing, you have failed on your marketing page, you have failed on your relationships, or you have failed on your ability to actually pick a problem worth solving. Any one of those is a very large and complicated and thorny problem that could easily be the subject of a lengthy episode of this podcast. In fact, some have in the past. But. The problem is with you, right? Either get a new service. It’s not that your clients don’t, they owe nothing to you. You need to find something that actually gets people in the door and causes them to buy, right? Think about yourself like you’re an inventor. Inventors come up with dozens of ideas that are hot garbage. Look at all the failed crap Thomas Edison came up with. And I know he’s a problematic example for a variety of reasons, but humor me. I think that the vast majority of productized consulting ideas die on the vine for one of the four reasons I outlined. And that absolutely affects your pricing. It causes people to undervalue themselves. But you want a flag as a premium offering, and you want to get there as quickly as humanly possible. I launched not realizing that $650 was comically undervalued, and then moved myself to an offering that was more in line with what I was actually doing work-wise. And then moved myself more into an offering that was in line with me being a prize to be won. And that took three years.
And so, were you changing the offering fundamentally during that time period or changing how you presented the same group of services? No, you don’t.
Yeah, good question. I only have done one fundamental change to the offering, and that is to add in significant amounts of research. And that’s recent. I was charging $2,500 a month at one point. which is damn close to where we’re at right now, um, for materially the same things that I was charging $650 a month for in the previous incarnations of DraftRevise. Add-ons generally cost more, and the pricing for that has gone up exponentially since, that sort of thing.
So yeah, one of the most amazing moments for me was when I was able to take the exact same service to a different market, but double my rate overnight. And so the background is: I was doing outreach and link building for mostly blogger outreach and influencer marketing for e-commerce stores. I was basically capping out at $1,000 to $1,500 a month. People would not pay more than that. Whenever I did, the expectations were too high, the focus on the return was too high. Their margins were too low, so we’d need to move a ton of product for it to even be break-even. And it just was, it was a fit, and I was building a business there, but it was not a perfect fit. And I had information product creators, so again, people selling products online. Reach out to me and say, We love the outreach thing you’re doing. We’d love you to do it for us. And I realized that by switching to this new market, I was able to reach an audience of buyers who didn’t have to worry about things like there’s a cost for us to produce this good. We have a margin. If we sell it for $50, we’re only actually making $20, and instead it’s PDFs. Videos and information. And so it was a lot easier to promote a high-value service and have people come through the door and then purchase it and reach break even faster. And Just by making that switch in the target market and my messaging and positioning, I was able to go overnight from charging $1,000 a month to $2,000 a month, and now I’m charging $4,000 a month for what is materially the same service. And so. I completely agree with you in terms of pricing being a signal for the quality of the service. It’s weird and irrational, and people have written tons of books on this. But. It is crazy how we do punt to, okay, which one’s the more expensive? That one must be better quality when we don’t have a lot of other surrounding information. In a vacuum, if you’re looking at two different consultants, And you’re trying to hire a good consultant for, let’s say, SEO, and one charges $500 a month, and one charges $3,000 a month, you’re going to start saying to yourself, why does that one charge $3,000 What do they provide that the other one doesn’t? What am I missing out on if I choose the $500 option? Suddenly, the $500 option doesn’t look like an affordable option, but it looks like a penny-pinching budget option potentially. So, why pick that one when maybe there’s a middle ground? So, Price gets into a really, really interesting territory there. And I think not enough consultants are willing to test the prices of their services and say, well, what happens if I just double the price for this? I have a pipeline. I have deal flow. I’m not going to raise it on my existing clients or existing prospects, but just for new people who come on the door, what happens if I just 2x it and see what happens? And I think more often than not, you’ll discover. Maybe a potential decrease in deal flow that comes in, but you’re still closing the same number of people. Maybe you’ll experience something I did, which is as I raised the price, the quality of the leads that came in went up dramatically. Like we’re talking. 300% better quality of leads. People who showed up were like, We understand our business. We need help solving this expensive problem. You are the person to call. We would love to work together. How could we work together? And a much more positive relationship than some of the e-commerce relationships I had. So I think pricing really does signify quality in a lot of ways. If you’re attracting low-quality clients, it doesn’t mean you need to work with more of them or necessarily change your positioning, but it might be that you are solving an expensive problem. You’re unintentionally signaling as being the more affordable or budget option and attracting people seeking that out. And so, if you raise your price, you’re going to attract people who are seeking out a higher quality premium option.
Yeah. Yeah. Man, there’s so much in that. You want to flag like you’re the premium good. I mean, we even mentioned this in our previous episode where we talked a lot about the difference between a con a consultant and a contractor, right? And if you start out like $100 an hour, you’re a contractor. But if you’re charging probably $30,000, $40,000 a week, you’re a consultant. And another huge difference is you’re doing the work or you’re doing the work in the service of solving business problems. And if the goal is to solve the business problem, that’s you do that by any means necessary, right? It can involve a lot of different activities and even that you kind of go a little bit more generalist, which is kind of funny. But you’re solving an expensive problem, and it might involve different programming stacks or different um techniques, whatever have you, different tools. What have you done for pricing your informational products like your books, your videos, your stuff?
Good question. Scott, Internet stuff, Internet things.
Learny things for the thinking and contemplation. Yes, okay.
It’s a trash fire a bit. I’ve adopted a few base principles that I’ve stolen from people like Patrick McKenzie or Nathan Barry. And so it comes, and Ramit Sethi is another big influencer in my mind. I try not to price any information product that significantly solves an expensive problem for the buyer at less than $49 or so because I think the price difference between 30 and 50-ish bucks. For this will save you, let’s say, five to ten hours of research and figuring it out yourself is immaterial. You might as well price it at $50. I’ll price things in the $5 to $15 range if it solves one small facet of that expensive problem. So let’s take a concrete example. I have my book, Podcast Outreach, which teaches you a repeatable system to get on podcasts. I charge $50 for the base package. If I was going to have a smaller $5 to $15 offering, it might be a short excerpt that says, Here’s how you identify podcasts to pitch. It doesn’t teach you how to pitch, it doesn’t teach you how to follow up. It doesn’t teach you how to do any of the other things surrounding being a good guest on podcasts, but it solves one small problem and serves to get people into the larger ecosystem. So. I take a look at it from the perspective of there’s a minimum I want to charge for larger scale products, like a full product, but there’s value in having smaller products as well. I want to, if I want to have something in that five to fifteen dollar range, I want to make it a cheat sheet, a worksheet, something tiny, something small. Maybe it’s only five-ish pages, but it really breaks down: hey, here’s a quick and simple way to do X. Our friend Moitza from Super Spicy Media. released uh a worksheet for five bucks, the 100 best Instagram hashtags to use, broken down into like 10 top level categories. If you’re in the cooking niche, use these. If you’re in the fitness, use these. And it sold moderately well for her. I I don’t know the exact stats on it, but I know it’s It’s been selling continually. And I think that’s a great example of pricing a smaller information product that you know will work as a feeder for a larger service offering or a larger product you offer. And what did she do? She took a tiny problem. Which hashtag should I use? She made something that answered it, and she charged five bucks for it. And if you’re debating in your mind, like, well, is it worth investing $5 or would somebody invest $5 in this? The rubric I always use, and the measurement I always encourage people to use, is think about if this would save the person buying it five to ten minutes. Maybe 20 minutes. Would you pay five bucks for that? Probably. Okay, great. Done. Ship it. Charge $5 for it. Like, it doesn’t need to be monumental and amazing to charge $5 to $10 for. It needs to save them 10, maybe 20 minutes of googling around to figure it out themselves. And that really, I think, is a great way to approach pricing for Lower, I don’t know what phrase to use, I guess smaller products or products that only solve a part of the expensive problem.
I generally do my pricing for information products. I mean, I make print books by and large. I do some PDFs. But I think I try and calculate it and position it in terms of the amount of money and time that you’re going to be saving. So just like Moitza, which that’s brilliant. It’s literally just a list of fucking hashtags. Like, and to somebody else, that looks horrible, but to others, it’s valuable, right? For cadence and slang, the calculus is if you’re a journeyman developer or you’re just starting out on a project, And it takes you two hours to read cadence and slang, and it saves you two and a half hours in work, you just paid back the book and your time. That’s it, you solved it. And by others’ estimation is actually far more than two and a half hours that it saves them. So then I can, you know, use that for testimonials and grist for that, right? I generally price it pretty low. I mean, books should only be about $50. To about $500, which I know a lot of people are listening to this podcast and being like boggled that a book could possibly cost more than $20. You’re not thinking right about consulting, and you’re not thinking right about design or tech. This is an industry that is awash in money, and you are selling to payers. You are selling to the economic engine of the planet. Start carrying yourself like it. People value a $50 book and they pay more attention to it than a $20 book. It’s why white papers on this industry go for $500,000 and it’s a 20-page PDF, right? It’s why Gartner has a business around that. The number one thing is sell to payers, right? Like, and we talk about this a lot on the podcast. I don’t sell to non-payers. I cut products that sell to people who are bad customers or not going to give me money. And I’m very, very, very cold and cynical about it. I don’t care. It makes me money. It makes my business money. It makes me solvent. So I also don’t give a whole lot away for free. I give away like snippets for free, like chapters, example essay from draft evidence, that sort of thing. I never run a sale. I have not run significant sales in a long period of time. I’ve given away free months of Revised Weekly to juice that once. I will start with a lower price, like an introductory price, and that will be the closest you ever get to a sale. Look at any luxury good worth its salt that is not poaching its name. and you will see a lack of sale. Aesop is a skincare brand. They have never held a sale once in their like twenty year history. Bentley doesn’t have sales. You know, Hermes may have sales, but it ain’t on a Birkenbag. And let me tell you, you’re there for the Birken bag, right?
Yeah, you’re right. There is an interesting Thing that you find there, where for a luxury brand or a luxury good, they aren’t discounting their price. They might launch a new product line and have that at a lower price to fill a market need. But If they do run a discount on a product, it can unintentionally steal some of their future revenue or signal that Oh, pricing for this is actually lower. There’s something I see a lot in the e-commerce space where a store has the standard, you know, pop-up, join our mailing list, get a 10% coupon. But when you do that, you’re unintentionally training your buyers to always wait for a sale. So if you do discounts and sales too frequently, people just say, I’m not going to buy it now. I’ll save 20% if I wait another week. A friend of mine ran into this with an abandoned cart email he was running. His audience realized that: oh, if I just add the product to my cart and then leave, I’ll get 10% off. Everyone did that, and he had to restructure his messaging around that to nudge people first, nudge people again, then offer a discount to try to incentivize the sale. Because it was having an unintentional side effect.
You know how on Shopify and Big Cartel, there’s like a little block box for promo code, even though you may not have configured any promo codes on your account and stuff like that? The first thing I ever see when I find a promo code box is I Google, I open a new tab and I Google name of storefront promo code. And then I just go down a rabbit hole of terrible content marketing and try to find a promo code that will save me free shipping. So that’s getting in the way of your conversion, right? If you eliminated that box, I would never think to Google furiously for a promo code. I can’t be alone.
Yep. No, I 100% agree. There’s been times when I’ve been like, So excited to buy a thing. Google the thing, find a thing, add it to my cart. Go through the checkout process. See that there’s an option for a promo code. Start Googling around for a promo code. Spend 20 minutes on it. Get so burnt out and disillusioned that I couldn’t find a discount on the thing I really wanted to buy that I end up not buying it. It’s, I mean, like, yes, take that promo code box in your checkout flow out behind the barn and old yeller it. Just Put it down with some dignity.
Every time I see a promo code box, I think it’s like the equivalent of a prospective client being like, Can I have the exact same amount of work for less money? Yep. Yo, fuck you. Come on. I got a business to run.
I do think there’s an interesting distinction in when and how you can or should offer discounts. When you’re selling services or when you’re selling products. Like, I’ve never run a discount on my services. If somebody asks for a discount when they’re doing a bundle, I’ll never do it. I think maybe once or twice in my history as a consultant, I’ve discounted my price. Usually, when somebody asks me to knock 10% off the invoice, I’ll say, great, what could we remove to make it? Fit in within this, within your budget. Or great, if we take 10% off, what I ask for is like a video testimonial or a larger case study or something that’s valuable to me as a business owner, even if it isn’t cash. When it comes to information products, I don’t know. I think it depends on, it definitely depends on where you’re trying to occupy in the market. So If you have something that’s launching once a year, well, you aren’t going to discount it because it only launches once a year and it’s premium, it’s exclusive. If you have something that’s always available, I could see As part of your launch sequence, or seasonally saying, like, hey, it’s the 4th of July. If you use the code July 4th, you get 10% off for the next 24 hours. And That will nudge buyers who have been like, maybe two. Oh, hey, it’s a time-limited discount. I better take advantage of it. I don’t want to miss out. So That could definitely work. But again, I think it circles back to that excellent point you made where you have to understand the position you’re trying to occupy in the market. If you’re trying to end up at the high end, well, Don’t give it away for free. Don’t discount it. Don’t give the perception that this is worth less than what you’re charging. If you are comfortable being in the middle of the market, I’m selling a solution to a problem. I’m running a temporary sale. There’s no problem with that. It could definitely nudge people in the right direction. You just want to be afraid of discounting too often.
Yeah. If somebody comes in and asks for a one-off discount on a book, I always say no. Because they’re the kind of person that’s going to come back and want a refund later or like man splaying their way through the book because they’re just like, you can’t give an inch on that. Right. If you want to run a time-delimited sale, if you want to run a sale, it should be time-delimited, and you should follow up with people continually during the sale. I don’t do that, but you could do that if you want to make less money. Um and juice a lot of interest. Might turn into more money later, who knows. But uh the vast majority of scenarios where people are asking me for discounts. I’ll compromise on scope of the project, not on rate. And so you are providing commensurately less value. Otherwise, you don’t have any integrity as a consultant. That’s it. There’s no way to be charitable about that. If you compromise on rate, you don’t have integrity as a consultant.
Yeah, I completely agree with that. If you compromise on rate, I mean, it sets a bad precedent. It will let the client think they can always negotiate with you on pricing. And I’ve gone down that rabbit hole before unintentionally. It’s never, it may be very solid in my stance of I don’t offer discounts because then you’re negotiating the pricing on everything and you want to be focused on the value you provide, not how much you’re charging. So Yeah, I think discounting a service is always a bad idea. Discounting on the invoice is always a bad idea. Occasionally, if I get people pushing back on a price, I tell them that what I do is I charge 100% upfront for all the services I provide. So I will let people know if they want a discount. Like, well, I’m actually already including a 10% discount for 100% payment upfront. So, you’re already getting a 10% discount. My apologies if I didn’t call it out. If you’d like to split this into multiple payments, I’m happy to. We do lose that 10% discount though. And I think one time somebody’s been like, oh, I guess we’ll have to split it into multiple payments and lose the 10% discount. And I’m like, okay, cool. I made 10% more money. And I’m okay with that.
Yeah, I mean, if you want to stagger your payment plan, great. Sign a contract and get it in writing. That’s fine. I generally request 100% up front. Some people, you know, it’s a back and forth. It’s fine. But don’t leave money on the table. You don’t want to be the bottom in the relationship before you even get in the door. How do you think that’s going to fare for the rest of your project? It’s going to be horrible. So don’t do that. My goodness.
Yeah, it unintentionally sets you up as being. Being a service provider instead of being a trusted advisor. And I think throughout all of these episodes, one thing we try to get at again and again is: as a consultant, you want to occupy the role of a trusted advisor to your client. You want to be the person they come, you want to be winning. Winston Wolfe. And if you don’t get the reference, you should go watch Pulp Fiction tonight. Please, for the love of God, go watch that movie. You want to be the fixer. You want to be the person they call when there’s an emergency. Winston Wolf does not negotiate on price. Winston Wolf shows up and he fixes the problem you’re in. He resolves the mess you’re in. And great, we’re done. That’s it. You want to occupy that role in the mind of your client. You don’t want to be the lackey that gets called in to build the website or do the thing. I shared this example, I think, on a previous episode, but it’s still germane. I had a long-term contract with a client. There was a big project they handed me: design and development of their new website. I was super excited for it. And I get three days into the project, and I get an email from this chief marketing officer: stop work, we’ll talk next week. And I’m like, question mark, what’s up? And they were like, we’ll meet next week and talk about it. They found somebody on Craigslist for 20 bucks an hour who was good at WordPress and air quotes and would do the project for them. And they said, well, we have two options here. We could go with the guy who’s charging 20 an hour or You could reduce your rate to 20 an hour. And I was like, ha ha ha ha, ha ha. Obviously, you’re joking. And they’re like, no. And I was like, well, then no on my part. Good luck with that. And it ended up terribly for them. Project shipped three months late. Went way right. Shocking. Shocking because they were shopping on price. They were not shopping on trusted advisor, on somebody who will be able to help us reach our business objective. And You want to occupy that role of being a trusted advisor, being somebody who’s talking the client through the project as a whole, and even helping them decide if they need that project or not. Not just being the person they hire to do the thing for them. There’s times when that can be great, but eh, I don’t think that. You want to occupy that role as you continue to develop your career. Maybe as you first enter a market, maybe as you’re first building up your business, it makes sense. But as you establish yourself as a consultant, you want to move as far away from that position as possible.
Yeah. Yeah. Agree with all of it. Yeah. I mean, if your client’s going to go behind your back and hire somebody for $20 an hour, fuck them. You’re there to solve business problems. You don’t gain the respect necessary to get in front of these business problems by A, getting paid $20 an hour, B, compromising on your rate, compromise on scope. And then constantly tell them that they’re shooting themselves in the foot by compromising on scope. And then if they ask you to increase the scope mid-project, say we have a contract. PS have contracts. Mm-hmm. Mm-hmm.
Completely agreed. So, yeah. I mean, pricing is big. Pricing is deep. I think.
Yeah, we could go for another hour on pricing. We could talk about. any other type of offering that you do, retreats, conference payments, reli like relative pricing to market rate, relative pricing to consultant rate. Relative pricing for enterprises. Any one of those could be a half hour episode.
Easily. I’d say, like, rule of thumb, as the scope of client you work with increases. Increase what you’re charging, and you run into some weirdness if you’re doing a productized consulting model where you have your price displayed on the website. And like suddenly, Google comes knocking, and they’re like, Nick, I’d love to hire you for A-B testing. Well, it says X thousand a month on the website. We’d like that. What I found is When those larger clients come knocking, saying, Well, great, because you’re a larger client, it would be a much larger scope because I’m trying to solve a much larger business problem for you. Well, we could get a similar, you know, basket or bundle of goods as is displayed on the sales page, but we’re going to have to go through a slightly different process for you to make sure that I’m going to be able to adequately meet your needs. And that will involve putting together a proposal. So I try to switch the narrative from: I want to buy the productized service you have, to, hey, let’s go through a research process and a discovery process. To make sure that this is a good fit, then I’ll put together a proposal that’s custom-made for your business because when Google comes knocking, you want to add an extra zero to everything you’re selling.
Two zeros.
Three zeros. A Google Plex of Zeros.