Tons of things have changed
At one point in time, if you owned a restaurant, maybe you thought of hiring someone to stand outside on the street corner wearing a sandwich board to tell people about your spot.
Or maybe, if it was a different time, you decided to spend money on a Yellow Pages ad.
I'm linking to these items on Wikipedia because there's a chance today that you don't know what these things are.
They were the distribution mechanism of marketing at one point in life.
Today, people don't always think about sandwich boards or the Yellow Pages.
Today they think about a website and maybe Google's local ads. Or maybe you ask customers to rank you on Yelp or TripAdvisor.
Maybe you'd integrate with OpenTable.
Here's the truth – the objective won't often change but the distribution mechanism will keep changing over time.
I tell you what seems obvious because I want to talk about a pricing dynamic that requires context.
Marketing hasn't changed
I tell you about the difference between objective and distribution mechanism, but those words seem stilted. So instead, let's call it the destination and the vehicle.
For many businesses, the destination is always the same – to gather a group of prospects with the hope to transform them into buyers.
So it's not the destination that keeps changing. It's the vehicle. When you could gather a group with a Yellow Pages ad, you spent money to do that.
Then, when it was time to use Groupon, you tried that. And when it was Yelp, or a fancy website, you did that.
The vehicles change.
In 2004, a business might have spent anywhere from two to eight thousand a year (or more) on Yellow Page ads.
By 2014, most would simply have the free ad that the Yellow Pages would give, simply to be able to publish something.
But that money went elsewhere, like to the development of a new website, or a refresh.
I've said you should raise your rates
I'm one of those guys who talk about value-based pricing and why you should raise your rates.
Face it, most people who build websites don't even know how much a company ever spent on their Yellow Page ads, so they have no idea what value a business may have on marketing.
They normally define their prices in a bubble, removed from the client and their business. This is why I recommend that they re-evaluate things and potentially raise their rates.
But it always has to be tied to the value delivered. And in that world, it means knowing your customer, knowing what they care about, and even knowing what they've spent on previous vehicles when you're asking them to change them.
WordPress Site Prices
To be clear, I've never said “raise your rates” without context. My suggestions have always had context, but this is a dynamic that is set in the overall customer objective space.
You have to know what your customer is doing, what they want to achieve and how you can help them.
But some folks have raised their rates. Just because. Or because they're doing things more technical.
You know what I mean:
- It cost $500 because it was html
- It cost $2500 because it was WordPress
- It cost $15,000 because it integrated with booking systems
Now, to be clear, I'm not against raising your rates or having different prices for different kinds of work.
But it's always going to have to be grounded in the client's world.
- What if they don't care about html vs WordPress because they won't be editing their site?
- What if all they want is to make sure people can see a menu and a phone number?
Sometimes we get so excited by the complexities of our own projects that we make things more complicated than they need to be.
And in those cases, we can easily price ourselves out of the market.
Not because we raised our rates. But because our rates weren't inline (any longer) with the value delivered.
The result is predictable
Years ago Clay Christensen wrote the Innovator's Dilemma. In it, he talked about the dynamic where companies move upmarket (they keep adding features and keep raising prices).
The result, in virtually a ton of different industries, is that while that upmarket climb happens, it creates an opening in the down market for new entrants.
That's what I think happens when you start raising your prices without qualifying value.
That's what I think happens when you get enthused by “how” you code something instead of “what” you deliver.
That's what I think happens when your client decides to change the vehicle to get to the same destination.
This is why I recommend Codeable
I'm an ambassador for Codeable.io for this very reason.
As people move up market, customers will still want simple things at simple rates.
And they'll want to use what they've heard is a simple solution, like WordPress.
I believe WordPress can deliver value down at the low ends of the market, for websites as much as for blogs. But the price for these solutions has to be inline with the value delivered to a customer.
Some customers, those who were spending $10,000 a month on Yellow Page ads won't have any trouble investing in a great website and an incredible WordPress solution.
But those who have never spent anything like that, need a place to go to get simple changes, theme tweaks, and even some quick plugin work done.
And they need it at a price that is inline with their value.
So I send them to Codeable to get help.