Eggs 437: The Death of Hourly Billing with Jonathan Stark

Summary

In this episode, Ryan and Mike interview Jonathan Stark, a consultant and author, who shares his journey from software development to coaching on value-based pricing. They discuss the pitfalls of hourly billing, the importance of understanding value, and the significance of the 'why' conversation in client interactions. Jonathan emphasizes the need for a shift in perspective from self-interest to client satisfaction, and he outlines effective pricing strategies, including the use of guarantees to mitigate risk. The conversation also touches on establishing authority in one's field and the benefits of narrowing focus to become a recognized expert.

Takeaways

• Jonathan Stark transitioned from software development to coaching on pricing.
• Hourly billing can lead to misaligned incentives and poor client outcomes.
• Value-based pricing focuses on the client's perceived value rather than costs.
• The 'why' conversation helps uncover client motivations and needs.
• Setting prices based on value can lead to better profitability.
• Offering guarantees can alleviate client concerns about quality and service.
• Establishing authority in a niche can lead to higher pricing and demand.
• Narrowing focus helps in becoming a recognized expert in a field.
• Proposals should offer multiple pricing tiers to maximize client options.
• Understanding customer satisfaction is key to long-term business success.

Chapters

00:00 Introduction to Jonathan Stark

02:56 The Shift from Hourly Billing to Value-Based Pricing

09:31 Understanding Value-Based Pricing

12:56 The Importance of the 'Why' Conversation

18:47 Negotiating Prices and Payment Terms

25:39 Shifting Perspective: From Self to Client

30:42 Creating Customer Satisfaction

38:57 Proposals and Pricing Strategies

47:49 Guarantees and Risk Mitigation

59:52 Establishing Authority in Your Field

Credits:

Hosted by Ryan Roghaar and Michael Smith

Produced by Ryan Roghaar

Theme music: "Perfect Day" by OPM

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