How to Price Services
A solopreneur shares some of the lessons he’s learned pricing high-end consulting services.
Good Morning!
Here are today’s highlights:
Gene Marks suggests taking your Google profile seriously (It’s free!).
What’s a better bet: Starting a business? Or buying a business?
The CEO of Zoom says he’s cutting his own salary by 98 percent.
This continues to be an incredible opportunity to hire tech talent.
PRICING
Prompted by Sarah Segal’s recent comments about pricing service work on the 21 Hats Podcast, Harry Elston explains how he sets his prices: “My company, Midwest Chemical Safety, is a very small company that is in a niche market—higher end occupational and environmental health and safety consulting. For me, the keys are billable hours and dialing in those hours for projects or pre-packaged services. First, I have a baseline hourly rate that is generally on par with someone of my qualifications and experience. For project work, I estimate the number of hours a project will require and add on expenses such as travel or, in my industry, environmental sampling and laboratory fees. Additionally, if on-site work requires any kind of written report afterward, I usually estimate one hour of report writing for every hour on site. I typically add between 15 percent and 20 percent on all project time so that on-site scope changes that arise can be accommodated in the budget without going back to ask for more money.”
“My hourly rate is negotiable—to a point. But remember, negotiations are two-way streets, and a client must give something up as well. I may choose to negotiate my hourly rate if a client will guarantee a large number of hours (in excess of 200).”
“If you are concerned that prospective clients are going to gripe about your fees, don’t be. Instead, I suggest adopting the attitude of, ‘If you want the goods, you have to pay the tariff.’ If necessary, tell them that.” READ MORE
MANAGEMENT
An executive coach and former CEO says business owners need to find someone they can talk to:
MARKETING
Gene Marks says local businesses should take their Google profiles seriously: “Unfortunately, it can be costly for a small business to get its listing at the top of a Google search. The good news is that there’s an easy way for customers to discover your small business online without your having to spend a lot of money on online marketing and search engine optimization. In fact, it’s free. You just need to make sure your business has a Google Business Profile. ‘Google Business Profiles are the number-one form of free marketing any local business owner could use,’ said Mac Frederick, who, as the founder and CEO of Philadelphia-based online marketing firm Momentum Digital, has helped ‘close to a thousand’ businesses create and manage online profiles. ‘It is more important than your website, your Instagram, or your LinkedIn profile.’”
“If it’s created properly, your profile will show a visitor all the pertinent information about your business, including hours of operation, location, contact info, photos, and videos that you’ve posted, and — most important — reviews from your customers, as well as your responses.”
“Restaurants can display menus and take delivery and takeout orders through Google Business Profiles. Retailers can show the products they offer. Car dealers can list their current inventories.”
“If you identify as an LGBTQ-owned business or as a business owned by people of color, you can add that label to your profile.”
“A new function will allow you to create up to 10 frequently asked questions with automatically generated answers.” READ MORE
Similarly, software platform Jobber is helping mom-and-pops enter the digital age: “Jobber operates in the U.S., Canada, and other countries, working with small businesses such as HVAC installers and lawn care providers. Its software helps with services like sending quotes, dispatching workers to job sites and invoicing customers. ‘The vast majority of these small businesses are going from zero to one with technology,’ said Chief Executive Officer Sam Pillar. The company’s goal is to help mom-and-pops and other local companies with few resources increase efficiency and work more effectively online. ‘You have someone come fix your HVAC or mow your lawn, and they give you an invoice on a scrap of paper — it doesn’t fit your expectations,’ Pillar said.”
“The company said its revenue has grown threefold since it last raised funding two years ago, and it expects revenue to exceed $175 million this year.”
“Jobber is raising money during a perilous time for both tech startups and the housing market. Technology companies have been slashing staff and watching valuations sink. Meanwhile, sales of previously owned homes in the U.S. fell in December to the slowest pace in over a decade, and new home construction is slipping.” READ MORE
Would you rather start a business or buy a business?
TECHNOLOGY
A Wall Street Journal columnist who tried Microsoft’s new AI-powered Bing says search will never be the same: “Microsoft’s search engine might not be a punchline much longer. The company is releasing a version powered with AI, and it’s smart—really smart. At least that’s my take after spending some time testing it out. Leaning on its multiyear, multibillion-dollar partnership with the buzzy startup OpenAI, Microsoft is incorporating a ChatGPT-like bot front and center on the Bing homepage. You can ask it questions—even about recent news events—and it will respond in sentences that seem like they were written by a human. It even uses emojis.” READ MORE
HUMAN RESOURCES
Business owners are paying premiums to hire migrant workers: “Migrants who come to the U.S. to find work are now being hired more quickly, at higher pay and under better working conditions than at any time in recent memory. In many cases, employers and economists say, migrant workers are being paid as well as their American counterparts. Job vacancies in the U.S. increased to 11 million at the end of December, according to the Labor Department. While the tightness appears to be easing in the white-collar job market, employers say finding hourly wage workers remains a challenge.”
“A shortage of cooks and dishwashers prompted Luis Reyes, owner of Washington, D.C., restaurant Lauriol Plaza, to distribute fliers in subway stations and at bus stops in neighborhoods with large migrant communities.”
“‘The scarcity is huge,’ Mr. Reyes said. ‘It’s a terrible stress. Many times I suffer from insomnia thinking about what we are going to do to give service.’”
“‘Last December, he handed out cash bonuses ranging from $250 to $5,000 for ‘those in the kitchen who represent the soul of the restaurant.’” READ MORE
In another indication that the work-from-home era is fading, Zoom is laying off 15 percent of its staff: “Zoom grew rapidly during the Covid-19 pandemic, when companies and consumers turned to its video conferencing software to connect with one another. That growth has cooled in recent quarters as companies have called employees back to offices and people returned to in-person activities. Mr. Yuan said the company tripled in size in two years. As of Jan. 31, 2022, the company had nearly 6,800 employees, up from about 2,500 employees at the same time in 2020, according to regulatory filings. ‘We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,’ [Chief Executive Eric] Yuan said in a message to employees. ‘I am accountable for these mistakes.’”
“Mr. Yuan said he is reducing his salary for the coming fiscal year by 98 percent and forgoing his fiscal 2023 corporate bonus. Members of his executive leadership team will also forfeit their bonuses and reduce their base salaries by 20 percent for the coming fiscal year.” READ MORE
Actually, there are lots of tech job openings—just not at tech companies: “According to Bain, job postings calling for people with tech expertise are growing within non-tech industries. ‘The growth of demand for tech talent from non-tech business has really been a game-changer,’ said Jonathan Frick, a partner at Bain and one of the study's authors. Using publicly available job postings and U.S. government data, Frick and his team determined that demand for tech workers at non-tech businesses outpaces demand at tech businesses for the first time. Companies across industries are using more technology, causing a greater need for people with software engineering skills, Frick said. He used Walmart and Amazon as an example: one is traditionally seen as a retailer, and one is seen as a tech company, ‘but the reality is that they've had to converge in terms of what kind of skills they need,’ he said.”
“Wajid Mirza, founder of Xperti, a recruiting firm specializing in IT and software development roles, said the report's findings ring true at his company. While some tech projects have been paused or canceled, Mirza said he still sees strong demand for software developers among government and retail clients.”
“Whether non-tech firms, such as retailers, can pay the same sky-high salaries as their tech counterparts remains another story.” READ MORE
THE SUPER BOWL
UPDATE: Big Charlie’s, the South Philly bar planning a Super Bowl party for fans of the Kansas City Chiefs, has decided to cancel: “‘It’s sad — we’re saying no to regulars,’ said customer Michael Puggi, a friend of owner Paul Staico and spokesperson of sorts for the bar. ‘It was a tough decision for the owner to make.’ Puggi said some 300 people had tried to get tickets for the watch party at the bar, which has room for roughly 60 people. Many of those requesting tickets weren’t the die-hard Kansas City fans that frequent the bar in the regular season, and concerns about security were growing. ‘He’s worried about other people,’ Puggi said of Staico’s decision.”
“The corner bar at 11th and McKean Streets has received an onslaught of media attention in the weeks leading up to the Eagles vs. Chiefs Super Bowl game.”
“Though the bar is no stranger to that— it was the subject of an Emmy-winning NFL Films documentary in 2003 — the intensity of this particular matchup proved too much.”
“‘How u goin to close for the most important nite?’ one commenter wrote. ‘Figure it out,’ said another.” READ MORE
THE 21 HATS PODCAST
Walking Away From a Salary: This week, Sarah Segal tells Shawn Busse and Jay Goltz why she’s decided to take her public relations business back after selling it two years ago to a larger firm so it could handle the back-end stuff and allow her to focus on public relations. For Sarah, the immediate result of the decision to break away has been an exhausting few months starting over, including reincorporating, finding health insurance, and reducing her own pay. Meanwhile, Jay suggests an old-school marketing tactic that involves leveraging an envelope, a stamp, and the post office. And Shawn explains how he created a sales process that has allowed him to remove himself from day-to-day sales.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren
Pricing services. A plumber might take 10 minutes to fix something and charge $150, but it’s worth it. Same with legal advice or writing a press release. You’re paying for the expertise, not the time spent. The job takes less than an hour; the expertise takes years of education and experience.
That's really interesting. Thanks for sharing, Scott!