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Would you let your clients set your pricing?

Deirdre Wilson – Thursday, December 05, 2013   

 

Are you prepared to let clients determine the price they will pay for your product or service? Well, here's an article about a design company prepared to let clients pay whatever they want. After producing 23 design – logos, business cards, letterheads – they have been paid an average of USD 74 per design. Hardly a roaring success but it does bring to the surface the hoary issue of what to charge for creative work.

I think that our expectations of what is possible and the ease with which it can be done has been profoundly affected by the way Apple have designed and marketed their products. They have created desirable, reasonably easy to use, powerful tools at a reasonable price. 

The rapid uptake of smart devices since the launch of the iPhone has resulted in an increase in expectations about what is possible with technology and a reduction in expectations about cost and time required. Add to that the deluge of increasingly cheap consumer goods and our understanding of value is shifting quite rapidly. Is a luxury good still a luxury if demand is so high that production volumes go up to meet that demand? We expect more to equal less. If that was happening in your market would you let you clients set your pricing?

Are luxury goods still lux if demand is so high that production goes up to meet demand? Tweet this

So, Pay What You Want or Pay What It Is Worth? If our understanding of value is a shifting concept then 'worth' also is in flux. This is evident in the battle between online retailers and store front retailers. Those who will be successful are embracing both as reported in BRW recently

Pay What You Want is a strategy doomed to failure for obvious reasons. Pay What You THINK It Is Worth opens the discussion up to how do you calculate worth? For creative services is it cost per hour to create or a fixed price – if the designer is clever and has lots of experience that allows them to come up with solutions quickly and execute them efficiently then should they charge more or less than a less experienced or less clever designer who takes ages and produces rubbish? Is it the value of the impact it creates in the client's business – if so, how do you measure that and is it the same measure that the client uses? Is it the amount of really clever thinking that has gone into creating a really simple, easy to use result?

What value is the clever thinking that creates a simple, easy to use results? Tweet this

There is a cafe near my home that allows you to pay what you want to for their food. I have eaten there only a couple of times because it makes me uncomfortable. If the service is bad and the environment grubby then I don't want to pay much. But I know that they have to cover their overheads so I feel compelled to pay at market rates but then I suspect that a lot of their staff are backpackers being paid cash so I lower my estimate of what their overheads are and want to pay less. I know that I am over-thinking it but the key is the experience and that has never been such that I feel generous about how much I pay. It's too hard to eat there!

At the end of the day, the auction philosophy remains: things are worth what the customer is prepared to pay for them on the day of sale. If there are no customers then the thing is worth nothing.

If you want to read more about creating experiences that allows you to charge what you need to then try:

This post is by Deirdre Wilson, Director of Hothouse Design – Australia's most sensible information design company.
Deirdre applies her background in industrial design and design management to the complex and wondrous projects undertaken by Hothouse Design.


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