Break-Even Points for Value Pricing

A play-by-play.

Published on

Around 2 minutes to read

When value pricing—pricing work based on the value it brings your customer—here’s a question I typically ask:

“At what point does this project pay for itself?”

Great answers I’ve heard:

Answers I’ve heard that make me think they’re not ready for a project (at least not with SuperFriendly):

Smart clients know what change they’re looking for, even if they don’t know how to achieve it. (That’s why they’re hiring help.) Sometimes I’ll try to help them articulate the value, but I don’t try to define it for them. That’s like going to a mechanic without a specific repair in mind and asking them to find a part of your car to fix.

In my experience, clients that don’t initially know what they want turn into clients that stretch out rounds of review and aren’t happy with the final result. Even when we’ve delivered something that might work for them, they can’t tell, because they don’t know what the right thing is.

But clients that know what they want from the start? They know way early on if we’re on track or off course, because they know the destination.

A client that knows what they want knows where the project pays for itself, where it breaks even. And that’s the first price ceiling. If they have a $5,000 budget and expect 1000 more signups, they’ll think they overpaid if you try to charge them $10,000 and they get 1,000 more signups (whether or not that’s accurate).

But what if you’re confident than you could get them 2,000 signups? Then they may accept a $10,000 price because you’re delivering twice the results they’re expecting. Here’s the kicker: that’s still a break-even price, even though it’s double their stated budget.

You can confidently price over any stated budget if you can demonstrate that you will deliver more value than their break-even metric. The more you understand the break-even point, the more liberty you have to assess and communicate the multiples of value you can deliver.

When you value price, every price you give a client should be at least a break-even price. Better yet, every price you give a client should be a “they got a deal” price.

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