“Value pricing” has two words in it. Most designers only pay attention to one of them.
They obsess over the “pricing” part—the number, the proposal, the negotiation—and spend almost no time committing to delivering something valuable.
In client service, “valuable” means “something that the client considers to be very important enough to invest in right now.”
I know it’s a simple definition, but so many agencies skip this part. They put all sorts of things in their proposals because they have them to sell, not because they’re important to the client.
So, here are three questions I suggest you ask yourself when trying to concoct a value-based price:
The answer to the first question seems obvious.
The client issued an RFP for a website, so a website must be important to them, you might think.
Sensible, but deceiving.
Things don’t have inherent value. If they did, then the price of them would be the same everywhere for everyone. You might only pay $2 for a bottle of water at grocery store, but you might pay $100 for it if you were parched and lost in the desert for a day.
(That’s why my favorite definition of value-based pricing is “pricing the moment.”)
Just like a bottle of water doesn’t have inherent value, neither does a website or a brand refresh. All the variables change the value: the client, their customer base, their industry, their business stage, your experience, your level of desperation for work, the world’s economy, etc.
Does that mean clients are lying when they ask for “websites” and make them sound really important to them?
Nope! They’re using shorthand. It’s easier to say, “I want a new website” than it is to say, “I want a better way to align my products with more of my potential customers.”
Most times, clients aren’t even aware that’s what they mean when they say, “I want a new website.” As designers and service providers, part of our job is to be the translator. After all, we’re the professionals at this part of it, not our clients.
“How do I calculate specifically how important—valuable—a website is to my client?”
Ah, the golden question of value-based pricing: calculating value!
The premise is that, if you could calculate that a new website would bring $250K of new revenue to your client, you could charge them $25K—10% of the value, which I advocate as a starting point—for your work.
Even further, if you could find some different math that said the revenue would be $500K of new revenue instead of $250K, you could charge them $50K instead of $25K for the same work.
This Shangri-La captures the biggest allure of value-based pricing!
The blunder is in the word choice.
“Calculate.”
You can’t calculate the future. That would make you a fortune teller.
The most you can do is forecast it. That makes you a meteorologist.
Fortune tellers and meteorologists both tell us something about the future. But meteorologists make an average of $61K/year, while fortune tellers make an average of $38K/year. If we use annual salary as a proxy for which one society values more—a logical fallacy, I’ll admit—the answer is clear.
Here are the steps to “calculating” value like a meteorologist.
Meteorologists combine historical weather records with current atmospheric conditions gathered from sensors to make the most accurate forecasts they can.
If you want to know how much revenue your work on the website for your new client could bring in, ask your previous client how much revenue your work on their website brought in.
Most agencies don’t do this. Not because it’s hard, but because it’s scary. It’s scary because you might realize that your work brought in $0.
Imagine the other side, though. You email your last client and learn that your work on their website helped them bring in an additional $500K of revenue. That’s incredible! And it’s not the kind of hand-wavey, “design is valuable” conjecture that designers are notorious for. It’s a client-verified result, attributed to you.
Also, it’s ok if you didn’t know at the beginning of that project that that’s what your work would lead to. Remember: you’re not a fortune teller, and no one is asking you to be. It’s even ok if that result was completely lucky. Regardless of the intention—or ignorance—the impact is what counts, and it’s attributable to you. And if you got that result once for a client, the chances are higher than 0% that you could do it again. (More on this later.)
Imagine, even, that you email your last ten clients and they all said that your work on their website helped them bring in an additional $500K of revenue. The most common reason agencies don’t make this call is that they don’t feel like they can take full credit. “Sure, they made an extra $500k, but that wasn’t all because of me. They had a marketing team, sales people, other vendors, etc.”
Right. That’s exactly why you’re not charging $500k. You're charging $50k: 10% of the value. The math already accounts for the fact that you were one of several contributors who did the other 90%. You don’t need full credit… only your fair share of it.
This brings us to the next step:
Clients buy change. They’re in one state now without you. They want to be in a different state, and you’re the catalyst that gets them there.
They make $500K of revenue now and they want to make $1M in revenue.
They spend 20 hours per week on legacy maintenance and they want to spend 2 hours per week on legacy maintenance.
Value-based pricing requires you being specific about what before working with you and what after working with you will look like.
For the next client who asks, make a prediction about the change they’ll see after working with you.
And that’s all it has to be: a prediction. That’s what meteorologists do: they make predictions based on historical data, current observation, and their expertise in interpreting the combination.
Based on your historical data from those last ten clients, you might predict that you can do something similar for this next client.
What if you don’t have historical data?
The answer to this is the next scary thing to face about value-based pricing.
If you don’t have historical data, you’re an amateur.
When it comes to buying important change, humans don’t value working with amateurs as much as they value working with experts.
Would you rather have an amateur heart surgeon or an expert heart surgeon for that triple bypass? Would you rather have an amateur plumber or an expert plumber fix the pipe that’s currently flooding your basement?
All of us are amateur meteorologists. Everyone can check the weather, read the sky, and notice patterns.
But expert meteorologists have decades of recorded observations behind every forecast. Amateurs only have beliefs. Experts have beliefs and evidence.
That doesn’t mean that amateurs can’t value price. Which brings us to our third and final question to answer when you’re value pricing, and the third step in executing it:
The advantage that experts have over amateurs in value pricing is that the likelihood of their predictions seems higher.
That’s it.
And it counts for a lot.
Clients want signals that you’re an expert and not an amateur for this exact reason. If you helped your last ten clients make $500K in additional revenue, the likelihood of you helping the next client also make $500K is much higher than if you only helped one previous client make $500K in additional revenue.
Why? Because it’s easier to believe something will happen the eleventh time than believing it’ll happen the second time.
A common objection I hear from the design agency owner is, “But how do I guarantee that I can deliver the same result for my new client that I did for my old client?”
You don’t. Not anymore than the meteorologist guarantees that it’s gonna rain tomorrow just because it’s rained the last 10 times conditions looked similar.
That said, if you’d delivered a similar result to 100 past clients, the likelihood may be so high that you choose to add a guarantee for your client since the risk of missing the result is so low for you. But that’s a choice you make, not some arbitrary threshold for guarantees that you somehow crossed.
You can only sell a value-based price if the client believes your prediction.
The Air Jordan 1 didn’t become popular because Nike sold Michael Jordan’s stats. They didn’t lead with his vertical leap, his points per game, or his shooting percentage.
They sold you the feeling of being him.
“Be like Mike,” the song echoed.
If you had those shoes, you could move like him. Jump like him. Be like him. The sneaker was just the artifact. What you were actually buying was a belief about your future self.
Your value-based price works the same way. When you show a client that your last ten clients each added $500K in revenue, you’re not showing them a spreadsheet. You’re showing them a version of themselves they haven’t met yet. You're saying: this could be you. The ones who buy are the ones who believe it.
The easiest way to get them to believe it is if you have a lot of historical data. But it's not the only way.
Billy McFarland sold millions of dollars worth of tickets to the Fyre Festival despite never having thrown a music festival before. Through influencer marketing and social proof, he got people to believe in his vision enough to give him money.
Even without an extensive track record, you can get clients to pay you if you can get them to believe you'll do what you say you'll do. But beware: McFarland's story ends in federal prison. Borrowing belief you can’t back up with actual capability isn’t value pricing. It’s fraud.
Most designers want value pricing to be a spreadsheet problem: find the right formula, plug in the numbers, show the client the math, and the price justifies itself scientifically.
That’s not how it works.
You can’t deduce a future result. You can only believe in one. And belief is an act of faith, not calculation. The $500K your next client will make because of your work doesn’t exist yet. You can’t see it. You can’t math it. You can only believe it’s coming and make the case for why your client should believe it too.
That, like all faith, requires creativity.
Believing in God, Ganesh, democracy, spaghetti monsters, compound interest, the expiration date on the milk, and the results you’ll get for your next client require the creative capacity to hold something real in your mind that hasn't been verified by your senses yet. This is why I think design agency owners are uniquely positioned to master value pricing faster than anyone else. You practice this kind of creativity every single day. Every wireframe, every concept, every pitch deck you've ever made required you to believe in something that didn’t exist yet and convince someone else to see it too.
You’ve been selling futures your whole design career. It’s time to price like it.
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