A Public Relations Podcast with:
The Financial Soulmate®
In this Smoke Signals podcast with Paul Cheal, I speak about a different approach to pricing: Value-Based Pricing.
Numbers, budgeting and forecasting are not normally the natural domain for PR professionals. However, if you’ve ever worked in an agency there is one thing we certainly know well – timesheets. But is filling out timesheets and billing our services at an hourly rate devaluing the work we do as a profession?
Smoke Signal Episode 14
Timesheets are not unique to public relations. They are used by lawyers, accountants and management consultants just to name a few. However, where we fall down in MarComms is we are generally not left brain enough to record our hours properly and take them seriously. But if this is the way we sell ourselves then it is very serious.
Re-read the KMint blog on Value Based Pricing that explores: what is the ultimate value of a piece of work for a client. It is about looking at what I am giving not what I am going to do and how long it will take. Instead of tracking hours or widgets you are tracking deliverables. Timesheets are not necessarily broken, they just need to be managed with respect.
The reliance on timesheets also hides the facts there are many other modes of pricing:
- Mark up,
- and Value Based Pricing.
Value Based Pricing should cover your costs as well as recognise the value you are delivering to the client.
Here are 3 basic steps to implementing a Value Based Pricing approach:
- Decide you are going to give Value Based Pricing a go;
- Identify the metrics or targets that are meaningful for the client;
- Assign a value (a price) to those metrics (this will be based on what the will market bear, the value of the service to the client at that point in time, and your confidence).
Introducing a Value Based Pricing Policy has flow on effects across an agency, including: hiring from the top down, staffing up based on demand. This fits with the ‘uberisation’ of the workforce where talent moves more often and more freely. It becomes much more efficient to staff up from a strong pool of freelancers and that could be local or offshore resources. Although it has been around for a long time this is very much a new space for many agencies, who are learning to be more nibble with their resourcing plans. We are not going to see the end of timesheets, rather they should add and endorse the way we bill and ultimately make agencies more efficient and profitable.
As you listen, take note of these key points:
- We are talking about how a firm manages its most important asset – its people.
- How will you break the pattern of continuing to give more away and not valuing our deliverables.
- Price is about the return on the client’s investment and the business outcome – not what we do; but rather what we achieve.
- There are thousands of dollars a month left on the table, look for ways to bill that properly, or not spend too long on the job if we have delivered what we promised.
- Every staff should understand the impact of poorly managed time, and the opportunity to assess and benefit from value-add client.