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What Should I Charge?

Lesson 22 from: How to Make Money

Ramit Sethi

What Should I Charge?

Lesson 22 from: How to Make Money

Ramit Sethi

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Lesson Info

22. What Should I Charge?

Lesson Info

What Should I Charge?

How much did you charge huge questions on charging raising rates and stuff like that so my suggestion to people is really start out with an hourly rate okay? This is controversial stuff but this is what I found to work for my students start off with an hourly rate I liketo understand the scope of what my competition charges so let's say I'm a photographer and I'm lets him a writer and my competitors which I've looked around at they charge anywhere between thirty and forty five dollars an hour okay let's just say so I'd probably try to charge my son right in there around forty dollars an hour not at the highest end of it but pretty high why because I'm going to be doing valuable work that's going to be way more valuable than other people other people are going to be stuck here in the laborious tactics of their craft well my craft is good and getting better but I'm also going to be doing all these other things that my editor cares about like being interesting like driving page views like...

blah blah blah blah blah so I don't want to charge it the highest because we charge the highest range part of your range than people give him why why you charging so much but over time you will actually often be able to charge the highest and even higher like dean or like other folks who charged even astronomically high rates does that make sense ok you will have to deliver value you will be able to raise your rates but this is a basic framework for how much to charge all right and you could find where people how much people are charging online you can just google that okay very simple we'll get back to some of the questions but I want o work through these quickly all god should you ever work for free okay creatives want to kill me right now already and I have even said anything on this slide because they they throw around words like spec work is evil oh my god you're destroyed and keeping the man down blood level but you don't know what you're talking about okay free work can work strategically you do not want to go around to everyone and be like yeah I'll work for free because you're going to devalue yourself and you're gonna develop who cares about devaluing feel you're going to value yourself all right it's not a political discussion we're talking about ourselves in our business here however free work works when done correctly I know because I've done it and it has dramatically accelerated my career and many of the people who work from worked for me for free this is early on and I ended up hiring them and they've been paid lots of money so when do you do free and when do you not you do free if you can ascertain that the person you're trying to work with has some characteristics like they're massively influential like, for example, a new york times columnist who has connections everywhere or a blogger with five hundred thousand readers a month okay or an author I'm not trying to say come work for me for free I don't want anybody pitch me right now, but there are a lot of people are like a really famous photographer in your field, but what do you do when you worked for them for free? You don't want to just say, I'm gonna work for you for free forever, you say, listen, I'm a huge fan of what you're doing I really like the new magazine that your building, my normal rate is actually fifty five dollars an hour, but I'm such a fan of what you're doing that I'd like to build a portfolio and I want to help you grow this magazine, especially with your launch in the next one month. So if you're willing, I'll be more than happy to actually do this project for free with the understanding that once we're done, you give me three referrals to other people you know, or with the understanding that if I do an extraordinary job, we go back to my normal rate, okay, so what happened there? I told them what my normal rate is I said, I'm willing to work for free under these conditions. Now it was time taking the power. I'm not letting this guy some freeloading guy tell me, oh, you're just a writer, you're working for free, never. I would never do that, but I would take the power in the relationship and say, you know what? I'm willing to work for free because I need extra eyes. I need a portfolio piece, I need a recommendation from you, I need this. If you're willing to agree to that, I'd be more than happy to do it. Does that make sense? Is that surprising? Anybody want doing death threats out there? Way got? There were a lot of people who were just laughing when you said, should you work for free? But then people were saying, like, I've done it for non profits that I previously selected on ly, if it's worth something to you in the long run in exchange for referrals, I do trades great, very good. All these things were great notice that the people who complain about free work and spec work and they don't even understand how this works there off complaining about this game, but they don't understand the game is sometimes if you need, like, if you're finding that you're clients don't trust you because you have no portfolio you have to do whatever it takes to get a portfolio, and that might mean working for free for one or two clients doing an amazing job and now you have your portfolio and you're off to the races, right common story about so it is a success I failure with us in a success of it. So my massage therapy business, when I first started, I was all nervous, like, what am I doing? And I would give things away for free, completely devalued lost so much money took so long to raise my rates center starring that business. Now I'm transitioning to kind of helping people with their marketing and creative project management, and I've worked for free for a year for my mentor and advisor that has led teo a portfolio of a great site in the great start, and, um, but he connected with a political strategist, and then this job came up with a company and because I had this team and work for free in this portfolio, I know hade a decent proposal, you know, I could be in the game and in the conversation for a new field beautiful, which is outside of the other beautiful, so I think it's totally worth it, you're working step by step I love that when I was doing research at the persuasive technology lab, my professor said to me do you want to take this for credit or for pay? And I said to him, what do you suggest? And he said, honestly, I would take it for credit because if you do it for pay that I'm just gonna have to give you a bunch of menial work to do but you do for credit I'm gonna actually teach you a lot of stuff that really shaped the way I thought about it there are more valuable things than money in the short term way more so really think about it and another guy who ended up working for me helping with my book launch guy named charlie home he came to me and he pitched me all these things he was like, hey, I think that your videos could be improved in fact, I already did it here you go, take a look at this video now why did you do that when you do that for everyone know he knew that I was about to have a major book launch. He knew that I would probably have connections to other people and indeed I sent him so much business he don't even know what to do with it so you want to work strategically with the right people not always for free but in certain cases it could make sense all right let's keep going on and if anyone has any questions think of them now because we'll have about five minutes for questions at the end of today and of course we're gonna be back here tomorrow all right? So I believe this is the last one here how to go from one client too many or three clients to make whatever one thing I like to do is a referral strategy right when when I agree notice that I'm taking a lot of concessions from the client because if I'm a top performer I'm like all right, fine, I'll work with you but you have to agree to a couple things to work with me that's what a top performer does now you're not being condescending about it, you're being really polite to say listen, one thing I do is I just want to see if this works for you but whenever I work with a client I make an agreement that if I do an extraordinary job they agreed to refer me to three people at the end that work for you and of course they're going to say yes because your first you have to do an extraordinary job actually holding yourself to a higher standard and then you're getting referrals at the end. The other thing is remember when we did the ask without selling technique so I've like interviewed twenty moms or thirty people who want personal organizer I didn't sell them on anything I stay in touch with them I have a little template email stuff like that and at the end I might say, listen, I'm starting actually decided based on what you told me and you recommended I talk to sue um, that I think I really want to do this personal organizing thing, so I'm actually launching a service. I'm probably gonna put up a website in a couple days, but do you know anyone? I should talk to anyone that might be interested in discussing, you know, having a personal organizer? Well, if you do that's twenty people, how many referrals do you think you're gonna get a lot? So these air easy ways to go from three or four clients to many, many, many more. Dean talked about it in detail. We cover it in detail, earned one k. Basically, if you have clients, we already have a gold mine to go forward with. You can ask him how they found you. What sites do they read? Where did they go? And then you go there and you present yourself. Micah is wondering when asking for referrals to ask these clients to talk to the potential clients first or do you cold call these referrals based on the referral itself? Well, that's a good question if they're willing to do it, say you always want to respect the client writes you say what would you prefer? Would you prefer to send introductory emails? I can actually write it for you if you want or would you prefer that I just use your name when I reach out to them? The clients probably busy, so whatever they want is what you do. Okay, a question from adrian far in england. How do you research what your competitors aire charging when many of them do not discuss their prices until they're trying to close a sale? I mean, if you know your market, it sounds like you don't really know your market well and that's very, very relevant for photographers. There are places if, you know your market, you're going, you're gonna have friends who are in the market were gossiping about this stuff all the time. You're going to see it in blog's or forums, you're also going to just have friends who have personal relationships are like, man, did you hear what they close that deal for that's a great way to do it? You know, the other thing is you want mentors so mentors in advisers, something we'll talk about tomorrow, those people are deeply connected to the field. You might be starting out david in the field for twenty years here, like, listen, I'm really stuck. What are people try don't understand how I think about my pricing, they'll be able to tell you because they have their finger on the pulse. So someone comes to me and they asked me about pricing in a specific area I will and it's an area I know I'll be able to tell them because I'm deeply in that market. So getting advisors and mentors beyond relationships is critical. It's great, since designers is wondering what about if I charged a certain amount and booked a bride and then eight months later, I double my prices. The bride referred me to another prospective bride and told her how much she she paid. So I give her my new prices or the prices that I gave to the original bright new prices, but you have to explain why you can't just jack up your prices to be like, don't togo's you say, listen, I appreciate you reaching out to me. I had an amazing time shooting the wedding with april and john remember, you're not jumping into pricing immediately to many creatives are jumping into pricing. Pricing is like the last thing and if you do it right, like like the kiss, everything has already been done it's been done right, the kiss is almost like you know it's like it's already been decided it's not even a thing so if you're concerned about pricing my guess is you're messing it all up over here you're not connecting you're doing commodity stuff you're rambling about yourself but you also need to explain why and she of course she's gonna be a long wait a minute I thought you charged oh three grand you're charging me six grand say well actually growing my business since then since then I've added three additional services because if you're charging double you need to be adding more value so one of the things that you'd be getting that's new is x y and z and I'm also happy to do this as a complementary service to you remember if you have that much margin you can throw in a little bit of bono you know, sort of bonus material for free right way have a question in the audience yes tag question to that in photography there are a lot of clients who are solely price driven and they may have looked at your web presence blawg website facebook whatever, but when they come to you they asked wedding or portrait or something but they go directly and for the price kill how do you take them back to the first kiss? I don't deal with these clients people do that to me sometimes too I mean first of all you probably not conveyed value on your website second you've probably had them email you are the first email saying like how much you cost hi we looked at your site we're interested in what your prices are yeah, they're price shopping and if you want to be that service provider than you can answer them if not you say you know what like this is what top performers who charged really high prices will do they'll say, well, I really need to understand your needs first and they don't just say that to back you off they actually want to know like what? What kind of wedding do you want our you know, secretary said if you just answer their questions like you're not, you're not doing them a service but also I'm really comfortable like people will ask me that and I actually say to them if price is your first question is probably isn't right for you but then again that's all part of it's very conclude with how I am right? Like I'll just call people out and they know that. So if someone comes to me in the first questions about price, I know they're not going to buy I know it because if you simply look at my price you're like, wait a minute, I could I could get something similar for one tenth the price, but you can't get the value so their price shoppers, you gotta be really careful about simply answering them. You want to ask them why what your needs, etcetera? And if you find out there need you like it, I'm just looking around for the cheapest price. Well, you know what? I really appreciate that, but I'm probably not the right photographer for you. That depends. Some people do some people don't. If you're charging a super premium price, you'll discover that many or most, uh, providers don't write. Um, if you have a price, it's really easy to compare, you know, I don't understand what the difference is between four hundred dollars here and two hundred dollars, or how can I? I'm just a client. I don't know. I don't live in your world and it's your job to teach me not my job. My job is to simply compare like a menu. Who's got lower price that's what I think. But your job is to show me the aspirational side, the experience, why you understand me better than anyone else? Okay, I I can actually back you up on that. I'm currently wearing shoes that are about three times what I had planned to pay for shoes that I went to buy some, but before I tried them on, like we didn't talk about price the guy just grab some was like here put these on walk around in them and I looked at them I love them and I walked out with them literally becoming really yeah okay so next question is from dc three for hourly consulting is it better to price in packages and let people people cancel at any time then simply to price hourly to start with I like to start our lee I know this is controversial but I like to start out early because it's really simple like with dean you start at thirty and you just can quickly find out the market will tell you if you're reaching out most most people actually most creative don't reach out enough they're like oh well I reached out to people I'm like trying ten xing that truly counted twenty people a week and the market will quickly tell you if you're pricing right or not it will quickly tell you stuff like you know are people actually listening to me are they are the words I'm using resonating so I like the hourly thing once you nailed that hourly thing once you nail it you know like I'm in my sweet spot between fifty five and seventy fifty five sixty five an hour then you can start doing packages and those packages like jackie did those will actually take you higher and higher and actually add mohr and more value but you gotta first nail the foundation before you start going all these fancy packages let's take a couple more uh this might be a quick one micah's wondering can it creative like a musician or actor used these same three steps to generate leads for gigs and landing movie rules yeah that's a softball question? Yes no, of course they can uh it's a little more difficult because entertainment has such a supply of people who just I'll do anything for low rates but there are certain techniques you can use it we talked about today and tomorrow about building relationships inside stepping the entire game what else have hand raised over there? Do you have this is from derek? Do you have to tell a story to convey emotion and every time you're pitching a client almost every time I didn't learn this for many years but the power of narrative has been incredibly strong we want a story look it even products that shouldn't have a story but do look it, pick up the book the power of habit and read the chapter about fabrice and how that was going to be a multi multi million dollar failure until they found that story it's not false it's true look at the story of list serene look adorable this classic commodity products that actually sell for five, six, ten times the price and actually people experience more value because of the narrative, the story and the narrative is absolutely critical. You don't just come to my sight, see a list of products and then buy something. They don't even put my products on my site. I don't think you can buy anything right now, because I want you to go through the entire experience, and so do I mean, think about the experience of walking into tiffany, the jeweler, versus somebody at your mall. You're gonna get champagne, you're gonna be pampered, you're gonna have a very high class person, probably a woman showing you around, really telling you what looks good, also saying, you know, I probably wouldn't do that if I were you, totally different experience now, are we all, tiffany known, but we are all trying to think about how to add more value to our clients lives. We do that, and we do some other things correctly, then the money will come.

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This course changed my life. After watching Ramit on Creative Live, I bought his book, then signed up for his newsletter, then bought several of his classes. You could say I am officially drinking the Ramit Kool-aid now, but I'll tell you why... His stuff works. You have to trust the system, but I've been able to create a rich life for myself by my definition of rich and I am so happy. It takes work, but I am so grateful I found Ramit in my 20s so I can truly enjoy my 30s over the next decade. Without this course, I would still be complaining that people don't want to hire me because my prices are too high and whining that I am not valued, when in reality, the problem was me. Thanks Ramit for always speaking the hard truths and giving people wake-up calls to get their act together and live the life they want... It's possible!

Adrian Farr

Ramit is a huge inspiration, he is not just a 'been there and made loads of money' kind of guy, he is a 'been there and made loads of money, and here's how I did it' kind of guy! Ramit really gets down to helping you understand not only how to make money but also how to save it too. I am looking forward to reading his book and plan to implement a lot of his systems into my own life.


I have taken a few business classes for creatives online, but this is by far the most comprehensive, most practical course of all. Especially for someone like me who loves Ramit's work but has not made a decision to commit to his full courses, this is a great introduction for what he can offer. He pushes you to think outside the box and see all the possibilities that we can have in a very clear, logical way. If you are unsure which class to take to learn about business, this is all you need.

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