If you're a 2000s girl who grew up obsessed with labels, there's a good chance you know exactly what the Birkin bag is (aka the epitome of luxury womanhood.)
If you're anybody else, you're probably confused why I'm talking about a fancy handbag and freelance project pricing.
See, the Birkin bag isn't any 'ol bag.
It's not inherently special, either. But it does run up to $225,000.
Yes, people pay $225,000 for a handbag.
When Hermes went about pricing the Birkin bag, they didn't view the price as a function of the product.
Instead of factoring things in like the cost of production, Hermes looked at how much luxury value the bag created. They asked questions like:
- How extreme is the perceived value of our brand?
- How much desire are we creating with our brand?
The sky-high prices aren't driven by the actual product — they're driven by the customer's perceived value of it.
Birkin bags never go on sale, and people see it as an even safer investment than the stock market.
In case you're wondering if the Birkin bag is made out of unicorn hair and goose feathers, it's not.
This is what it looks like:
It's cute, but IMO, not 6-figure cute.
People wait years to get a Birkin bag because of the perceived value. And they pay top dollar for it over paying $300 for a rather nice purse that does the same job.
You can be the Birkin bag of freelance UX writing.
The exact same value-based pricing concept easily applies to UX writing freelancing.
What’s value-based pricing?
Value-based pricing is a pricing strategy that uses an understanding of what your project is worth to the client to figure out a fair price.
An overly-simple example: A client comes to you looking for an email welcome series. After asking the client a series of specific, business-based questions, you learn this welcome series will make the client $10,000 in new sales. You think it's fair to get paid for the value you're creating over, say, an hourly rate, and decide getting 20% of the added value would be fair. Ipso facto, your price for the project is $2,000.
Value-based pricing is da bomb because:
- It shifts the conversation from a pricing discussion to a value discussion: You're talking about business growth, not dollars and cents.
- You can make wayyy more: 10 hours at $100 an hour is half of what you'd get paid with value-based pricing for the email welcome series.
- You're not exchanging time for money: Because time doesn't equal money.
The best part? The pricing strategy works because it puts you on the same page as your client.
For example, there's a discrepancy between your goals and a client's goals with the most common pricing methods:
- Client: Minimize time on project, minimize cost
- Freelancer: Maximize time on project, maximize income
- Client: Get the most work for the best price
- Freelancer: Work fast, maximize effective hourly rate
But with value-based pricing, the goals align:
- Client: Reach business goals, minimize risk, get maximum value
- Freelancer: Achieve client's goal, make the right solution, deliver most value
And you get paid more to be on the same page.
I've mentioned my $100,000+ proposals before on The Gig Gal. That didn't come from an hourly rate or a flat-fee. I couldn't sell it if I used that kind of pricing strategy!
Instead, in one instance, I learned a client stood to make $1M if the project achieved their goals. I thought it'd only be fair if I got 10% of that growth to help them reach that goal. Had I positioned my pricing using specific deliverables, it wouldn't have gone as smoothly, and I would have made a lot less.
You need to show the value you can create and how that ties to their goals happening.
So, how do I do this value-based pricing thing?
I'll be honest, it's not something you master on the first go.
It requires lots of practice on real discovery calls to get it right.
But, the idea is you ask some very specific questions on your discovery call to get a sense of the client's goals and what they stand to gain from the project.
Some questions might be:
- What does the success of the project look like?
- What's the cost of failure?
- How will we measure success?
- Will this project have a monetary impact on the company?
- What financial impact will achieving your goal have on your business?
- What's your current annual recurring revenue?
Some tricky, uncomfortable questions to ask… But it becomes casual and second-nature with time.
Once you learn how much the client stands to make, decide what a comfortable and fair cut of it would be for you. Then, look for the golden price in the handy chart:
This was just a brief intro into the magical world of value-based pricing.
There's still a lot to dive into, like how you finesse these figures out of a potential client and how to pitch a client your price in a way that makes it easy to say yes.
Happy UX writing 🖖