Episode 122: Why Your Pricing Should be Based On Your Value, Not Your Hours with Filip Fucic

In Episode 122 of The Business Habitat podcast, Sam is joined once again by Filip Fucic, Founder of Lift-off, a business designed to work with professionals such as accountants, lawyers and expert freelancers to help them rise their prices closer to the value they provide to the client. 

In this conversation, Sam and Filip explore the dollars for hours mindset and discuss whether there has been a shift in thinking in light of evolving work practices in the last few years. They delve into the conundrum presented as experts become more efficient and produce better work in fewer hours, resulting in lower revenue as billable hours decline, and consider the benefits of pricing based on value as opposed to input. 

Filip provides great perspective by explaining the origins of dollar for hour pricing, and highlights why experts need to be factoring in their knowledge and experience, and the value they are delivering to their clients, when they determine their charge out rates. 

Using his own experience of outsourcing his accounting, Filip talk to how we often underestimate what people are willing to pay, especially when it’s something they don’t want to, or don’t have the skills to do themselves. By using the analogy of a pirate captain searching for treasure, Filip emphasises the difference in being paid for your work, versus being paid for the risk that you take on. 

This is a highly practical episode, filled with compelling examples set to challenge your thinking around your pricing model and the value that you are delivering in the work that you do. It’s an episode you won’t want to miss. 

Listen to an excerpt

What we cover in this episode 

• The mindset of value pricing vs dollar for hour pricing 

• Are we being punished for efficiency? 

• Expert work hours do not equal linear progression 

• Swan pricing vs duck pricing 

• The difference between the price floor and the price ceiling 

• The importance of value communication 

• Getting paid for work or getting paid for risk 

Quotes 

“The important thing to realise about hours is that hours were not meant to measure experts’ work, hours were meant to measure physical work that anybody can do” - Filip

“Being stuck in the idea of linear proportionality so more hours equals more work is simply a bad fit” - Filip

“The important part is that the floor tells you nothing about where the ceiling is, you have no idea ,you know the floor and you know how not to lose money but how much you can charge that has nothing to do with the floor” - Filip

“Be careful how exactly the value of your work is actually expressed, how do you measure it because it will affect how people remember your work and it will affect the quality of your work” - Filip

“You should be paid for your work and your risk, these two things are completely different” - Filip

Links mentioned 

• Episode 86 - The Mindset Shift Towards Value Pricing, with Filip Fucic

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