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Are you buying work? Or are you buying results?

The answer to the question above is pretty obvious when we ask it like that. But in practice, almost everyone is busy buying work! That work may or may not get you the results you’re are after. 

Here is an example to illustrate this issue.

Say John hires Maria to code a website for him. 

After the initial discussion, Maria estimates that she will need 100 hours priced at $100/hour for a total of $10,000. 

As she thinks deeper and some research, Maria finds a ready-made plugin that costs $1,000 and takes care of half the project scope. 

What should Maria do next? 

1. Buy the plugin for $1,000 and charge for the rest of 50 hours. So Maria is left with $4,000 in her pocket and a plugin she now owns. The client will love her.

2. Have the client buy the plugin and charge for the rest of the work. She now has $5,000 in her pocket, and the customer owns the plugin. The client will love her.

3. Buy the plugin for $1,000, work 50 hours, and wait for another 40 to charge 90 hours. Maria puts $8,000 in her pocket. The client will be happy; he paid less and got it faster. 

4. Maria ignores the plugin, starts coding, hopefully, be done in 100 hours, and charge at least $10,000. The client will be satisfied if finished on time and angry for any extra hours over the estimate.

We can all agree that (3) is dis-ingenious. But in truth, all four options suck. 

With option (1) and (2), Maria feels cheated. She had agreed to do much more work than she would get paid for. She has no incentive to choose less work for her. Still, if she chooses option (1) or (2) out of moral obligation, in the back of her mind, she will resent ever having done any research! 

With option (3), she will have to live with the lie.

And if she ignores the plugin and does the work agreed for the money agreed, she is also cheating. 

She is cheating herself out of the growth opportunity. Why work better or faster when that means less billable “working hours.” Best be slow and friendly as you plow along. 

And she’s also cheating the client because you are not free to do your best job. She will do the regular “fast enough” kind.

It amazes me, especially in the IT industry, where performance metrics are easier to measure, that people are still buying work instead of results. 

Whenever discussing a new project, I almost always hear this question: “How long will this take?” because the next question is, “What is your hourly rate?”

And the answers to those questions are: “I don’t know how long it will take. This project is a collaboration, with lots of variables out of my and your control. It will take at least three months, but it could take 6 months or one year… nobody really knows.” And “I don’t have an hourly rate.”

My favorite alternative is to focus on results and not care about how long it will take. 

With the initial example, Maria would ask John why does he want a website. How will that generate value for him to justify the expense of creating one? And John might say, it would help him sell his handmade products to a larger audience, and it would make it much easier for customers to place an order. Maria continues to ask what is a realistic revenue goal for one year from the website sales. John thinks for a bit and says that based on his audience and some estimates, it should be around $80,000. Maria says she is confident she can help John reach his goal of $8,000. 

Now, if John has spent $8,000 to make $80,000, do you think he would care if Maria used a plugin or not, or how many hours she worked on the website? Of course not! He did not buy Maria’s time; he purchased a result.

And what about Maria? She is free from the moral dilemma from before. She can now employ her full experience and work as fast as possible, using any tools she sees fit to help John accomplish his goals. 

It does not matter if she can do it in a day because she has done the same thing before or takes her two months to put everything together. John will pay a fixed price. He will not be taxed for a “poor estimate,” and Mary is free to work as fast as she can and be rewarded for getting better at her craft and working less. All interests are aligned. 

I challenge you to buy results and not work. You will pay more upfront, yes! But you will get much better returns in the long run. If you still choose to buy work, there is no guarantee that “the work” will get you any closer to your goals. And the conflict of interests will make it almost sure that you will run over the initial estimate by a large factor, even if everyone is super honest and fair. 

The Buyer decides what is worth to them

“The price you’re charging for this is ridiculous!”

“Are you trying to rip me off?!”

“What?! Is this made out of gold or something!?”

“How can you live with yourself when you charge ten times it costs you to make this?!”

If you have ever been in a position to sell something, chances are you have heard some or all of the above. If you haven’t, you are on a race to the bottom, competing on who is the cheapest.

Who decides if the price is right for a product or a service? 

What is the correct value?

The answer is that a buyer and a seller decide.

If the buyer feels that she gets more value than the is paying, and the seller feels he is making a profit from the sale, then the price is right! And the price is right for that context only.

For a different buyer or another seller, the price may very well be “ridiculous!”

I have heard many times, and I also used to believe that it is a shady practice to price the client, not the solution, meaning: to change your price depending on the person sitting in front of you. 

Does this feel like a scam to you? Do you want to know the price upfront, and do you want to know how much the other person paid, so you get the same price or better?

If you feel that way, then you are shopping for price, and not for value. And that is OK. I believe everyone is doing that in some areas of their life.

But if you are shopping for value, then the price is not that important.

How can that be?

If the value you are getting out of the product or the service is greater than the price, it is always a good deal for you, regardless of what someone else paid for it. Of course, you can still negotiate and try to maximize the value over price ratio, but ultimately it is the value you are after. If you could spend 75 cents to make a dollar, you would go for it!

To understand this better, let us look at an example from photography.

You went into the jungle and captured some amazing bird photos. You had to pay for the trip, the insurance, the equipment and also pay yourself. So there was a cost incurred by those photos.

How much will you sell them for? How will you decide what the right price is?

Let’s say you decide $200 for each photo. That is your price for everyone.

Now a blogger comes along; they look at the photo and think: “My God! What a ridiculous price for a picture! I can get a free one from Unsplash. This guy is crazy trying to sell for this price!” Maybe you will think: that is OK! They don’t understand the costs of making these pictures. It is still a reasonable price for my work.

Next, National Geographic comes along and purchases one of the images and the right to print it for $2,000. It gets on their cover, and it becomes such a hit that it becomes a “National Geographic Classic.” Does the $2,000 still feel fair to you if sales increased by $200,000 for the magazine because of the cover?

How much would it cost you in time, tools, and resources to draw the Nike logo? Can you put a price on that? How much is the Nike logo worth today? Is that close to the price you came up with?

We all want to be good fellow humans. We want to help out. We want to be seen, appreciated, and valued. And we want to thrive.

When you allow someone else to judge you on your value and make you into a horrible person because of your price, you get into trouble simply because some of the people you will encounter will assign a different value to you and to your product in their eyes. 

So you may be horribly overpriced to them. And then, they are not your customer. There is no need for you to lower your price or to feel like a bad person, just because someone could not see the value in what you do.

In the same way, you will not be able to serve everyone. Some of the problems are too small for you to handle, and you need to refer those out, or just say “no.” And some of the problems may be too big for you right now, and you also need to say “no” instead of over-promising. But in between those, there is your range: a range that will grow with experience and personal development.

I still believe luxury goods are a scam, or that some people just gave in to the “marketing” and bought a useless product, but I am wrong. The truth is, none of the parties would have agreed to make that transaction if they did not feel the price was the right price. I may not see the value, but that does not mean that value was not there. I simply value other things.

Don’t allow others to push their value onto you. And mirroring that, accept that other people value other things. And all that is OK.

Credit: Thanks, “The Futur” for their inspiring videos.

Everybody has a plan until they get punched in the face

The quote in the title belongs to Mike Tyson. And while I don’t condone violence of any kind, there is a lot of truth to that quote!

I read his quote in a business book a few days ago, and it was one of those things that have an after kick. Only after I got to the next page, I started to laugh at the very graphic explanation of an unexpected big surprise, and I’ve been thinking about it ever since. 

Why was this so funny to me? 

It is funny because I am a big fan of plans and lists and thinking ahead and having a strategy. 

But more often than not, something happened along the way (the so-called “punch in the face”) that threw my plan out the window. It does not look funny in the moment, but looking back, it is pretty amusing. 

So what is the connection with web applications? 

To understand, let us look at another useful quote, the Murphy’s Law: “If anything can go wrong, it will!“

This quote is a more pessimistic view of something that is statistically true: “If anything can happen, it will happen.” It does not matter if it’s good or bad, but since the bad one hurts, that’s what got captured in Murphy’s law. 

When you build a web application, you do your best to plan, to foresee potential problems, and avoid the common pitfalls. The more experience you have, the better your plan is, and the more future problems you can avoid. 

But here is the kicker: no matter your expertise, if something can happen, it will. And since there is no such thing as a perfect product, the inevitable will happen sooner or later. A surprise that does not fit into your carefully crafted plan. 

This idea is not an excuse to stop caring and stop delivering excellence. It is just a word of caution that humbling experiences await you/me in the future :).

The reason I enjoy Tyson’s quote more is because of the visceral feel to it. I rely heavily on planning and my past experience, so when the rug is swept from under my feet, that scares me. I have always managed to recover, eventually, but still, I am not looking forward to the unpleasant experience of free falling. 

However, I am told there is another way. And that is “falling with grace.” Accept that you cannot foresee everything and that the unexpected will hit you, and you will fall. But you can learn to fall with style, to fall forward, and to bounce back. 

My plan to deal with the unexpected is to have backups, a cash reserve that can come to the rescue of the project, and always keep in mind that: if something can happen, it will! I should add to that more practice in falling :D.

How much cheaper is an expensive freelancer?

There are two types of readers that this article is for.

1) you are already considering hiring a freelancer, but you are still on the fence about it, and you hope this information will help you decide.

2) you are a freelancer looking for a way to position yourself in front of potential clients.

The short answer to the question in the title is that if you had the time and the skill, you would do it yourself. It would save you money, and you would not have to deal with communication issues. 

But here you are. And this means that either you lack the skill, or more likely, you lack the time. If you had enough time, you could acquire the skill and deliver before the deadline. 

The right freelancer will save you both time and money. 

You will save time in two ways: you don’t have to wait until you build the skills, and you can do other work while the freelancer does theirs. 

Saving money is not always that obvious. I can best illustrate it with a story. 

A couple of years ago, someone reached to me to help them with their site. After the initial discussion, I estimated that the project would cost them around $3k. 

They respectfully told me that it was too much for what they wanted to do, and we parted ways friends.

Fast forward four or so years, and I hear again from this person. They were desperate now. They had spent over $15k hiring help, and their site was still not working. 

Paying $3k to someone you trust looked like a bargain right now. 

Part of it was my mistake for not knowing at the time how to explain the value they were getting. 

And this brings me to another point: the price of hiring a freelancer is not the same as the cost of hiring them. A lousy experience means you need to hire someone new. That means more money spent and more time lost having your work redone. A good experience means you get it right from the start, and you recoup the money quickly from your working website. So which experience ends up costing you more? And what if you consider the cost that is not financial. Like a stressful relationship vs. smooth sales. 

And of course, this begs the question: how do I know if this freelancer is the right one for me? Is expensive, necessarily better or cheap, necessarily bad? 

Let’s deal with cheap/expensive first. Indeed there is no guarantee that expensive means better or even the right choice. But let’s look from the viewpoint of risk. Why would a freelancer charge you less money than another? It could be for a variety of reasons:

  • they desperately need the job;
  • they are new on the market, so they need to earn trust and build experience;
  • they self-evaluate their own ability to deliver as lower than other freelancers;
  • they have turn-key solution ready for you, so their cost is nearly zero;

It is a gamble. They could be outstanding but out of work and needing a job right now. (But this would beg the question, if they are so good why do they have trouble finding work). Or they have a turn-key solution ready to deliver. The catch here is to make sure that this “ready-made” solution actually fits your custom needs, or you would be left trying to fit a round peg into a high-quality and cheap square hole. Can you afford to take this risk?

With a more expensive freelancer, they could be bluffing, but they could also invest in themselves and have better training and a better experience. They could deliver the work with higher quality, faster, and with a lower risk for having to redo it again with someone else. 

Now back to: “how do I know if this freelancer is the right one for me?” 

It comes down to trust. What have they done that they can show you to prove their experience? What have they created and put out? Who is talking about them? How did you find them? Has anyone you know recommended them? 

My argument is that if you trust them, if they come with recommendations, and if you can see past work from them that is in line with what you want to build, then it makes sense to pay a premium now and have the peace of mind that comes with lower risk.

Choose wisely. 🙂

How do you find customers?

I know this is a burning question in the minds of many entrepreneurs and freelancers. 

I don’t have a “how-to” guide that will guarantee your success, but I would like to share my perspective because it is not just about getting more business, but also about creating a better world for everyone :). I also admit that what I about to share does not apply to everyone or every business model.

My first customer was my first employer. They were buying what I had to offer, my unpolished, raw programming skills fresh out of school. I did not like that customer, but they taught me a lesson: 

your customers should find you, rather than you finding them. 

It took me almost a decade to understand it, though. 

My second customer was my second employer. But this time there was a big difference. They called me, and I had to decide if I wanted to work for them, not the other way around. They had already decided they wanted me there.

This may seem like luck, and that is what I also thought for a while. But it happened again with the third employer. And after that, I stopped being an employee and became a freelancer. And the people I work with today found me. 

It wasn’t until I read about inbound marketing that I understood what was going on. And that, in fact, luck was just a part of it, and maybe not the most significant part. 

What I was not doing was not sitting around, waiting for clients to call. I was continuously working. Either to improve my skill or to generously solve other people’s problems. 

When I began my freelance work, I’ve spent the first two years doing volunteer work. And they have been the best years. In those times, I would only do work that was profoundly satisfying to me. And I discovered how nourishing it is for the soul to be able to choose the people you are working with or working for. 

To paraphrase Seth Godin, the way to get clients is to do work that matters for people who care and to do so generously.