#212 – Ditching Hourly: A Web Designer’s Guide to Value-Based Pricing with Jonathan Stark

Shannon Mattern (00:01.673)

Hello everyone and welcome back to the Profitable Web Designer Podcast. And today I am excited to introduce you to Jonathan Stark. I'm sure for many of you, he needs no introduction. He is a former software developer who is on a mission to rid the world of hourly billing. He's

host of the Ditching Hourly podcast and the author of Hourly Billing is Nuts. So Jonathan, welcome to the Profitable Web Designer Podcast.

Jonathan Stark (00:33.09)

Hey, thanks. Thanks for having me.

Shannon Mattern (00:35.441)

So I would love to hear from you. Why are you on a mission to help freelancers ditch hourly?

Jonathan Stark (00:45.176)

The thing that the story that really kicked it off for me was I was working at a dev shop and I got promoted to the VP role, which is a management role, and I started doing one on ones with people. And so then I saw what they were getting paid. Like I had to know what their salaries were. And it occurred to me that if we were going to grow the firm by hiring people, we'd want to hire people who were like our worst developer.

Because they were way more profitable than our best developer. And I could not wrap my head around that. And I went through all these gymnastics, like, yeah, but the really good developer sort of trains the other developers, and but then the other developers get better and faster and they want higher salaries. So we make less profit from them. It's almost like so I it was this counter, I mean the financial incentives.

Of hourly billing kind of boil down to that, where the better you get, the less you make, which doesn't make any sense to me at all. but the real thing, and and it was con I was very conscious at the time when I had that sort of epiphany about hourly billing being a mismatched financial incentives between the client and the the seller, I was very familiar with going over estimates. So I would

Write proposals, estimate, I think it's gonna be a hundred hours at $150 an hour. And then a hundred hours later, we're only 50% done. And it was like they don't get real happy about that news. And there are things you can do to keep them in the loop along the way, and wow, the scope is creeping or whatever. But it just made it really hard to satisfy clients, like really delight them when the meter was always running. So I, you know.

And I could list a dozen other things that are bad about hourly billing, but those two, the mismatched financial incentives and the difficulty in delivering really high customer satisfaction, those are the reason I'm on the mission.

Shannon Mattern (02:58.028)

totally agree with you and I think that that's one of the biggest challenges that that our listeners experience is one of the things that they constantly say is like, I don't want to be nickel and diming my clients. How do I estimate appropriately like the hours this project's gonna take? Like all of these questions that if that meter was not just constantly running in the background, they'd be thinking about solving these problems in an entirely different way.

So how did you then make the transition from doing it the way that you were doing it to what you how you teach now and like what your podcast and your books and your, you know, mission is all about?

Jonathan Stark (03:46.029)

Mm-hmm. Well, I after I had that revelation, I went to my boss and I was like, I explained to him what I just explained to you. And he was like, Okay, I see what you're saying in theory. And but what would we do instead? Like and and how would we switch to it? And I didn't have an answer for that. I was just like, I see a major problem. I don't know what the solution is. Because we had tried fixed bids before and felt like we got killed because they were, you know, we end up feeling like we would have made more money the other way, you know, hourly.

So I wasn't sure what to do, but I couldn't unsee the issue and, you know, other life reasons. My wife got a job up north. So we were in Atlanta at the time. And I left that firm, moved back up to Providence, Rhode Island, where I am from and live now. And I went off on my own to figure out what what are the op like what are the alternatives to hourly billing for someone who builds software.

And right around that same time I stumbled across a book called Val Value-Based Fees by Alan Weiss. And it's a management, it's for management consultants really. But it it was enough of a it was enough for me to say like, okay, I see another model, you know, a value-based model for project work. And that's what I teach to this day is the idea of starting with the value, working backwards from there to set some prices, and then once you have some prices,

Then you start to think about what scope you might offer at those prices to help them move the needle to unlock the value that they want to get.

Shannon Mattern (05:19.238)

I think back to my early days as a freelance web designer, side hustling back in 2014, 2015. And I I I think when I meet people like you, I'm like, where why couldn't I f have found him a decade ago? and I went on my own journey of figuring out that wow, this is like really not working.

Jonathan Stark (05:35.756)

Yeah.

Shannon Mattern (05:44.307)

touching the stove, overworking, undercharging, over delivering, just kind of trying to like iterate my way to a solution. And after I worked with several clients, just kind of like you said, I'm like, I'm charging this hourly rate, which is, you know, whatever the quote unquote market rate I could figure out based on what corporate

Jonathan Stark (05:46.378)

Yeah.

Shannon Mattern (06:11.64)

employers would have hired me for my skill set. Trying to mark that up a little bit to account for some, you know, some like other taxes, whatever. Right. And then then working for a company where I build them a solution that helps them create several hundred thousand several hundreds of thousands of dollars in revenue that they could not create without my skill set.

Jonathan Stark (06:14.776)

Mm-hmm.

Jonathan Stark (06:21.428)

Adman. Yeah, yeah.

Shannon Mattern (06:38.948)

versus working for other companies that you know could create tens of thousands. And I'm just like, there's got to be a better way. Why am I trying to sell myself, my skill set, my how how am I supposed to stand out from everybody else that does the same thing as me? Maybe they live overseas and they do it for a fraction of what I can do it for, but we're equally skilled.

And I just kept banging my head up against that wall until I was like, it's not about me. My price is not about me. The value of this is not about my value, it's about the value to them. and that's kind of where I, you know, started to figure out like, there's a different way to do this. But that was like a five-year journey of misery, but also.

Jonathan Stark (07:16.91)

Mm-hmm. Yeah.

Jonathan Stark (07:28.078)

I know, yeah. Yeah. Mm-hmm.

Shannon Mattern (07:33.456)

I would much rather chase that problem than work for someone else. I'm unemployable now.

Jonathan Stark (07:37.091)

Yeah. Yeah, same. Yeah. Yeah, it's I hear it all the time, you know. So I I try and I have a daily newsletter. If anybody is new, I talk about it every single day. So, you know, it's just a short little thought provoking tip or trick or whatever. And yeah, it it comes back to the mission. Like there's too many I mean like almost nobody does anything but hourly billing in services. It's

Shannon Mattern (07:46.118)

Yep.

Jonathan Stark (08:05.654)

It's I feel like there are more people now doing productised services and using value based pricing for projects. It feels like more than it was ten years ago when I started. but it's not the majority, that's for sure.

Shannon Mattern (08:19.602)

So how did you start really applying value based pricing and value based billing in in your work and in the things that you were doing after you moved to back to Rhode Is Rhode Island and really started like solving the problem?

Jonathan Stark (08:30.933)

Mm.

Jonathan Stark (08:37.27)

Mm-hmm. Well, it probably I followed the advice and value-based fees, and I th I thought I was following the advice and value-based fees and starting with the value and working backwards, but really it took me like probably 18 months to completely cleanse my system of this cost first scope first approach that I would always take in sales interview, like sales meetings. I used to call them interviews. So I'd go into a sales interview in the old way when I was when I was

working at the firm and and the next thing I was gonna have to do was write a a proposal that was based on an estimate of hours. We think it's gonna cost fifty thousand dollars, but maybe it'll be a hundred, you know? So in that in the meeting, the initial meeting with the prospect, I spent the entire time desperately trying to uncover every bit of weird scope and landmines and all of the possible things that could lead to scope creep, which would punish them

Be good for if there's scope creep, but it'd punish them. But I really wanted to I hate fighting with clients about timesheets and hours and and I know the feeling of, you know, like a a contractor putting a roof on your garage and they said it's gonna be five thousand dollars. Like, actually it's gonna be eight. It's like, well, now it's too late, right? So I don't like the feeling as a client. And but I still the habit is so hard to break when when you go into that meeting, you're like, Okay, well.

How many entities or how many business objects are in the entity relationship diagram and like how many relationships between each one? And you know, you're doing all this total scopey solution first thinking, which makes sense. I mean, if you're trying to give somebody a good estimate, you need to uncover all the scope. But the thing that you never ask, and it took me a long time to get better at asking and digging and digging and digging is what's the goal? What's the point of this? You know, yes, you came in and for 15 minutes you told me all of these features and things that you want.

And like what how big the logo should be, and all of these things. And that's great. I wrote it all down. Sounds like you know, there's all stuff I can do. I do this all the time. But I don't want to paint us into a corner. And there's probably a dozen different ways I could build this. And when we're done, you're gonna do something with it. You're gonna want something to happen after I either we launch this internal software or we launch this app, or your website is published, your new website is published.

Jonathan Stark (11:02.37)

What's the thing you're hoping is going to happen? Because I want to make sure that what I do leads naturally into that thing. And I don't build this in some way that doesn't map into your business goals. And so now you're talking about the desired outcome, the client's desired outcome in a business terms. So what do they want when this app is launched? Well, they might want it at like as an MVP to start beta testing with paid.

Customers and get to $1,000 MRR. That might be their first goal. So if that's their first goal, I don't have to make it handle a million current re concurrent requests a second. But if their if their first goal is, I don't know, to get acquired by Google or you know, get acquired, basically, then maybe it does make sense for me to build it in a way that you could immediately get a get acquired and start handling millions of requests a second. I don't know.

I could build it either way, and any software developer listening probably has the air quotes right way to build an app, and it should be able to scale two millions of concurrent users, but not everybody needs that. So making the client pay for web scale when it's an internal system that's going to be used by 10 people makes zero sense, especially if it's going to be more expensive that way. So here's what eventually I got.

Better and I kept thinking I was doing it right. And then I'd be like, I'm scoping again. I'm scoping again. But eventually I got to the point where I didn't scope it all in the meeting. I would let them brain dump because it's top of mind and they're excited about it and they think that's what I need to know. And so I just let them do it. And there's some usually some good information in there. And then I'll do that pivot where I'm like, how do I not paint us into a corner? Like, what's gonna happen next? And then I know what the goal is. And now it's like a basketball player.

Who's been shooting hoops with a blindfold on, hoping that your best practices get this person where they want to go, that you're hitting three pointers with a blindfold on. Well, guess what? You can take the blindfold off by finding out where the basket is before you even start the project. And when you find out where the basket is, aka what their desired future state is, or their business objective, or what they're hoping is gonna be better after you're done, then you can, based on the size of the client and the

Jonathan Stark (13:22.306)

you know, whatever the numbers are that have been revealed to you in the sales meeting, you can come up with an amount of money that is probably worth to this person or this company. And and then reverse engineer some prices bait that are a fraction of what it's probably worth. And then and only then would I sit down and start thinking about what I was actually going to do. So even though they gave me a punch list of features and all these things, I'm like, okay, that's interesting. And maybe that will be in the you know, one of the things we end up doing.

But I would I started to approach it more like a doctor and I would diagnose before I would prescribe. I okay, some you know, it's like the joke I always make is like if if a if a guy runs into a doctor's office and says, Doc, I need a triple bypass, the doctor's not gonna say, Okay, great, take off your shirt and I'll go get a knife. Like, they're not gonna do that. And that's basically what's happening when a client comes to you and says, Here's this list of features I want you to build for us. And you're like, Okay, pump the brakes, buddy. Why?

What are those things for? Why would you why would you do these things? Is there no easier way to solve this problem? What needle are you trying to move? And I call this the why conversation. I would ask, why this? Which is also an Alan Weiss thing. Why this? Why do this now? Why do this project at all? The next big question is why do it now? Did something change? Is this actually urgent? Are you just shopping around? Couldn't we wait six months and you know get some more market information?

What's the urgency? And you want it to be really high. The higher the urgency, the better. And then the last one, which people always have a really hard time asking when they're starting out with this, is why would you hire someone expensive like me instead of someone in the Philippines who will do it for pennies on the dollar? And they'll and if you can't talk them out of working with you, then you will be convinced that there's a certain amount of value there. And they will have convinced themselves that there's a certain amount of value there.

And you'll have all the notes, you'll have written down everything they said, and you'll have all the notes to put into the proposal why they can't go with someone cheaper. So i it's this focus on the outcome, the desired outcome, and not the hours or the features or this, you know, all of those things are in there, but you're not calculating your prices based on that. The prices dictate the costs, not the other way around.

Jonathan Stark (15:44.248)

So

Shannon Mattern (15:44.656)

I am thinking about so many conversations that I've had with the web designers that I talked to and the women in our Web Designer Academy program. And and I can hear a few of their objections because I've helped them overcome these ones myself. And I'm curious to hear your take on them. Like one, they think that it's to ask some of the questions that they need to ask to really understand.

Jonathan Stark (15:47.757)

Yeah.

Jonathan Stark (15:57.519)

Mm-hmm.

Shannon Mattern (16:11.663)

What's the value of this project to your company? And like what's the cost to your company of not doing this? Or what's the opportunity cost of going with the person in the Philippines versus me? they're like, I don't think I can ask that. Isn't that outside of the scope of what I'm, you know, isn't that like being too nosy or asking for propriet proprietary business information?

So that's one thing that I'm really curious to hear your opinion on. And then the other one is they say, well, what if I build something and they don't get the result that they think that they're going to get? So I'm super curious what you think about those those objections that I hear all the time when people are like afraid to ask those questions.

Jonathan Stark (16:59.381)

Mm-hmm. Right. Okay. So let's start with the first one. The first one, put your doctor hat on, right? You're you're good at what you do. You've been doing it for a while. You're the expert. They are not the expert, right?

They're going to give you a bunch of money. That makes their, their, that damages their business. That is like a wound. All right. So now they have now they do not have this buying power anymore. I would want to, I want to, and I would think your your listeners would want to be reasonably confident that you're going to deliver enough value to that client so that they're glad that they gave you all that money. So it's not about, it's not about.

Badgering them about dollars, it's about making sure it's first do no harm. It's being reasonably confident that they're not making a dumb decision because they're not the expert, right? So these questions really what you're doing is you're acting like a business consultant. You're acting like it's almost like you're imagine you're the CEO of that company and you're talking to the senior vice president.

Okay, you convince me that we should go find someone to give $100,000 to to rebuild this website. Because I the thing that I dread is doing the whole thing and then that them not it not moving the needle. So I want to know where the needle is. What are you measuring? How are you gonna decide that this was a great idea, or how are you gonna realize that this was a huge mistake? And they're gonna know that.

right at the end of the project or or like through actually they're gonna know it throughout the project the way I would do it. So they have progress metrics. They can see everything's moving in right direction. and we're moving toward the desired outcome. And there's gotta be some kind of something you can measure. But I'll I'll let's talk about measurement later maybe, but there has to be something you can measure. and it's always there because that's how they know something's broken. That's how they know something's wrong because they're looking at something and that's the thing they want to have changed.

Jonathan Stark (19:09.357)

The other thing is, what if your contribution is upstream from the des their desired outcome? Comes back to the why conversation. So let's give do you have an example off the top of your head? I could make one up, but maybe you could come up with an example of that's exactly what your audience wrestles with.

Shannon Mattern (19:27.835)

I mean the most common one is, you know, we want to make sure we're building you a website that actually converts your visitors into clients. It's like, well, you know, they're like

Jonathan Stark (19:36.782)

Mm-hmm.

Shannon Mattern (19:39.484)

I know that I can build a functional tool and use all of the best practices for conversion rate optimization and ask you all of the questions and, you know, write the copy. But at the end of the day, do I know that like you have an offer that actually sells and, you know, all of these things. So that's really like the most common scenario that I hear.

Jonathan Stark (19:54.467)

Mm-hmm.

Jonathan Stark (19:59.138)

Okay, good one. Yeah, that's a good one. So in the why conversation, you just try and talk them out of the whole project. And and if you if they're like, We need you to do this and whatever, and it's gonna lead to all of these we're gonna sell a whole bunch of dog collars or whatever they sell. And it's like, well, why do you think that? Like what what is gonna like those two things in their mind are connected. So the website, a new fancy website, is connected to increased sales.

Shannon Mattern (20:06.555)

I love that.

Jonathan Stark (20:28.653)

Why? So you want to find out that connection. That's their responsibility. So if you if you're like, okay, why do you think having a why not do something to the existing website? Just do conversion, just do CRO on the existing website. You don't need a complete rebuild, even though we both agree that it doesn't look pretty, it's working and it got you where you are. Maybe it just needs to be tweaked. Maybe you don't need a whole brand new one. And they're gonna say nope, because of reason, reason, reason, reason.

And you write those reasons down and you say, okay, so you're convinced that a website that has I wouldn't want to do it on a features basis, but pr that does something that you can guarantee. There's something that you can guarantee. And that thing that you can guarantee, you are in control of, in their mind, that is highly likely to lead to the outcome they want. So you're kind of on you're not on the hook for the increased. Well, in this model, but stay tuned, you're not on the hook.

For the increase in revenue. They're on the hook for it because they said if you do this milestone, then that will naturally follow, or we're willing to roll the dice that we think that that is the thing that will unlock more revenue. So the thing that you want to deliver, so that like the day it's delivered, or ideally you're rolling it out in parts, not one giant reveal at the end, you're going to want to have something measurable.

That will have come out of this original conversation that will convince them that you did a good job. So what is that thing? So maybe it's beautiful, beautiful to who? You want a beautiful website ba based on whose opinion? And they might say a common one for for me was when we used to build portals. Well, I don't want to shift metaphor, but basically what you want to do is start to talk to the end user instead of the people in the room who all have an opinion and think the, you know.

The logo should be a little bluer. It's like, no. Who are your end users? So this is the web designer getting into almost like a product role or getting into a real design role where who's gonna use this? The client's not gonna use it. Well, let's get some users. And what are the metrics that you think need to be improved? I don't know, page load time, usability, time on site, whatever the thing is, get some users and test it and see if it's better than the old one. And then you now you have these progress metrics where these things

Jonathan Stark (22:52.419)

That you, the web designer, can control, or at least if you're good. Now you can control these things and you can prove to the buyer that the users like it better, or it is more effective, or it's faster or smoother, or the checkout process is much better on mobile. And you can you can prove it along the way. So then by the end, they know you made a site that their users like better, whatever that means, but the client will define it.

And so you can declare victory. So you're like, okay, we we did all of this stuff that we said, all the numbers are in the green. And you know, and then your head like fingers crossed, they were right about their ultimate bet, which was that that is gonna turn into increased revenue or whatever the metric was.

Shannon Mattern (23:38.662)

I was thinking when you were saying, like, I'm gonna try to talk them out of the whole project. It's like a subtle yet powerful shift of the dynamic of, I need to sell myself and convince them that I'm the right fit for this project. To I'm gonna get them to sell themselves. And I'm gonna ask them things that literally no one else is asking them. So that automatically positions me.

Jonathan Stark (23:57.038)

Mm-hmm.

Jonathan Stark (24:05.955)

Right.

Shannon Mattern (24:08.567)

As the expert, the strategist, the person that really has their best interests in mind that's going to lead them and not lead them astray, which, you know, is really what we all should be doing anyway. and then at the end of the day, I'm always like, these people are business owners, they're adults, they're responsible for their decisions.

Jonathan Stark (24:25.337)

Mm-hmm.

Shannon Mattern (24:35.589)

You know, my role is to make sure they have all the information that they need to make the best decision. and be very clear about if I think that they have a misinterpretation or a misunderstanding about what our work together is actually going to do for them, I'm gonna clear that up before we ever work together instead of

Jonathan Stark (24:58.115)

Before you start. Yeah. Yeah.

Shannon Mattern (25:02.023)

letting them continue to think if we build it, they will come and you will explode your revenue overnight or whatever misguided thing that they're whatever, you know, what problem are they really trying to solve and is this the solution? And I think people are so afraid to like let the opportunity go that they don't they aren't willing to go there.

Jonathan Stark (25:20.611)

Yeah. Yeah.

Jonathan Stark (25:25.783)

Right. And that's a that's a self-centered approach. It's actually much nicer to the client if you don't pitch yourself because it's too soon for you to know that you can actually help. You do know that you're good at you're good at what you do and you know all the best practices and you have had successes in the past, but that doesn't mean that this client's expectations are realistic. It doesn't mean that they're satisfiable. It doesn't mean that the thing that they think they want you to have to to do is like

even the right thing to do. So pitching yourself to me is like now that I've it's been 10, 20, I've been doing it for 10 years and then teaching it for 10 years. It's I wouldn't even know how to have the old conversation anymore. Because it doesn't give you what you actually need to satisfy them. Certainly doesn't give you something what you need to set a reasonable price or an acceptable price. And it and it

It also puts all of the puts all of the risk on the client if you let them backseat drive the cab. You're the cabbie in London. They're a a tourist from out of town. You're not going to let them tear tell you where to drive, or maybe you will, because the meter's running. yeah, go ahead. Tell me, tell me how to drive around London where I've been that I've been doing for 20 years. You might make more money, but you're probably not going to have happier, you know, clients or cab fares.

So it's the the the thinking, the mindset shift that you're raising is is really important. It is in their the client's best interest for you to at least be confident that you can move the needle somewhat on their actual goal. And you can't know that unless you ask. And that's like that's like just drive. I'm gonna tell you where to turn left and tell you where to turn right.

Turn the meter on and just drive. Nobody wants that in a web. I mean, maybe there's a maybe there's some cabbie who's had fares like that, but no one wants that from their web designer. There there was another, I mean, there was another point that we sort of bookmarked earlier. If you it you could find that the contr the piece you can control as the web designer, you could find yourself moving downstream.

Jonathan Stark (27:53.68)

Toward closer to the money, closer to the sale. And you might want to get better at CRO, or you might want to get better at, I don't know, shopping cart flow or mobile or ads or or SEO or all of these other things that are in the orbit of a website, of a design, but they're more about how the site really works, not functionally, but for the business as a strategically as a piece of the business.

And get involved in more systems thinking, get more and more business like, even though they came to you for a new website, because we know we need a website, we think it's ugly, and our salespeople are embarrassed to share it with others. So we know it's something's wrong. Okay, we can do that, but like, you know, maybe the options in your proposal, because you should always put options in your proposal, include things that are the higher options might include things that are more downstream of where you would normally be and be more expensive, but

If you can actually change the conversion rate optimum, you know, the conversion rate on whatever an opt-in form by ten percent, yeah, that would be amazing. Yeah, that would be amazing. So you're all I mean, it's still web design, you're still goofing around with WordPress or something, but it's a much more it's closer to the transaction. And the closer you get to the transaction, the more you can justify a percentage of the dollars. And I salespeople

In a normal service business, salespeople are right at that intersection where the upstream and the downstream switch. So if you're operating in so if you're a salespan, no one here probably listening is a salesperson. They're the only one who has direct control over the revenue. You're either upstream of that, attracting leads and doing marketing and doing all that stuff that leads to the sale, or you're downstream of the salesperson and you're cutting costs. So you're optimizing, you know, whatever. You're adding automation so that

They don't have to hire another invoicing person or something like that. So you're either contributing to a sale or you're contributing to the bottom line by cutting costs. So yeah, anyway.

Jonathan Stark (30:03.577)

That was I just wanted to loop back to that because over time this approach can morph your identity because you end up slowly turning into a business consultant and not just someone who builds pretty websites.

Shannon Mattern (30:17.35)

I couldn't agree more. And I think the one of the biggest shifts that I also help our listeners and students in our Web Designer Academy make is transforming deliverables into results and transforming deliverables into results that the person who is making the buying decision cares about. And I love the way you talked about that. Like we're either helping them like get better results or save money, or, you know, there's all of these things. And and and we have to ask more questions.

Jonathan Stark (30:28.899)

Yeah, right.

Shannon Mattern (30:46.968)

then what do you want the color pat like you know tell me show me some other websites that you like that's like completely irrelevant to the whole conversation and I love the way you describe that like the closer that you can get to the revenue increase or the expense decrease like the better the better case you can make for your value base price

Jonathan Stark (31:16.004)

Mm-hmm.

Shannon Mattern (31:16.39)

so I wanna shift gears a little bit and ask like when did you decide to start teaching this to anybody who you could get to listen to you? And what has that journey looked like?

Jonathan Stark (31:27.663)

Yeah.

Yeah. yeah, so let me get the years right. It was before two thousand so two thousand six I went solo. I guess the years don't matter. Long time ago, I was sort of well known as a particular kind of software developer. I did FileMaker Pro and and worked at a the firm I was at was very well known. And I was speaking at the conference and writing for the magazine, the actual magazine, paper magazine.

back then. And when I left, it was like, what? All everybody I knew was like, Are you crazy? I had like a great job. And they were like, What are you doing? And I said the whole thing like aller billing is nuts. And I I don't want to do it anymore, but I didn't know how to help Chris change the agency. So I wanted to figure it out. So I went off and did it and it went great. Like even though I wasn't doing it quite right, even in the first year, I like doubled my income, which was it's not exactly apples and oranges because salary and revenue is not the same thing, but it was a lot more money.

And the client relationships got really good surprised. Like the clients chilled right out. It was amazing I was like, wow, my clients have been stressed. Even the you know, I got along with all of them, but they were stressed. Soon as that meter shuts off, deadlines aren't as important. It's all it they were very chill. It gets done when it gets done, that kind of stuff. So a couple of years go by, not that much time. I think it was probably 2009.

And I started getting asked by all these people who used to know me, you know, like, so how's it going? This like hourly thing. I I assume a bunch of them thought I'd come crawling back to the agency. And I was like, No, it's going great. And they're like, Really? And yeah. So they just asked me. I just kept getting more and more questions. It was very organic. And eventually I got asked to go to a there was a user group meeting in Boston. And I went up and spoke at that and basically explained how I ran my business. It wasn't I wasn't

Jonathan Stark (33:25.357)

I was just saying here's how I do something. I'm not saying it's for you or it's not for you, but whatever. Here's how I do it. And there's about 40 people there. And I got a load of questions that I couldn't answer. You know, like, well, how do you do this employees or just stuff that was different about their their firm or their business from mine? And what if we're not well known already? And things like that. So I was like, geez, you know, I really don't know. And another group was coming in, so we had to leave. And I said, Well

I have this like lame mailing list. P just sign up for my mailing list. And then every Monday I'll answer one of these questions. Just email me the questions and I'll answer one every Monday. And I figured like that would be six Mondays and that would be that. But it ended up being a ton of Mondays. And that ended up being the the hourly billing is nuts book. Like the stuff that I was writing for those those my ex-colleagues ended up being like the material. It's kind of like a manifesto. It doesn't really tell you how to it's not a it's not a how to. It's more like

Shannon Mattern (34:05.584)

Yeah.

Jonathan Stark (34:23.617)

Me trying to agitate, like point out, shine a light on how bonker's time trading time for money is. And and then sure, same somebody's like emails me, guy I know, can you coach me? I'll pay you. It just kept happening. So so I had been blogging about it, I was coaching people, and and then

to get the numbers wrong. In 2016, I published I I I got all of the the essays together, organized them, cleaned them up, changed stuff that I had been wrong about or or you know, where there's more nuance to, and just published a short book. now to me, that 2016, that was the point where I seriously in my head switched from being a software consultant to some kind of like business coach or pricing consultant or something like that.

And and then those two businesses just like one overtook the other one eventually.

Shannon Mattern (35:25.072)

Yeah, and I'm sure that led to a podcast and then, you know, where did the podcast come? And then you also have like courses and, you know, member like all lots of different ways that you work with people on pricing. How did those come to be?

Jonathan Stark (35:30.532)

Mm-hmm.

Jonathan Stark (35:43.928)

Well, the podcast, I had been doing a tech podcast with a good friend of mine, and I just loved like a ri I was a original podcast listener. I think when I started listening to podcasts on the old iPod with the mechanical wheel, there was like ten. There were there were like no podcasts, and there was just I loved them. There was something about it I loved 'cause I'm my former life, I was a musician, and the idea that I could just go directly to to the the my listener.

not through a gatekeeper was just I was in in heaven when that happened. So I just loved listening to podcasts. There was one called Boag World that people might remember. Paul Boag was in Marcus Lillington. It was so much fun. So I loved podcasts. And then this friend of mine who we just had a great rapport. We actually were supposed to record another episode tonight of a different show. Anyway, I just love podcasting. So we started one, I kept it simple so it wasn't too hard. It wasn't that much work.

had a ton of laughs, but it was all tech. And after that wrapped up, I don't know. I mean, I I don't know. It might have been two thousand I really don't remember. There's like it like four hundred episodes ago. Yeah. Four hundred episodes ago, I started one called Ditching Hourly. It probably was around 2016, 2016. And yeah, just started sort of like reading my articles at first, and then I started interviewing people, and then I started getting

Shannon Mattern (36:54.886)

Time is weird. Yeah.

Jonathan Stark (37:13.397)

people who had found like you, people like you who had sort of found their own way to the top of the same mountain but from another path, and have them explain it from their perspective, because that might resonate differently than the way I describe it. And that just keeps going. Like every time I meet someone like you or whoever, a book author, I can bring them on and like, okay, explain it from explain how you do it. And so that's been going for years. I don't know how long.

Shannon Mattern (37:39.875)

I love that your marketing strategy is meeting people and having interesting conversations with them and writing and sharing your ideas. I was listening to a couple of your episodes from your your back catalog and and I'm the same way. I'm like, I've tried social media marketing. I hate it. I'm of the I'm of the pre. So I did not grow up on social media. I don't consume social media. It's not a place where I

want to spend my time and market my business, like having interesting conversations with other people, meeting people, sharing ideas, adding value. Like I don't think there's any better way to market is so rewarding. So I I really appreciated that about you. And I think that, you know, our listeners here, I always like to ask whatever guests I'm talking to, how did you grow your business? Because they think they have to do so much to get a client.

Which then goes back to what we were talking about earlier. They put so much pressure on themselves to like sell them sell the client on them and they get every part of this whole process backwards and end up creating a bunch of jobs for themselves and a bunch of bosses and being overwhelmed and miserable and then saying things like, It'd be easier to go back to corporate. And I'm like, Yeah, the way you're doing it, it absolutely would. Like, please let me help you

Jonathan Stark (38:48.184)

Yeah, it's backwards.

Jonathan Stark (38:56.952)

Yeah.

Right.

Yeah. Right. Right. Yeah, totally agree. I I think if I see these kinds of businesses as expertise-based businesses where you're really good at something, you know you are, you're confident, that that you know the best practices and where all the the knobs and and buttons are. So if you have that kind of a business, the more you move toward true consulting, and not just calling yourself a consultant, but the more you move toward true consulting.

The more you need to be a recognized authority. And I think everybody, you're never gonna regret it if you get better at writing, and you're never gonna regret it if you get better at speaking, whether it's on a podcast or live or whatever, virtual events. You are never gonna regret it. No matter what you end up doing, it's gonna serve you all, even if you do go back to corporate. So any time spent on either both, ideally both of those activities, is time well spent. So

And I like you, I'm just hate social media, frankly. And I I publish stuff to it and every time every once in a while I'll go on LinkedIn, but I do not spend time there. And I think that well, AI and sh I I think a lot of trends are make it a great time to be writing more thoughtful pieces.

Shannon Mattern (40:13.478)

Sure, same.

Jonathan Stark (40:30.327)

And like I said, I have a daily writing practice seven days a week since twenty I just had the 10th anniversary on Sunday of every day by myself writing this thing, but then broadcasting it to 10,000 people or whatever. And then those 10,000 people, they can just hit reply and I broadcast to, you know, lots of people. But anybody who replies, it's private instantly. So it's like it autom

the way email works, it defaults to conversations. So if you write something that gets someone thinking and they reply, they know they're not doing something performative online. They know they're not juicing the algorithm to help me. They they're just curious or like they have they have a question. So it turns into an email conversation. And I just absolutely love email as a format for for regular daily or even week daily or weekly publishing. I think weekly is way harder than daily, but

so I think if you're writing a lot, you're gonna get better at articulating your ideas, you're gonna crystallize your thinking, you're gonna start to see where you're different from other people. And there's your face in your client's potential client's inbox every single day, even if they don't read it. When they do finally need someone or know someone who needs a web designer, guess what the first thing they're gonna who the first person they're gonna think of is? It's gonna be you. So, okay, great. That's that is great for building authority.

crystallizing your expertise and you can turn it into a book at some point, which you know, author authority, it's right in the name. The other side of the fence is podcasting and speaking. And the thing with speaking, people are experiencing it right now, hopefully, is that they get a sense of whether or not they click with you. And some people won't click with me or you, other people will, and immediately they feel like they know you. And there's this asymmetric, asymmetric kind of intimacy that's called parasocial relationships.

And it is about transmitting the information that we're actually talking about, but you're also transmitting what it would be like to work with you. So they people who are turned off by your, you know, maybe I'm too casual or whatever, be turned off by that. Other people will not be turned off by it. And it really differentiates you when you do end up in a sales interview and you say, you know, and and you say, like, well, why would you hire someone expensive like me? And they're like, we're not even considering anyone else.

Jonathan Stark (42:49.127)

Like we're either not doing this or we're hiring you. So that's and that comes from podcast. Like I can't tell you how many high ticket clients I've gotten who just weren't even shopping. They were just like, you're the only one we're thinking about because it builds so much trust. They feel like they're friends with you. It's creepy almost when you go to a conference or something and people like know my kids' names, and I'm like, Well, do I know you? It's like, no, no, no. I listen to ditching hourly. And it's like, wow, okay.

You become a micro celebrity with your target audience. That's the speaking. That's what speaking does. It builds a crazy amount of trust in a very short amount of time with the kind of people who are going to click with you. And then the writing is the part that makes you the expert. You actually prove you actually do get better from the writing. So those two things are just the most genius one, two punch ever. I think and and no social media. Just automate that stuff to TikTok or whatever. And yeah, don't even don't even

Don't even play with the algorithm.

Shannon Mattern (43:50.349)

such good advice. Yeah. One of my it is my favorite thing to to meet people who know more about me than they should in real life. And then you realize, like, like you spend a lot of time with me. I've had a big impact on your business and your journey. And like, you know, to hear people say, like, you helped me quit my job. And I'm like, I'm just meeting you for the first time. Like it's it's really, it's really cool and very rewarding because I don't know about you sometimes. Like I'm alone in this room.

Jonathan Stark (44:12.153)

It's wild. Yeah.

Shannon Mattern (44:19.46)

My dog is over there. I spend all day by myself. And yet, you know, I'm having like a big, big impact on people without them ever having to have met me. which is is really fun. I have 7,000 more questions to ask you, but I'm gonna reserve myself here. you you brought up AI and

Jonathan Stark (44:30.959)

Yeah.

Jonathan Stark (44:39.631)

Mm-hmm.

Jonathan Stark (44:43.535)

Mm-hmm.

Shannon Mattern (44:45.892)

You know, this is something that n everybody I'm talking to, not just web designers are are trying to figure out how to navigate. And I think it really does, you know, there's there's this question about like, well, where is my value now that anybody can just go to Claude or Chat GPT and ask them all of the questions that I would have typically answered for them or advised or consulted and guided them on or helped them with. So

Jonathan Stark (45:13.495)

Mm-hmm. Mm-hmm.

Shannon Mattern (45:15.906)

What is your take? What are you seeing? What kind of questions are you seeing from in your community on how do we continue to communicate our value in this era?

Jonathan Stark (45:30.593)

So I think it it's first of all, I don't know what's gonna happen, of course. That's not exact you're not asking me what's gonna happen, but I don't know what's gonna happen. I mean, I if I was gonna make a prediction, I would say that right now the Frontier models, Chechpti, Claude, yeah, basically those two are the only ones I know normal people are using. something like ninety-eight percent of people are using the free plan on both of those. And

Shannon Mattern (45:36.475)

Mm-hmm.

Jonathan Stark (45:57.754)

They're both wildly subsidized by VC money. So I don't see how the price isn't gonna go way up. I I just don't see how it's possible. It's going to get real right. It's just it's gonna be ruined in some way. Like the the the calculus is just gonna change. So if I had to bet, I'd say it's probably gonna get really expensive. So then people will be really surgical about what they use it for, and the usage will go down. that said.

Shannon Mattern (46:09.976)

Or ads.

Jonathan Stark (46:26.243)

We gotta live through the phase where it's cheap. And I think the I think the core of the of the question, if someone asked me that question, I feel like the core of it is that you think you are giving them information. If they just need information, then they don't need you. They probably didn't even need you before AI. If they just need information, you could Google for it and it's not as it's not as customized. But if they just needed information, then

They weren't a good client in the first place. But if you are in like just think of like I have a pay pay for a personal trainer. I have I know how to get washboard abs. Everyone knows how to do that. But how come you're not doing it? Like there's a motivation thing, there's a trust, there's connection. so I you know, there's accountability, there's support, there is all of these things. So like I used to AI constantly, I I probably got two things running in the background right now.

But I'm not using it for things that are I'm using it for tedious things that I would maybe hand off to a VA. I'm not having it write my emails for me. That would that would like that's would ruin the whole point. That'd be like be like bringing a forklift to the gym. Like no, I'm here to not here to lift weights, I'm here to get stronger. So I I just think the more this is gonna get into a positioning thing and a marketing thing, but this it's if you're the one and only.

If you're just another web designer and the only difference that your potential clients can tell between you and the next one over is the hourly rate or your price that you gave for the project, then you're dead. Like you're gonna lose to the cheaper one. But so so it's important that they are aware of differences that already exist, I'm sure, between you and the next web designer. So you need to you wanna be ideally working toward becoming

the one and only for a particular audience and like you are known for something and you you're just like associated with that. Like Volvo safety, right? So like, okay, I could buy any car. A car is a car, right? But do you want a safe one? Well where are you gonna go? Volvo probably. They're gonna be on your short list. So it gets to this thing where you you always had to be different from your lower cost competitors overseas or wherever.

Jonathan Stark (48:51.895)

And so you just have a new one. You have a new low-cost competitor while you know, while the costs are low, we'll see if they stay low. You have a new low-cost competitor. And like anybody, I would, I would, if we were if I was working with one-on-one with someone, I'm like, okay, how are you different from this cheaper alternative, whether it's a person or not a person? How are you different than this cheaper alternative? Okay, these are the ways you're different. Okay, who cares about those differences? What's the most important difference to the kind of people you want to work with?

And emphasize that stuff. And I'm not saying like be the barefoot web designer or something like, you know, like influencery. Like it needs to be in a way that's meaningful to the client. And it's probably partially your personality and professionalism. And it's like the right altitude for where they're at, but it's got to be something else. You need to be really good at something that they care about, delivering results that they care about for the kinds of for people like them. So it's it already, it it's the AI to me is just like.

you know, remote workers. It's it's to me it's the same problem.

Shannon Mattern (49:57.774)

Yeah, I I I totally agree with you. It's like the same things that were important when WordPress people freaked out when Squarespace got good are the same things that are important now. so

Jonathan Stark (50:10.479)

Yeah, it's like I was a web developer when Rails came out and I was like, wow. It used it used to take me two weeks or not, maybe not that long, but it would take me days to create a login system. And now it's just like include whatever it was called, include login gem and just like done. Okay, great. Which I loved back then because I wasn't trading time for money. So I got really fast using frameworks and stuff, but it that's off topic. But like, yeah, same kind of thing, the Squarespace WordPress thing.

Shannon Mattern (50:21.681)

Yeah.

Shannon Mattern (50:30.191)

Yeah.

Jonathan Stark (50:38.155)

And those that's stuff's all gonna continue to morph. Like I use Circle for my community and like I just gotta you know, we're enforced you're gonna use Circle Eclipse on October first, whether you like it or not. So all of these platform y types of probably web convert kit and all of are jamming these AI features in there. So I don't know. I think it's gonna get really expensive and then people are gonna be like, you what? I'll just do it myself.

Shannon Mattern (51:04.023)

Hmm, interesting. So you had mentioned earlier that you said always offer option. We always offer options in our proposal. I teach the exact same thing. I'm curious what your what your rationale is there.

Jonathan Stark (51:14.539)

Mm. Cool.

Jonathan Stark (51:22.171)

yeah. It's again, this goes back to Alan Weiss, which that book was my Bible for you know three years. I read it ten times. if you give them one price, it's an ultimatum, and they're like, should we work with this person or not? And if you give them three, they're like, What would be the best way to work with this person? So, and and that is that's Weiss for sure. Like, I that's the first time I heard that. But I I always

Shannon Mattern (51:27.759)

Yeah.

Shannon Mattern (51:39.776)

Yes.

Shannon Mattern (51:44.132)

Yeah.

Jonathan Stark (51:47.96)

I always I just I w I want to say insist. I insist that people put exactly three options in a custom proposal because too many starts to get confusing and not enough. It's there's not enough back and forth with them. So two is better than one, and four is better than one, but three is really the sweet spot. And then you can use different pricing curves in there. And there's like two, you can you can price them any way you want, but I use two.

Different pricing curves depending on how badly the person wants to land the project. Because I work on proposals with people like on a regular basis. So I don't know how much we have time for this. Okay, so at I like Goldilocks pricing as a default. And I call it Goldilocks because the bottom one, well, that's that's a good price, but we really want some more of that stuff that's an option too. And then the the expensive ones, like breathtakingly expensive, like five times higher than the first option. So that middle one's starting to look just right.

And I even have a calculator on my website that you can I don't I don't even know if we'll put it in the show notes or something, but it's on my free page. And you you just pick Goldilocks pricing, you say, how much do you think the project is worth worth to the person, say $100,000, the the value, not the budget, but the value of it. And then you say, okay, 10,000, 22,000, and 50,000. What would I do at each one of these prices that's gonna move the needle that they want moved?

It might not even be the thing they asked me for. But, you know, cause when they start and they're like, I went scope, scope, scope. It might, it might, but it might not. And so these three things, incremental options. So like you can't just, you know, like if you buy if you get two, you also get one. So like, you know, my in my proposal to say two includes everything from option one plus I'll do this, that, and the other, and just like one or two sentences. And then it's like benefit, benefit, benefit, benefit of option two. Not like there'll be some

They're always gonna want to know, like, well, how many features is that or revisions or whatever? And I'll say, like, unlimited revisions or whatever your thing is. And these are the benefits of that. You you know, feature, so that, business benefit. So you you'll always know where we are in the project, or feature, so that benefit. So I find when people write proposals, they're they're not they're usually always bad at converting the features and things they're gonna do into business benefits. And that's what the the buyer needs.

Jonathan Stark (54:13.273)

To decide because they don't know what a what I don't know, some jargon that you would say about, you know, they don't know what DNS support, like they don't know what that is. So you can't just say, it's going to include DNS support and cloud hosting, and they're like, I don't know what any of this is, so that you don't have to worry about your computer at home falling asleep and your website being down or something crazy like on-prem hosting. Anyway, so I like those.

I like that particular curve. There's another one called called might as well that drives them to option three. If you're afraid of losing the gig and you really need it, but but Goldilocks pricing is like 10, sorry, 10%, 22%, 50% of your guesstimate at their value for the first year. And you put the scope in after. You I don't even start thinking about scope until I have some prices.

Shannon Mattern (55:04.621)

I love that. So good.

Jonathan Stark (55:04.993)

And yeah. And if they pick option three on one of those, you've been leaving money on the table. Yeah, big time. Yeah.

Shannon Mattern (55:12.197)

Time to raise your prices. So good. Okay. Where can everybody go to hear more stuff like this?

Jonathan Stark (55:23.737)

Cool. Yeah, just Google for the ditching hourly guy and you'll find everything. Website, podcast, whatever, community workshops, all that stuff.

Shannon Mattern (55:34.657)

Amazing. I will link all of that up in the show notes, including the Goldilocks pricing calculator. Jonathan, thank you so much for being here. This was such a fun conversation. I could have asked you 7,000 more questions, but he's answered them all on the Digiting Hourly podcast and in his book. So you can go subscribe, get that book, check him out, learn more about the community and programs that you have to help people with pricing. I really appreciate you being here. Thank you so much.

Jonathan Stark (55:48.239)

Jonathan Stark (56:02.914)

thanks for the excellent questions. It's always always nice to have good questions, people who know their audience. It's excellent. So thanks. Thank you.