You’re Not A Pig: How To Avoid Commoditization, With Brennan Dunn (1/2)

If I told you that for only $49 I could show you how to double your rates, you would probably call me crazy (or think I was trying to scam you out of $49). And even assuming it was somehow possible to double your rates, why would you need to someone to tell you how to do it?

That was pretty much my mindset when I first found out about Brennan Dunn’s book. I was pretty sure whatever advice was in there didn’t apply to me.

Yet as time went back, I kept seeing Brennan’s name pop up again and again on Hacker News and in podcasts. So I decided to dig a little deeper to see what Brennan was all about. I don’t regret giving him a second chance. I soon realized that behind a slightly gimmicky tagline laid a foundation of very solid career advice for freelancers.

So I asked Brennan to share his advice with me, especially for freelance designers, and the result is this podcast. In part 1, we’ll cover:

  • What Brennan’s book is about
  • The difference between freelancers and pigs
  • Value-based pricing, and how it applies to working with startups
  • Why we’re secretly ashamed of charging more (and what to do about it)

By the way, if you want to get Brennan’s book, use coupon FOLYO for an extra 10% discount!

The transcript follows, and you can also discuss the podcast here in the comments or over at Hacker News.

Note: I left some of the startup names misspellings in the transcript, because I thought they were cute!

Introduction

Brennan: Why don’t we introduce ourselves first? So, do you want to start?

Sacha: Yeah, go ahead. Go ahead.

Brennan: OK. My name is Brennan Dunn. Done a lot of things. For the last five years, I’ve been either freelancing or running a consultancy. My consultancy’s name is We Are Titans. We’re based in Virginia. For the last almost year, I’ve had a product called Planscope out, which is a project-management tool for freelance developers and designers.

We Are Titans

And most recently, I launched a book called “Double Your Freelancing Rates.” I launched that, actually, I think, exactly a month ago. So far, it’s been great. The reception has been great, monetarily and in feedback. It just crossed over 300 sales, and I’ve received, actually, I think, about two dozen emails so far from people saying either it changed the way they think about their role as a freelancer, or they actually have raised their rates and already are making more money than they were before reading the book.

So I guess my goal now is to try to figure out how I can take the experience I’ve built up having consulted for so long and try to give back as much as I can to either freelancers who might just be starting out or are struggling and want to get to that next plane but don’t know how to get there.

Sacha: So, when you say you’re a freelancer, you are a Ruby developer?

Brennan: Yeah. So I do, actually, a few things. My core competency would be Ruby on Rails, although I do do a bit of design. Before I got into programming, I almost went to art school for graphic design.

I ended up realizing that I am technically good at mimicking other people and not a very great of coming up with new ideas. So I ended up more into development which is a nice being able to play for both sides because you know for since with my product and book I didn’t need to find a designer to work with it. I did it all myself.

Sacha: It’s funny because I am actually the opposite I started out as a developer and found out I like design more and I was better at design…

Brennan: I can understand that. I actually like design more, too. I just tend to do a lot more development recently. Although actually recently I have been doing more writing a lot of blog posts with the book and everything else which I think I actually like writing better than I do developing or designing.

Sacha: Well, it’s really funny because I started as a developer then became a designer for freelancing and then once I started launching my own products. I also ended up doing lot of coding and now I am also mostly writing on my blog and on Folyo’s blog. So it’s very similar.

Brennan: It’s the inevitable path we all take I think.

Sacha: Right, Everybody ends up as a writer.

Brennan: Exactly exactly.

Planscope

Sacha: So let me just introduce myself real quick. I’m Sacha Greif and I am mostly a designer, and I have been a freelance designer for the past four years. My specialty is UI design, so I’m worked with companies like HipmunkRubyMotion and Sharypic, mostly doing web apps, mobile apps, that kind of stuff.

Now I’m also transitioning into focusing more on my own products, the main one being Folyo, which is a site that helps startups find freelance designers. You’re going to think I’m copying you, but I also have an e-book about design which I’m also selling.

Brennan: Yeah, it’s actually funny. I’m friends with Jarrod Drysdale, who I know you and him had a bit of a spat online about pricing. I think you both released on the same day, right?

Sacha: Yeah, we did.

Brennan: Yeah. I’ve read actually both your books.

Sacha: Oh, cool.

Brennan: They’re both fantastic books, so kudos on your book. I know Jared lists on your book too.

Sacha: They’re very different books. He spent much longer writing his book and it’s much more complex and denser. Mine is really a quick, quick read, that you can read and process in 20 minutes, so I think they’re two different books for different targets.

Brennan: I think yours had a different aim, too. If I remember correctly, you wanted it really to be a way to propel your personal brand, to get more exposure and everything else. It’s funny how when you produce information, that tends to be the side effect, right?

Sacha: Right.

Brennan: If you are prolifically producing other blog material or e-books or downloadable content, whatever, that’s probably… we all look to people like Jason Fried or someone and we’re like, “How did you get so popular?” Really if you look back, with Signal vs. Noise and everything else, he’s produced so much stuff.

Sacha: Oh, yeah, definitely.

Brennan: Output is key.

Sacha: Let’s try to keep the focus on freelancing for now.

Brennan: Absolutely.

Sacha: Maybe we can come back to e-books and products later on.

Brennan: OK.

Sacha: Maybe you should just introduce your book real quick, like what’s the main topic.

Double Your Freelancing Rates

Brennan: Sure. My book has a very marketing friendly title. It’s called “Double Your Freelancing Rates”, which you inevitably read that and you want to do that. Really at the core of it though is, it’s a book that helps freelancers.

Most of us when we started out were, lets say, maybe, designers who worked for somebody so we were probably salaried employees at some point until we went out on our own.

What I found is that the majority of us when determining how much we price ourselves, we tended to look backwards, thinking, “OK, I made x amount of dollars on my day job so in order to maintain the standard of living that I had before, I need to charge this,” or they’ll go to some sort of calculator or they’ll go to AIGA.

Any of these different kinds of outlets and try to come up with a market rate or something like that and really what that is, is commodity pricing.

You can go to the stock market and they’re trading corn, oil, pigs and all of these different commodities and there is a market rate for oil and there’s a market rate for corn. The majority of us take that same approach when pricing our services, what I’m arguing is that it doesn’t need to be that way.

Don’t be corn

You can tangibly convince and deliver to a business owner who hires you, a product that produces a positive return on investment for the purchaser. In service when a client hires us, if we can convince them and also deliver work that ends up benefiting their bottom lines then we can charge a lot more than we are charging now, especially if the work we’re doing boosts their profit exponentially.

My goal is to help people understand that, you don’t need to look around at market rates. What you can is, you can look at yourself and your client and think, “what can I do for this client that will make them a lot more money and therefore, how can I price accordingly based on the surpluses of success that I’m now bringing this client.”

There’s a lot of actual material things like, ‘How to redo your personal sales website’ a lot of people talk about how much they love snowboarding and all of these different things. A lot of this clicked for me when I started a consultancy and I was kind of a bridge between developers and designers that I hired and clients.

If I’m a client and I want to hire a designer, do I want to read things about them? Or, do I want to read things that they’re telling me that they can do for me?

The fact is, when you’re going to hire somebody, there is a selfish motivation; you want to hire Sacha because you believe that Sacha will end up bringing you in more money than you’re going to spend on him. The core of the book is really, how to bake that into your freelancing business.

Sacha: Just to clarify, when you’re talking about freelancing it could be a developer, a designer, it’s not specific to one kind of work, right?

Brennan: No, we’re all doing the same thing in the end, we are all being hired to produce some sort of business value for the client. It’s kind of like, if you think of a company building a house.

You have carpenters, masons, all the different people that go into building that house but it all has one angle. I don’t care if you’re a copywriter, a designer, a developer, an SEO specialist, at the end of the day we’re all being hired for the same reasons.

Valuing Design

Sacha: Folyo focuses on design and one thing I’ve always wondered about value based pricing and that kind of philosophy is, how do you quantify the value that the designer will bring to a project or company?

Brennan: That can be tricky because design in subjective, right?

Sacha: Yeah.

Brennan: I mean it’s either, you like the blue or you don’t like the blue. Though I think that you can quantitatively kind of report on the work that you’ve done. The way you would do that is, let’s say you’ve been hired by a restaurant and the restaurant previously had a website that was flash based.

It really wasn’t effective from the perspective of the customer, the restaurant owner. The way you would quantify that is you would determine, how many new customers does your website bring that business in the door?

It’s hard because, unlike if you’re selling an eBook, it’s hard to quantify. But what you can do is you can do things like, you can talk to your customer and say, “Before, because you had a fully Flash-based website, if I’m driving around and I’m hungry for sushi and I pull up your website, I’m going to see a blank page on my iPhone because…”

Sacha: Yeah.

Brennan: “…the iPhone doesn’t support Flash. Therefore, you had a failure of design previously. What I’m going to do is, I’m going to understand that somebody on the road who’s hungry for sushi is going to care about two things probably. They’re going to care hours of operation, directions, and maybe their menu.”

What you can tell the business owner is, “I’m going to optimize for the business need.” The experience for somebody at home on a laptop or a desktop is going to be different than it would be for a mobile device. You explain why, and you explain… you go beyond, let’s figure out if we want blue or black or green or red. You start looking at, what can I deliver to this client that I can back up? Because it’s going to be all hypothetical before you’re hired.

Sacha: Yeah.

Brennan: You can’t say, “I’ve increased your sales by 182 percent,” because you haven’t done anything yet. But you can put together a roadmap that says, you can identify the business failures of their current website.

Truthfully, if a designer can study up on human psychology and read books like “Don’t Make Me Think“, you’re automatically going to be on a higher echelon than the majority of your peers.

Don’t Make Me Think

Because understanding the way that humans interact and use websites or software or whatever else, and applying that in a way that will be laser-focused at increasing the revenue of the client who hired us. If you can do that, and you can make a convincing case to a potential client, and speak language that they resonate with.

You speak in profit and costs and revenue and customers. That’s what people want to hear. They don’t want to hear about serif fonts or sans-serif. At the end of the day, the average customer is going to be more focused on wanting to know, and wanting to be certain of, that you’re going to deliver a product to them that is going to be more valuable than the amount of dollars that they’re going to spend on you.

Demonstrating Value to Startups

Sacha: Yeah. I think that makes a lot of sense. But also in my own experience, I’ve worked a lot with startups. One of the difficulties is that the problems startups are based on are not very well-defined yet. It makes estimating those things really hard sometimes.

Brennan: Especially a lot of start ups aren’t exactly profit driven too. That’s true. That can go into your positioning. What kind of client do you want? Granted if you have a venture backed start up their pockets tend to be pretty deep and with somebody else’s money.

It might even be easier sometimes to justify, especially if you can pull the whole, there’s more demand than supply type of situation with them. I think with any customer with any customer profile, you really just need to understand I think, what are they looking for? You’ve mentioned you’ve done work for Hipmunk right?

Sacha: Yeah.

Brennan: They’re competing against Campfire and Flowdock and other products like that.

Sacha: : They’re actually a travel website.

Hipmunk

Brennan: Oh no. I was thinking of Hipchat. I’m sorry. Hipmunk is competing against Kayak. I’m sorry. Start up mix up! By the way their product is beautiful so whatever you had to do with that kudos.

With the start ups, and I actually think I mentioned this in the book, I’m like a small business or a profitable business who wants to invest money to make a positive return.

With start ups it’s all about… really and I hate saying this, glitz and glam, right? They want to be what Techcrunch wants to cover. They want to be something that people want to show off to their friends. I’ve showed so many people I think the Aerobian Bee [Sacha's note: Brennan actually says "AirBnB" here but I'm leaving it as it was transcribed because I just find it so funny] iPhone app because of how well I think it is.

Sacha: I don’t think I agree with that though. I’ll let you finish but I want to get back to that.

Brennan: I used to do some work out of San Francisco but recently I’ve actually made the decision I only want to work with companies that are currently profitable and help them make more profit. I might be out of touch with some of the needs of the modern day start up.

Earning More And Working Less

Sacha: Right so I think what that points to is that who you are working with is very important too, right?

Brennan: Absolutely.

Sacha: Lets come back to the book title, “Double Your Freelancing Rate”. Increasing your own rate is one part but I think choosing who to work with and selecting the right kinds of clients for your own goals is very important too.

Brennan: Right. I mean if your goals are financial you can probably build a simple web form for a Fortune 500 and if you tell them, hey by using this we will be able to cut two positions because it saves that much manual processes therefore I’m going to charge you this. They might gladly pay that because to them it’s that return they’d be getting from that is huge.

If your goals are financial you might not want to always be looking at a start up as client. The people that I’m attracting for the book I think are… I don’t want to say lifestyle designers and developers but people who would rather not work as much or focus on other things

Sacha: I think that that’s a lot of people.

Brennan: Oh, that’s me. I couldn’t have written a book and built Planscope if I was doing full-time freelancing. I really had to be my own investor by charging more, working less and then maintaining the same… really what the end result was, my income didn’t change, but I had more time that I could dedicate to other things.

Sacha: I think that’s an important point to make, is that you’re not just earning more but also maybe earning the same and working less.

Brennan: Exactly, exactly. That’s something that… we all have the same amount of time, and the more time that you can spend. Especially, I have two kids and I want to spend a lot of time with them, and that’s where it becomes a lifestyle issue.

One of the perks of charging more for your time is you can… let’s say you’re making $100 an hour and you’re working full-time. If you charge $200 an hour, you can now work 20 hours a week and get the same. Nothing changes in your lifestyle.

Sacha: That’s actually what I’ve done. I’ve been increasing my rates for the past four years and I’ve also been working less and less for clients. I think I’m probably actually earning less now than I was before, overall I mean, but that gives me a lot of time to spend on my own projects and I’m much happier than before.

Being Ashamed of Charging More

Brennan: When you went about raising your rates, did you use your… you’ve got some pretty impressive things in your portfolio. Has that been the main driving force behind charging more?

Sacha: Yeah. I guess this and also the jobs, getting more experience. A little bit more about me, I don’t have a design background, I never went to design school, so I think I suffer from impostor syndrome, you know?

I think a lot of people, especially in our industry since a lot of us are self-taught, we’re like, “Oh, no, I can’t charge that much because I’m not a real designer or I’m not a real developer, I don’t have the plaque on my wall or the diploma.” I think that’s been a problem for me and it took me a couple of years to overcome that.

Right now my rate is REDACTED [Sacha's note: Patrick McKenzie has convinced me not to talk about my rates publicly anymore. If you really want to find out, listen to the audio version!] an hour if I took on any freelancing projects, which I haven’t for the past six months, but that’s my current rate. I think I could probably charge more, but I still have something holding me back. I can really relate to what you talk about in your book. What people talk about on Hacker News, too. All that about being afraid to charge more. Even sometimes a little bit ashamed to charge more.

Brennan: There’s definitely a distinction, right. There’s a distinction of what you just said about being ashamed. Where, really what you’re saying there is, how on Earth is what I’m doing worth that?

Sacha: Yeah.

Brennan: I think the answer to that is –I don’t mean this in a bad way– what that is, is that’s a selfish reflection of your rates. Really, what I mean by that is that you’re looking at yourself. You’re looking at your capacity.

What you’re taking out of that equation is how much –I don’t know Head monks’ [Sacha's note: Brennan says "Hipmunk" here but "Head monks" does sound much cooler] profit model– but how much benefit whether financial, or exposure wise have you delivered to them? I think we, as a whole, we need to look more at: what am I really doing for my clients?

Sacha: Yeah.

Brennan: How am I benefiting them? Then, I think that, of being ashamed of what you’re charging completely dissipates. Because let’s say I work for a week. I’m charging $100 an hour.

If I charge somebody $4,000, the value, the life time value of the project that I just worked on could end up netting this company $100,000. Should you feel bad that they spend $4,000 to make $100,000?

Sacha: Yeah, of course not.

Brennan: That’s where… I think, I think what we tend to do is that we miss really the most important part of the equation. Which is the result of the work we’re doing.

Sacha: Yeah. Yeah, I think it’s interesting because it’s not so much like charge more as change the way you think about charging. Change the way you think about valuing your work.

Brennan: That’s exactly it. I mean, I use Harvest for invoicing. I could go in Harvest right now, click on a textfield, and modify my rate. Anyone can do that.

Harvest

Sacha: Yeah.

Brennan: Anyone can do that. Will the client pay? I don’t know. But there needs to be, you’re exactly right, It’s a philosophy change. It’s a change in your world view. Your positioning. The way that you present yourself. That’s really what, what I’m trying to get at. Is it’s not about the number.

Being More Than A Freelancer

Brennan: It’s not how many dollars, or yen, or euros an hour we’re charging people, that’s not it. What we’re getting at is something that benefits both parties. Benefits you and benefits them.

Benefits you because you, probably going to have a better client first of all because you are going to be more in line with what they are looking for.

Me as a client, I’ve dealt with designers who have been so focused on things like, I don’t mean this in a bad way, but things that are academically right. We all like to make fun of, say, “make the logo bigger“.

While that’s justifiably valid, a lot of designers’ reaction would be more on the academic side, saying “you just can’t at all, it’s not the right thing to do”.

If you can go to your client after they say that and tell them “well the problem with that is it would push the other content lower down the page which could make it so people are now more likely to immediately click back because they are not going to see what you have offered them”.

Present to them a rational business-focused case about why you should or should not do something.

That is something that, considering I have worked with probably half a dozen designers now, it’s so rare for me to find somebody who understands that, I am paying them a lot of money and I am not paying money just to spend it. I don’t enjoy writing cheques.

I am hoping that something positive, and by positive I mean the investment I’m spending is going to bring back more than I am spending, so that is really kind of the gist of what I am trying to get at, is that we need those kind of repositionment. We don’t need to learn new skills, it’s not about that. It’s about reworking internally what we’re thinking in our heads and also what we are presenting to our potential clients and their clients.

Next Week: Part 2

Let’s stop here for now, but stay tuned for the conclusion of our podcast next week. Here’s a preview of the things we’ll cover:

  • Why how much you charge influences how people percieve you
  • Brennan’s message to freelancers in India, Pakistan, or China
  • What I think of 99Designs
  • How to avoid being commoditized (remember, you’re not corn!)
  • If speculative redesigns are a good idea
  • Brennan’s networking tips
  • A comparison of our approaches to billing clients
  • What to focus on when designing your portfolio

In the meantime let us know what you thought of part 1 here in the comments, or over at Hacker News.