Welcome to Modern Sales

Creating a $1M Book on Pricing to Leverage Consulting Expertise with Blair Enns

Share on facebook
Share on twitter
Share on linkedin
Ever wonder why it feels like you’re not netting the profits you should? It might be that you’re pricing is a big problem.

For more information on remote selling and a complete list of links mentioned in this podcast, visit this remote selling article on our website.


Creating a $1M Book on Pricing to Leverage Consulting Expertise with Blair Enns:

Full Transcript

Liston Witherill:
Welcome to Modern Sales, a podcast for entrepreneurs, business owners and sales people looking to have more and better conversations with your perfect clients. You’ll a healthy scoop of psychology, behavioral economics, and sales studies to help you create win-win relationships. I’m your host Liston Witherill and I’m pleased to welcome you to Modern Sales. Today I have a very special guest. His name is Blair Enns and if you’ve been in the consulting business for any period of time, you are almost certainly familiar with Blair and Blair’s work. You can check it out at winwithoutpitching.com. He offers sales training for creative agencies and today I’m going to be talking to Blair about his new book about Pricing Creativity.

Liston Witherill:
Now what I found fascinating about this book from a business point of view, is that he has a plan, a master plan that he has hatched in order to make $1 million from a book. Now, I found this to be first of all, wonderfully ambitious and fascinating to hear how he’s going about this and what his plans are and why he thinks he can do this and in this podcast we’ll talk a little bit about that.

Liston Witherill:
We’ll also be talking about, obviously, how to price creativity, how to price especially value price your services as a consultant, as an agency owner, as someone providing their creative energy, their advice, their strategy for clients. And so I’m really excited to bring this to you. Just as a quick reminder, if you’re looking for help with your sales, you can head over to my free sales course, that’s salesin30.com. I promise you that by the time you’re done with those 10 free videos, you will know about 10 times more about selling than you did before you went in, and you’re going to be able to sell with much more confidence than you ever have in your life. So once again, just head over to www.salesin30.com if you’re interested in grabbing that course. And now without further ado, I’m bringing you my conversation with Blair Enns. Hey, it’s Liston and I am here with Blair Enns. Blair, how are you today?

Blair Enns:
Doing really well. Liston, thank you. It’s a pleasure to be here.

Liston Witherill:
Well, it’s my pleasure to have you here all the way from the woods of Canada. We have the technology to make this work and I have been following you quietly and afar for quite some time. My friend who I think you’ve also been on his podcast, his name is Phillip Morgan, initially recommended the Win Without Pitching Manifesto. And so it’s a little surreal to have you here, so thanks for being here.

Blair Enns:
Yeah, my pleasure. I haven’t been on Phillip’s podcast. I’m actually going to meet him later this week for the first time.

Liston Witherill:
Oh, in Tennessee?

Blair Enns:
Yeah.

Liston Witherill:
Fantastic. You should definitely badger him into being on his podcast because I’m sure he’d love to have you.

Blair Enns:
Consider it done. Consider Phillip badgered.

Liston Witherill:
He responds well to that kind of thing. So Blair, I know that a lot of the people listening to this are probably familiar with you, but can you explain just briefly what does it mean to Win Without Pitching and what are you up to with this new pricing thing you’re working on?

Blair Enns:
So Win Without Pitching is a training program for creative professionals and it really helps them do just that, win without pitching. So your question is, “Well, what does that mean?” I think that’s your question. What does it mean to win without pitching?

Liston Witherill:
It is.

Blair Enns:
So my definition of a pitch is a pitch is a defined client driven selection process in which you, the creative firm where the consultant you’re lined up against your peers, your competitors in an apples to apples comparison and you are told outright or it’s implied to you that it’s in your best interest to begin to solve the client’s problem as proof of your ability to solve their problem. So it’s really a client driven selection process where they’re calling all of the shots and they’re either telling you or inviting you to start giving your highest value product, your thinking away for free.

Blair Enns:
So that’s what I mean by a pitch. So to win without pitching is to basically win outside of that client driven selection process. It’s to take control of the selling/buying process, depending on what side of the table you’re on, take control to move from the vendor position to the expert practitioner position and to change the way your services are bought and sold. So I don’t see a pitch, a free pitch where you’re giving your thinking away for free. I don’t see it as this moral conundrum that some people do. I don’t see it as amoral to pitch for free. I don’t say it is amoral or unethical for clients to ask. It’s just a sign of who has the power in the buy sell relationship. So we teach creative professionals how to change the dynamics in the relationship so that they take back some of the power and then they can go about selling their services in a way that’s a lot more sane. That’s what it means to win without pitching.

Liston Witherill:
Yeah. So when you talk about pitching, I think it can mean different things to different people. So you’re not saying don’t make an offer, but I conjure this image of the Mad Men episode when they go to, I think it’s General Motors or one of the car companies and they have all their best people in a room for a week putting together all of these elaborate boards and three different campaign ideas and that’s what you mean, right? Is not to give away the strategic thought and the deep thinking that would go behind what the actual executional work would be powered by.

Blair Enns:
Yeah, that’s exactly it. So a pitch in the money or in the finance business is different. It’s just, here’s why you should give me money, and it’s a very short, often just a few minutes long. So I’m not talking about that type of pitch. I’m talking about the type where you… It’s still done to this day, even though the economics don’t really merit it like they used to back in the good old days of the 15% advertising agency commission and that’s in that Mad Men episode and I’ve only seen about three quarters of one episode of Mad Men. I find it far too sad. I can’t watch it. I could watch the show, The Pitch when it was on AMC or whatever network it was on. I could watch The Pitch. To me that was comedy, but Mad Men, I find it just too sad and I’ve never been able to articulate why.

Liston Witherill:
Well it is a tragedy. I mean it is about the downfall of a very successful man.

Blair Enns:
Yeah. I never watched it long. I didn’t go past the first episode. There’s just something about the entire thing that was just so sad. But yeah, so you used to be able to rationalize it a little bit because if you’d give away the creative and you’d win the multimillion dollar accounts that would go on for years with 15% agency commission, that would be in the millions of dollars and it kind of made sense back then, and it’s just made less and less sense over time and then that advertising agency creative pitch thing has bled into the other creative professions like there’s some parts of the world where free pitching is known as the advertising disease. And so designers in Europe sometimes refer to it as the advertising disease.

Blair Enns:
So it’s kind of spilled over in the other career professions. But that’s what I mean by the pitch, is this idea that you’ve got to give your highest value product away for free as a means of getting the business and then somehow hope that you’re going to make it up. Once you’ve won the business, you’re going to make up for the high cost of sale, even though you don’t have those 15% commissions and the tenure of these relationships are getting shorter and shorter.

Liston Witherill:
I will admit that I was once afflicted by the advertising disease, but I’m happy to report because of you and people like you, I’ve been cured. So I want to go back. We’re going to get to your book in a second, Pricing Creativity, and first of all it’s an amazing resource. So I want to spend a lot of time on that. But let’s turn the clock back for a second. I have a lot of people who are either independents or small really like micro consulting agencies and I know pricing may be kind of a new thing to them to really think in depth about how to price and what is strategic pricing mean and how do I use tiers, but let’s put all that aside for a second. If you could go back to newly independent Blair Enns, you first strike out on your own to start doing consulting for creative agencies and help them with their sales. What would you tell that younger version of yourself about pricing?

Blair Enns:
I’m not sure I’m a little biased against this question. I’m going to answer it, but the more general version of the question where that’s pretty involved these days, what would you tell your 20 year-old self? My answer is I would tell my 20 year-old self, “Beware of old guys from the future pretending to be you because they don’t know shit.”

Liston Witherill:
So you think there’s no experience advantage? I don’t believe that.

Blair Enns:
No. What I would say is, and maybe I’m getting too philosophical with the question, if I could go back in time and tell my younger self anything about anything, I would say you’re doing great. Keep going. That’s all I would say.

Liston Witherill:
Okay.

Blair Enns:
I wouldn’t give my younger self some advice.

Liston Witherill:
Let me just rephrase it because I don’t want to get caught up in semantics or philosophy here.

Blair Enns:
I’m rephrasing it for you. I think what you’re saying is a way that doesn’t fall into my bias against this question, is if there was somebody who are just starting out who is at the age where I was in the point where I was when I was just starting out, and I see they’re starting to go down the path that I went down, what would I say to them? I would say to them that pricing isn’t an afterthought. It is one of the fundamental skills of business that you need to acquire. It’s far more nuanced than you can imagine, and it’s way more impactful than anything else that you can do. So even before you really learn the craft of consulting, even before you really learn the craft of selling, start with pricing. That’s what I would say because it is the single easiest, fastest way to dramatically improve the amount of money that you make, hands down, there’s nothing that comes close. Start with pricing.

Liston Witherill:
Has that been your personal experience that once you started to work with a lot of the clients back in your consulting days, I know you’re doing training primarily now, but when you were consulting, did you find that altering pricing was an almost immediate win for a lot of your clients?

Blair Enns:
I really didn’t start advising on pricing until we had switched the business model from a consulting practice to a training company. So it was near the end of my consulting days when I started to learn about pricing and changed the way I priced my own services, about the same time. That was actually one of the impetuses for me moving to a fully productized and scalable training company. I realized that I had been caught in the middle. I had quasi, I’d productized, not even quasi. I had largely productized most of my consulting services. And I think a lot of consultative customized service firms end up doing that. They’re not clear on why they do that, but they go down this productization road and it’s a mistake.

Blair Enns:
You think of there’s productized services and there’s customized services, and in almost every consulting practice you should be embracing the customized services model, which means that every new client is a completely blank slate of possibilities and opportunities and you should go into the sale where you’re beginning to scope of the engagement, completely focused on the client first and the value. And you shouldn’t even be thinking about what solutions you sell them until you’re three quarters of the way through the arc of the sale. And when you’re productized, as soon as you get an inquiry from a prospective client, you start thinking about what you might sell them and you start to violate all of these rules of pricing that I’ve since come to see are rules and I’ve codified them as rules.

Blair Enns:
So I realized once I started learning about value based pricing, I realized I had gone down this road and I was in this mushy middle between a customized services firm and productized services firm, and I thought I’m going to have to pick one. It’s one or the other. And for a few reasons, I ended up choosing to become a productized services company and turned Win Without Pitching into a training company. And if one or two variables were different, I could have easily gone the other way. In fact, one of the variables that drove it is where I live. I thought, okay, the way I really should be doing consulting is when a prospective client comes to me, instead of saying, “Well, here are three different ways that I can help you. Here’s three different products that I have.” I should really go deep in the sale itself.

Blair Enns:
I should uncover more information about what it is that they really want, what assets they have and what limitations they’re working with, and then start to think, how can I best help and how much actual value can I create for them. So if I was going to be stay a customized services firm, I would have taken a smaller number of clients, I would have gone deeper into those clients, into their businesses to be focused on creating more value for them and I would have charged a lot more. I would charge different ways and different prices for the different clients. But I live in a remote mountain village in the middle of nowhere. It takes me a day to get anywhere and I thought, so for me to work that model, I really needed to be able to say to my clients, “Okay, I’ll be there the day after tomorrow.”

Blair Enns:
If I wanted a large value based pricing, priced engagement, I needed to be able to work that way, to go deeper into the client organization and I felt like I couldn’t do that from where I live from this little place in the middle of the woods, in the middle of nowhere. There are variables around that and I’m not saying that the decision I made is the right one for every consulting firm. In fact, I think it’s probably a mistake for most consulting firms to go to the direction I did, but you do have to, when you find yourself in that mushy middle between productized and customized, you don’t want to be there. You have to pick one or the other because a productized services firm is infinitely scalable. A customized services firm is not, but the amount of money that you can make in your engagements is way higher in a customized services firm, way higher. So in a customized services firm, you’re pricing the client, not the work that you do. In a productized services firm, you’re pricing the products.

Liston Witherill:
Yeah. I heard you in another interview say that if you lived in Austin, Texas, and this was in response to someone who lived there, you said you definitely would still have a customized consulting business where it was not productized in any way, and I was really surprised to hear you say that because it seemed, at least from the outside looking in that you chose a model not only that works for you and that you really like, but you are able to help a lot of people. So what was it ultimately maybe besides travel that kind of tipped the scale in favor of saying, “I’m just going to do a training business rather than customized consulting?”

Blair Enns:
Well, I did want to touch more business. I’ve been fortunate in that through my first book, the Win Without Pitching Manifesto. I’ve touched thousands of people on and I felt like one firm at a time wasn’t enough for me. I wanted to have a bigger impact. I really had this vision of I want to change the way creative services are bought and sold the world over. I couldn’t do that in a customized services model, but if I wanted to look at just the business that I could be, perhaps the most lucrative, the training model can be lucrative too. The point I was trying to make, and I’m trying to make here too, is because I’ve actually seen some consultants… Like there are dozens of agency new business consultants out there and I have a very good relationship with lots of them. When I shifted to a productized services model, I saw a lot of other ones began to shift too and I kept thinking almost without exception, I would look at them and think, “That’s a mistake you should stay a consultant.”

Blair Enns:
And so now when I’m speaking to somebody like you and your audiences, a lot of consultants or sellers of consultative services, just because the person on this podcast you’re listening to has productized his business does not mean that it’s the ideal model and that you should productize your business too. Doesn’t mean you should dismiss it. I mean we should… these are all decisions that we as business owners should face and I didn’t face it, I didn’t realize it was a decision to be made. I just found myself being caught in that mushy middle where it wasn’t infinitely scalable because I wasn’t fully productized. I was limited by the amount of engagements I could take on and I wasn’t going deeply enough into my client’s situations that would allow me to charge a whole lot more money. I was kind of trapped in the middle, and that’s something you don’t want to do. Pick one, value based pricing consulting company where you’ve got a small number of clients at any one time or infinitely scalable productized services company.

Liston Witherill:
Let’s talk about your book. You have a new book out, it’s called Pricing Creativity. It came out earlier this month in January and definitely I’ll open it up for you to talk about the book generally, but first a question about it before you dig into the particulars of the book. There are lots and lots of pricing books already, why do we need another one? What was the impetus for you to create this and say, “The world needs this book?”

Blair Enns:
Yeah, that’s a good question and I ask myself that question of other people I didn’t know when I say they’re going to write a book. Like if somebody says, “I’m going to write a book on branding.” I cannot my disgust, really? Does the world really need another book on branding? I have a bias against that topic but maybe the world does and I just can’t see it. And it was the same with pricing. I own all the good books on Pricing and I had a friend of mine suggest to me, you should write a book. And I said, “There’s lots of great books on pricing.” And I listed a bunch of them. Like we’re on bakers, I’m a huge fan of Ronald J. Baker and he’s got two books on pricing that are fantastic. Pricing and Purpose and implementing value based or value pricing.

Blair Enns:
So I cited some of these books to my friend and he was familiar with them and he owns a small agency. He said, “Your clients aren’t going to read those books.” And I thought he’s right. My clients don’t… One of the things I love about Baker’s book is he’s an excellent writer, but more than that, he’s a sponge. He’s a read everything. I said I think I read most of the books. I haven’t read them to the extent that he has learned them, he has learned the entire canon of pricing literature and then he’s built on that. And in his books, he’s summarized all of the theory, He’s got all of the principles and I love reading that nitty gritty. I love getting into the economics of it, all the models of it all. I like that he cites the sources and I can go back and read the source material.

Blair Enns:
But most of my clients, those creative professionals, they just want to know what do I do? The full name of the book is Pricing Creativity: A guide to Profit Beyond the Billable Hour. And I’ve broken the book up into three sections. There’s the fourth Tools section in the manual version, but the earlier three sections are Principles. So the principles are the key underlying foundational principles where I’ve pulled out the theory and just explained them in as few principles as possible. Like the idea of the subjectivity or the subjective theory of value, that all value is subjective. The idea that fairness is subjective, the idea that the more you pursue efficiencies, the more you give up innovation, value creation and extraordinary profits. So these are some of the underlying principles and there’s five or six chapters on… I think there’s four chapters on Underlying Principles.

Blair Enns:
Then I get into the rules, so I thought what is the smallest number of principles I need to deliver? So I think there’s four chapters on Principles and then what’s the smallest number of rules that I need to give my clients. And so rules are things that you must do every time live by these, in every pricing situation, and I got it down to six, there are six rules, things that you do every time and then everything else, all the other guidance I put into the largest section of the book, which is called tips. And so tips are specific guidance for specific situations. Like how to craft your anchor price options or retainers or contingency model pricing or negotiating tips or tips on negotiating with procurement where specifically. So there’s all kinds of tips for specific situations. So that’s why I wrote a book… we already have a bunch of great books on pricing.

Blair Enns:
I felt like my clients weren’t going to read those books. And I guess the other thing if we just dropped pricing creativity, if we forget about the target audience of creative professionals and we broaden it out to all of value based pricing. If I look at my book within context of all the other books out there, I would say I come at the subject of pricing first from the Win Without Pitching as a sales training organization. So I come at it from selling first and I add some negotiating, which is kind of an offshoot of selling. But value based pricing is easy in theory, most not just creative firms, but professionals who are familiar with the principles of value based pricing still fail to implement. And the reason they fail to implement is you cannot be a successful pricer without being a successful salesperson. These three topics of pricing, selling and negotiating are intertwined and you cannot just talk about pricing without talking about selling and negotiating. So that’s another point of view that I’ve brought to this subject.

Blair Enns:
There is one other book out there that I think that comes at the subject from that point of view. In fact, there’s two books, Reed Holden, who’s the author of a few really good books on pricing. One of his books is called Pricing with Confidence and then there’s kind of a sister book to that that’s called Negotiating with Backbone. So those two books together, if we kind of treat them as one book, they’re smallish books, those two books together, I would say are most similar to Pricing Creativity in that they also address the topics of selling and negotiating.

Liston Witherill:
Interesting. And one thing that you said there was your goal here in what you’re doing is to change the way creative services are bought and sold. Now, certainly the owner of a creative agency or an independent consultant can change the way that they price and sell. But is it up to them to change the way that their buyers buy? How do you view that piece of the equation?

Blair Enns:
Yeah. If one party, if the buyer changes the way they buy, then the seller has to respond and change the way they sell and vice versa. So by selling your services, your expertise differently, you are educating the market one client at a time to buy differently. You could look at it as taking on a responsibility to educate your market. I don’t think you need to do that, I think you just need to do what’s best for you and what’s best for the engagement you and the client and ultimately the outcome that you’re striving for in engagement and proper selling and proper pricing. And when I say proper selling, part of what I mean is a lower cost of sale and you and the practitioner positioning, and when I say proper pricing, I mean you getting paid more. Both of those things are good for the client.

Blair Enns:
Now client listening to this might think, “That’s ridiculous. How is me getting paid more better for me?” Generally speaking, it’s interesting when you look at where loyalty comes from in most companies and I mean loyalty on the customer loyalty in the client side, especially in consultative services firm or any services organization, not just consultative services like hospitality is a great example where this has been proven. Your most loyal clients are your most profitable ones and it’s not the other way around. People think that loyalty drives profitability. That’s not true. Profitability drives loyalty and the reason high profit margins drive loyalty is when something goes wrong in the engagement and it often does and going wrong can be something of your doing, something of the client’s doing, something maybe where you share responsibility or something that’s a function of the market, but just something happens that wasn’t anticipated and some costs are incurred or things get expensive.

Blair Enns:
When you have margin in the deal, then you have the wherewithal to fix the problem and that’s where loyalty comes from. Your most loyal clients are those clients who don’t experience a flawless engagement, but who have something go wrong and then have you step up and fix it. So that’s where loyalty comes from. You need margin to be able to do that. I like to say I can prove your least profitable clients get your worst service and vice versa. Just by sitting in your office and watching your expression as you look at your ringing phone. So when your most profitable client calls, you look down and see their phone number on your phone. You smile, it’s a reflex. You smile, you pick up your phone and say effectively, “How can I help you today?”

Blair Enns:
When you’ve been ground down by a client and you’re operating on very little margin, or maybe you’re upside down and the phone rings and it’s that client, you have this look of disgust or resignation because your reaction is, “Here they are again. I’m already over on this. What do they want now?” And you pick up the phone and you try to plaster that smile in your voice, but it’s not there. So you’re treating your most profitable clients the best. They’re getting the best service from you, they’re getting the best experience from you, they’re most likely to come back. That’s a really important point that very few people understand that profitability drives loyalty. You earning more is good for the client.

Liston Witherill:
Yeah, absolutely. Now I do have a question about earning more in value pricing though, and I’ve always wanted to ask you this, so please humor me. First of all, I am an advocate of value pricing in a lot of situations. You’ve said yourself in some situations it’s not the right approach, but how do you think about market pressures and market price norms when you’re talking to say a new training client about pricing their service and is it required that they’re in a market of their own or have some unique expertise in order to really effectively implement this?

Blair Enns:
Yeah, that’s not a pricing problem. That’s a differentiation problem, which is a function of your business strategy. And so there are different definitions to the word strategy. One of my hobbies is collecting answers to the question, what is strategy? But one of my favorite answers is, I think it’s Michael Porter’s, it’s a strategy is the answer to the question, how are you going to become and remain unique? So just think of that question and think of what’s your answer to that question about your business. How are you going to become and remain unique? So if you have a sound business strategy then you’re not going to get, like the market forces are something, things that apply to if not outright commodities, doesn’t have to be a commodity to suffer the effects of market pressure.

Blair Enns:
But when things are seen as very similar, when the client sees what you offer is quite similar to what she can get many other places, then you’re effectively losing power in the buy-sell relationship and that can be expressed as market forces. You have too many direct competitors, at least in the eyes of the client. The pricing problem is a function of your lack of strategy.

Liston Witherill:
Very good. Now, one of the takeaways that I had from your book, if I were to maybe not talk to my younger self, but if I could start over with some of the things I’ve learned is the one page proposal and the reason I love the one page proposal is it really minimizes our time in the proposal process, but it also forces us to have a sales process that fills in all of the blanks that we typically like to fill in a proposal itself. Now one of the big things that’s working when you do a one page proposal is this idea of anchoring. Now, can you talk a little bit about that and how someone getting started with pricing in the way you recommend it can use anchoring?

Blair Enns:
Yeah, so if I just take three of the more common rules of pricing creativity from the Rules section of the book and put them all together. So one is limit unpaid proposals to one page. The other is always offer options and another is anchor high. So you’ve got a one page proposal that’s basically got three columns, maybe four columns, but let’s just say three, three different options for the client. This is important psychological reasons why you want offer options and there are other reasons why three is better than two. But the anchoring idea, it comes from the full name of it is, well it’s known as the anchoring effect, but it’s sometimes known as anchoring and adjusting. So an anchor is the first piece of information that you receive or in your cases the sales person that you deliver on a subject.

Blair Enns:
So our subject is pricing. So an anchor price is when you’re in conversation with the client, you start talking about the range of solutions. You want to start with a really high counsel that you offer a range instead of X to Y, it’s Y to X. So I think we’re looking at between Y and X depending on a bunch of variables. So this is earlier in what’s commonly known as the value conversation. It’s the last step in my four step methodology or framework for the value conversation is to offer some pricing guidance and say, “Okay, I’m going to come back with a proposal with some options, some different ways that we can help, and they’re going to be in the Y to X range. So let’s say it’s 250,000 to 75,000 depending on variables and we won’t get into those variables now.

Blair Enns:
So you offer that guidance and you start with 250 so you lead with the important number and then you go put your proposals together, work out your options. And let’s say you come back with one option that’s 250, one option that’s 125 and one option that’s 75. And you put them forward, you start with 250. If you read Daniel Kahneman’s book, which is fairly popular, it’s on behavior… Kahneman is a psychologist, but he’s known as one of the forefathers, I suppose, or at least an eminent voice in the world of behavioral economics. And in his book, thinking fast, thinking slow, he talked about these two systems of thinking. So System One and System Two. System One is the very cognitively efficient system where we make assessments really quickly based on limited information. And most of us make decisions engaging System One first and then if it requires more thinking, then we engage the more deliberate, cognitively expensive System Two to work things out.

Blair Enns:
So we make an assumption first based on… like we anchor somewhere and then we use System Two, the more deliberate, methodical way of thinking to kind of reason a way from that initial assumption that we’ve made. And what the research shows, so it’s often known as anchoring and adjusting. You anchor and then you adjust. If you’re selling to me and you put that high anchor of $200,000, well that’s really expensive. That’s way too high and I start adjusting downward. But what most of the research shows is that the adjustment never fully compensates for the anchor. So the job of the anchor, the most expensive option, it can be the first one or the last one, I’m experimenting with this now. I used to like the expensive one to be farthest right, now I’m putting it farthest left. No matter where you put it, you lead.

Blair Enns:
That’s the first one you lead with. You come back for the closing meeting and say, “Okay, I’ve got three different options. I want to start with this.” The most expensive one, it’s 200,000 and explain what’s involved in that and then you cover the other one. So it’s important that you lead with that high anchor and that the $200,000 price is not to sell the $200,000 option. It’s the sell the $125,000 option. It’s to make the other options that are next to it that are cheaper than it look more affordable than they are. And there’s all kinds of research that’s been done on products and on things like mock juries that show the effect of anchoring. And in some instances, they can even plot power curves and they can show how, depending on where the is, where the average price will end up.

Blair Enns:
We don’t have that kind of data in the consulting world, but anecdotally, the returns, the effect on it is significant. Just of those three rules, a one page proposal with three options, start with the high anchor. I mean, I know firms that have moved their profit margin from under 5% to almost 50% with just those three rules.

Liston Witherill:
Yeah. One of my favorite examples of this comes from the product world, the Williams Sonoma bread machine, which yeah, from Dan Ariely’s book, Predictably Irrational talks about how they had a hard time, nearly impossible time selling this new bread machine because no one knew why they needed it, no one was in the market for a bread machine. So they hired an agency, creative agency, no doubt, to come in and figure out what was the right messaging in order to sell this bread machine. And the agency came back and said, “Let’s just make a more expensive version of it, put it on the shelf next to it and people will buy the bread machine.” And that’s exactly what happened.

Blair Enns:
Yeah. And then the original, the cheaper price one, the original ones started selling like hotcakes.

Liston Witherill:
Exactly. Yeah, I love that example. So speaking of pricing tiers, I wanted to talk about your book and the way you decided to price your book. So you’ve opted not to do a traditional publishing route on this book, and the reason I want to bring this up is I think it’s important to understand how you thought about pricing something that has a very well established way of being bought and sold and you took a very different approach. So why did you price the book the way you decided to price it?

Blair Enns:
I priced it this way for a few different reasons, but one of our core values at Win Without Pitching is we lead by example or we sometimes express it as we do what we say. So as I was writing in the book, it occurred to me that I was not aware of any book on value based pricing that was using the principles in the book to price the book. I want it to be the first to do that. And also I felt strongly that the amount of value that this book would create in the world was enormous. I mean, I’d done some rough math and quite conservatively, I think this book is going to help create over $100 million a year in new excess profits for the global creative community, and that’s even based on conservative sales numbers that we’re well on our way to hitting one week in. The financial impact of this book is going to be significant and I thought, well, if I’m going to help to create $100 million a year in new profit, what’s fair compensation for me?

Blair Enns:
It’s not $10,000, it’s not $100,000, I’ve stated publicly and other podcasts, and I’ve been intentional about this because I think I want to lead by example again, and these are conversations we should be having with each other. My goal is to earn $1 million from this book and it’s pretty clear that that’s going to happen. I’ve never doubted that it was going to happen and I think one weekend, it’s pretty clear it’s going to happen. Now I’ve said it might take seven or eight years. I actually don’t think it will take that long and I think $1 million in return for the value that the book will help to create is fair compensation. I couldn’t have done that if I had gone with a mainstream business publisher. I actually think charging $25 or $40 for the book would have actually devalued what was inside the book and a would have actually maybe even had a negative impact on the effect.

Blair Enns:
I think the more you pay for something, the more you value it, the more you appreciate it. But I think the… sorry that was a bit of a ramble. I think you wanted to get to the point where not just the fact that it’s an expensive book, but there are three tiers and in a week or two there will be a fourth tier.

Liston Witherill:
Can you talk about that? Can you give people a preview of what that fourth tier is?

Blair Enns:
Yeah, I’ll explain the three tiers now. So right now you can buy the ebook for $100, you can buy the ebook and the manual and so the manual is same contents of the ebook, but with the added tool section and the tool section is the part that, I really wrote this as a working book with that tool section where after you read the first three sections, the next time you price your proposal, I want you to move to the tools section, use the proposal creation guidelines, use the checklist, use the templates in there to actually price your proposal. So that’s $199 for the ebook and the manual, and then we have what we call the total package. It’s the ebook, the manual, and it’s just under four hours of video. It’s basically the video version of the book of me going through the whole book, or at least those first three sections in five different essentially webcasts. We’re never broadcast publicly.

Blair Enns:
That’s $320. In a couple of weeks, we’re going to release a firm-wide license because we’ve had a lot of interest, a lot of people asking about, “Well, okay, can I share this with others in my team? I want to get multiple copies, but do I have to pay $320 per copy?” So for $1,000 for any one location can get a firm wide license where you can give all three of these things, the manual, the ebook, and the videos to everybody in your firm in the one location. So that’ll be added in a couple of weeks.

Blair Enns:
The reason we’re waiting a few weeks is, well, there’s a couple of reasons, but one is, I want to get enough data on who’s choosing what option first, and then once we launched the fourth option at $1,000, so that will be the anchor price, that’ll be the most expensive option there. I want to see how the average price changes. It’s my full intention… In fact, I’ve already written a bunch on this. I haven’t published it. I’m going to share all the numbers. I’m going to share what sales or who chose what option, et cetera.

Blair Enns:
My idea was that you would buy this book, read about it, start practicing the principles, and then you would go back and look at the pricing page, pricingcreativity.com and you would look at all the different pricing techniques that we’re using on that page. Now because we’re productized service business, they don’t all translate to a customized services business or consultative services firm, but a lot of them do.

Liston Witherill:
One thing I thought about when I originally heard you talking about how you decided to price this book and you have $1 million in value that you think you’ll deliver through the book at a minimum. My first reaction to that was, “Well, that doesn’t matter to the individual firm, right? All they really care about is what it’s worth to them.” But when I think about the pricing that you have $100 to $300 and the amount of different courses I’ve taken throughout my life, and they’ve all been way more expensive than that, and thinking about if a creative firm charging, let’s say, anywhere over $10,000 really if they’re charging at least $10,000 for a typical project, if they implemented what’s in this book one time, probably pay for itself 20 times over. So I just wanted to point out that I think that the price of the book is actually a little low, truthfully for the amount of value you’re delivering, and I just wanted to congratulate you on the work that you’ve done inside that book.

Blair Enns:
Oh, thank you, Liston, I appreciate that and I appreciate you saying that it’s priced low. We did get one email from somebody. I’m surprised we haven’t received more saying, “I would love to read this book, but there’s no way I’m paying $100. To me, that’s hilarious.”

Liston Witherill:
I would suggest that the next time you hear that you should ask why, because that’s an opportunity for you to learn. Obviously this person is not in your target demographic. If they’re going to be a price based buyer on this book and just really look for the Kindle unlimited free version of it, that’s not going to be for you. But it would be interesting to hear what they have to say.

Blair Enns:
I know what the answer is and I can predict this person’s future and I’m not about to get into a conversation with somebody who cannot make some equation around value, who looks at the cost of everything in the value of nothing. By definition, that’s a price buyer, right? We all encounter price buyers and what I say in the book is, for the most part, you don’t want to do business with price buyers, and when you do, you want to be very careful. I’m talking about consultative services from now or customized services. You want to be very careful and you want to essentially sell excess capacity to them, but you make sure you strip out all excess forms of value so they don’t get to talk to you, they don’t get terms.

Blair Enns:
If you’re going to sell excess capacity to a price buyer, it’s just money up front and no project management, whatever it is, all these other forms of value, you just strip it all out and you don’t make a habit of it when they come along and they say, “I’m willing to give you this money and you have excess capacity.” Then it might make sense. You know in a productized service business it doesn’t make sense to engage conversation with a one on one individual and explain to him why $100 investment in an ebook is a good investment.

Liston Witherill:
Not in the long run, no, but this does bring up a good point that if someone is exposed to Blair Enns for the first time, they don’t know who you are, they don’t know your body of work, they don’t know the value you bring. $100 is not going to sit well with them. It’s going to break the mold of their expectation for what a book should cost. And you really need that exposure and to be seen as an expert before someone could ever make that decision, I assume. Do you agree with that?

Blair Enns:
Yeah, but you’ll also see on the, if you go to pricingcreativity.com I didn’t engineer this, but I don’t know, there’s a few dozen quotes from industry leaders who got to read the book in advance and were gracious enough to offer some blurbs for the book. And there’s a bunch of them that speak to the value of the book. And like you said earlier, you think it’s under priced. So there’s a bunch of quotes like that. It’s really the word book that is the package. It’s the shape of the package that some people are going to cause some people to have a problem with the price. But I’m pleasantly surprised at how first two days we sold almost 600 copies at an average price of close to $200 per copy.

Liston Witherill:
Wow.

Blair Enns:
And we had one email, somebody saying, “I’d love to read this, but it’s too expensive.”

Liston Witherill:
That was me by the way. That’s really funny. So final question and then I’ll let you off the hook here because I know you’re a very busy man with many more things to run to, but if the problem is book packaging question, why did you choose to go with a book rather than a course or a class or some other form that would communicate, at least in terms of heuristics to the buyer, this is a more complete or larger more expensive thing.

Blair Enns:
Yeah, we thought about turning this into a training program at some point when I was writing it and then I thought, “No, I originally conceived of it as this manual.” I wanted it to be readable that you would enjoy reading it from start to finish. And then I wanted it to go either on the corner of your desk or on a bookshelf, not too far from you, never out of arm’s reach and every time you have to put a proposal together, I just saw people reaching for it, opening up, refreshing themselves of some of the rules, flipping to the tools section and creating their proposal right there. That’s the thing I envisioned. I wanted it to be this working book but not like an overly technical manual, completely approachable and readable, but I wanted it to be something that was like referenced often for a very long period of time. So it had to be the book package and years ago I got over the packaging problem of a book. I had a book that I charged $995 for years, I got over that years ago.

Liston Witherill:
Well, excellent Blair, I really appreciate your being here, and if someone wanted to follow up with you or learn more about book, where should they go?

Blair Enns:
Yeah, you can go to winwithoutpitching.com to learn more about The Win Without Pitching in our training program or you can go to pricingcreativity.com to learn more about the book, Pricing Creativity; Guide to Profit Beyond the Billable Hour. That’ll redirect you to winwithoutpitching.com/pricingcreativity. And I’m a Blair Enns on Twitter.

Liston Witherill:
Fantastic. Well, thanks so much for being here, Blair.

Blair Enns:
Thank you. Liston, my pleasure.

Stay In the Loop

Get a daily sales insight sent straight to your inbox – sign up for our newsletter.

Like what you heard? Help us get the word out! Just leave a rating and review on Apple Podcasts. It’ll take you less than a minute and it’ll help us spread the word about Modern Sales.

Subscribe

Get Serve More Weekly, an email newsletter with one article, podcast episode, and stories from around the web. Every Monday.

Up next…

Check out the four sales fundamentals every top performer masters, how to use value-based selling to increase your leverage, and how to improve your remote selling skills as the world becomes more virtual.

And check out the SDS method if you want to improve your sales process.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn