I’ve mentioned before that I would rather have 1,000 businesses pay me £20 than one business pay me £20,000. I absolutely stand by that. Having one or two sources of income is a bit like holding one or two stocks. It will be bumpy and it’s unlikely in the long term to compound. Diversification, therefore, as in stocks, is the best way to grow a business and hedge against loss of clients and therefore income.
With this philosophy in mind, I quote to reflect it. I am always benchmarking against the market, and I like to stay just under the going rate with everything I do.
One thing I find baffling is when working with another agency and I submit a quote to them for work I will be doing for their client, they tell me, with no prior knowledge of my business strategy, that I can charge more than that, or that I’m undercharging for website support.
What it says to me is that they don’t have a long-term strategy with the client, as I will have priced it just under the market rate with the intention of looking attractive to the buyer, while knowing I will be offering excellent service in an effort to keep that customer as long as possible.
This strategy works well because expectations are set lower from the start, then exceeded in the medium term.
I’m happy, the customer is happy, they refer me to someone else, and the cycle continues.
By charging slightly less and delivering slightly more than expected, I have cemented myself in the client’s mind as a fairly priced expert they can trust. The best place to be, in my opinion. It’s on this basis that I built Yazaroo, with some clients having their websites hosted by Yazaroo since I started.
What annoys me is the agency’s assessment that we could charge more and should squeeze every penny. I think this is misguided, as not only do you lose the client quicker because you set value higher than you can realistically deliver, but you also set about creating lots of busywork to justify the higher prices. Monthly reports and so on that need to be produced in addition to the work.
At Yazaroo we don’t do this. We don’t sell things to clients they don’t need. And we certainly don’t overcharge for a quick win. I want to keep every client for years, and you won’t do that by squeezing them dry. We still make money, less in the short term, but my bet is that over the life of a client we will make 10x what we would have done had we charged more from the start.
Keeping a client at the lower end of a retainer reduces the risk for everyone. Yazaroo remains competitive and the obvious choice in the medium to longer term. A competitor undercutting our retainer would mean a meaningful drop in service level and worse outcomes for the customer, so it’s in their interest as it is in mine to continue with the status quo.