We pitched Crayola and in the pitch we went around kind of doing intros and one of the team members, my friend Vic, he introduced himself as the senior strategist and he said, you know, I'm the senior strategist, I used to be an elementary school teacher and the client stopped us and said, like, well, hang on a second.
You're going to be the strategist on this project and used to be an elementary school teacher and he's like, yeah, Crayola does a lot of stuff for schools and teachers and parents and kids and he said, well, then you win.
And we're like, well, what do you mean? He's like, you win the pitch. We're going with you.
[Music]
Welcome to the Future Podcast, a show that explores the interesting overlap between design, marketing and business.
I'm Greg Gunn. When you think of a design agency, you might imagine a large bustling office with an open floor plan, teaming with creative people.
And most of the time, reality would meet your expectations, but not all of the time, because that's not what Philadelphia-based agency super friendly is.
In fact, it's not even close. Super friendly is a distributed design collaborative, which means their team members reside all over the world.
And like specialized creative agents, they're tapped to collaborate on projects that maximize both their skill and their personal experience.
Kind of like what you heard in the opening for this episode.
Our guest today is the founder and sole employee of Super friendly.
You'll hear how and why he structured his agency the way he did and why having the right people in the room is how you win.
You will also hear how he reversed engineered his entire career from entry-level designer to agency strategist, and he'll talk about the double-edged sword of youthful arrogance.
But the most interesting part of this conversation, to be at least, is how he and Chris talk about pricing.
Now, we're all familiar with the various pricing models, like hourly, value-based, cost plus, etc.
But rarely do we stop and think about the ethics involved.
Some people may think value-based pricing is unethical. Others may argue that charging hourly is.
So who's right? And what's the most important part of the equation anyway?
I will let you decide. But I suggest you listen to this episode first. Please enjoy our conversation with Dan Mall.
All right, Dan. I'm super excited to have this conversation with you.
I don't know why it took so long for me to figure out, like, I just reach out. I don't know.
I also imagine you being much, much older. So there was that kind of age thing.
I'm like, okay, let me just get my act together before I reach out to you. Then I see you.
I'm like, damn, okay, we could have a conversation.
Yes. Why not, right?
Don't be intimidated by my, by my old age because it doesn't exist.
The wisdom is like beyond your years. Okay.
That's right. For people who don't know who you are, can you introduce yourself, please?
Yeah, sure. My name is Dan Mall. I run a distributed design collaborative called Super Friendly.
I'm just outside of Philadelphia. Our team is all around the world.
I wrote some books on pricing. I talk about design. I've been doing design for a while.
I don't know. How's that?
It's beautiful. Tell me a little bit about the name Super Friendly.
I read it on it about it. You're LinkedIn profile, but tell the people why Super Friendly.
Yeah, cool. So I mean, as with all good things in my life, it came from my wife.
When I started my agency, I had a name picked out. I did the branding.
I did everything. And then she was like, eh.
And I was like, what, what, what, what don't you like about it?
She was like, I don't know. It just seems dark. Like you just need something that is super friendly.
Yep.
And then as soon as she said that, it just kind of like tied, but like I've always loved superheroes as the kids.
I grew up watching the super friends. I'm a big Superman fan.
You know, I love superhero mythology. So it just, it just all clicked from there.
We already have a lot in common. And I think you, you wrote on, I think it was LinkedIn about the concept of,
I think what some people might know is a fluid agency where there's you.
And you, you clearly state you're an employee of one. That's how big your company is.
Yep. And then you work with this big network of super star superheroes, right?
Super friends. Yeah.
Okay. Now, why did you decide to take that route versus say start to grow and have permanent team members?
A couple of reasons. One is just so I've, I've been lucky in that when I started super friendly,
I had worked at other agencies for I think 12 years or 13 years at that point.
So I got a chance to look at how other folks grow agencies and grow teams on, on their dime.
So I got to see how that went. And I saw the stress that having payroll has for some agency owners.
So I'm like, oh, if I ever run my own thing, I never want to, want to be in that position where, you know,
I've seen one of my bosses lose 20 pounds in two weeks because he couldn't make payroll.
He had to refinance his house. He had, you know, all these things happen.
And I was like, I wonder if there's a way to be more fluid that to ride the ebb and flow of client work.
You know, like, how do you ride the Feast or famine in a way that you're not, you know,
dip in below a certain amount or how do you normalize that a little bit more?
So that was part of it. That was the big thing.
And then the other thing was, I remember I worked for when I, the last agency I worked for was Big Spaceship in New York.
And I remember we pitched Crayola. And that was one of the accounts that we had. And in the pitch,
we went around kind of doing intros. So I went, I said, hey, I'm Dan. I'm design director.
And we had all the people on our team. And one of the team members, my friend, Vic.
He introduced himself as the senior strategist. And he said, you know, I'm the senior strategist.
I used to be an elementary school teacher and a client stopped us and said, like, well, hang on a second.
You're going to be the strategist on this project and you used to be an elementary school teacher.
And he's like, yeah. And Crayola does a lot of stuff for schools and teachers and parents and kids.
And he said, well, then you win. And that was it.
Wow.
And it dawned on me that like, if you just have the right people in the room, sometimes that's where you win.
Like just off of that. And I was like, I wonder if there's a model that has, you know,
that when we have the right people at the table, then we win.
And it dawned on me that like, I can't employ all of those people.
But maybe if I could have the mims part of a network and incentivize them for a period of time,
maybe there's something worthwhile there. So that's that's a lot of where the roots came from.
That makes a lot of sense. You're you're a very common sense, like very approachable human being.
I've watched the videos that you've made. And there's an energy about you that I think is really cool.
So I'm going to ask you a dark question because maybe that's not where your mind goes.
Sure. Okay. Are there those moments when you're like, dang it. I had two other people do this other job.
My life would be a little bit easier. I don't have to constantly rotate people in and out.
Tell us a little bit about the downsides of being a one person operation.
Every day, every day I have that.
Because we need it real real.
Yeah. Every time we construct a team, there is an element of reinventing the wheel.
And there's some parts I like about that. Some parts are like, you know, when we reinvent the wheel,
it forces us to go, well, what's the process we're going to use on this one?
And what's the team we're going to use on this one?
But we never get the benefit of going like, we never get the benefit of shorthand.
Maybe that's a better way to put it. Like we can't say, oh, let's do this one like we did that other one.
Because the people on the team are like, well, I wasn't on that other one though.
So how did it go? You know, and you have to end up doing that.
So there's just a lot of inefficiency to the model.
I think we get more benefit than drawback, but it is a lot of reinventing the wheel sometimes good and sometimes bad.
Okay, is it has ever been a problem when some clients raise an eyebrow?
Like we're going to give you this really big project and it's just you.
People get nervous about stuff like that.
Yeah, totally. That was definitely a problem in the beginning of super friendly.
Now almost nobody comes to super friendly for me.
You know, I get, I get a lot of people who are surprised when they, you know, they don't even know about me,
which is weird to me, like because that's how clients first started coming to super friendly was off of my reputation.
But as super friendly has grown over the years, it's going to be I think 10 years as of next year.
You know, folks come to super friendly for the work, which I'm proud about and I'm happy about that.
And so, and so, you know, that, that's the thing is people come for the work and they come to, you know, for the expertise that we have.
And, you know, this is, I know this will resonate with you.
I've seen you kind of talk and teach about this stuff a lot, which is that the clients that that rubs in the wrong way, they self select out very early on in the sales process.
Like, we don't get, you know, to like signing an agreement stage and then they're like, wait, what's the model that you have?
So, you know, we don't even want those people to contact us, you know, from a positioning standpoint, there are people who are like, well, that model is weird.
And I'm like, cool, you should probably go and work with an agency that doesn't have that model because you'd probably like it better.
It would probably be easier for you. And then the clients that do work with us are the ones that generally go like, well, that model makes a lot of sense.
Why don't other people do that more? I'm like, right, exactly. We're going to be good fits.
Okay, you just said something that just I'm having a hard time conceptually wrestling with my mind, which is your company of one, you're the main contact point person, right?
And then you bring together a team. So how can people come to super friendly and not even know who you are?
This is like, what? That's a problem.
Right. So I think I think part of the misconception is that I'm not the contact person.
And so even though I'm the only full-time employee, I'm the only W2 employee of the company, we have lots of people that have worked on super friendly things for many years.
And then we have lots of people who have worked on only one thing and probably will only work on one thing. So we have the whole range.
So we have six or seven people. We call it our back of house. We just kind of a restaurant metaphor where like, there's front of house and then there's back of house.
We have six or seven people that are super friendly back of house. We have a business development person. We have a head of operations. We have.
an admin, we have an accountant, we have legal. So we have all of these folks that work
on landing the projects, working on them out. And my job really is just to assemble teams,
you know, is figuring out what our super friends' motivations are, what their incentives are,
and then matchmaking them to projects themselves. So, you know, a lot of clients will never interact
with me from the course of first contact all the way to, you know, to the project shipping that
we're doing. A couple of clients, I tend to be like an executive sponsor for those clients,
or our important accounts and things like that. But for most of our clients, they have no idea who I
am and will never talk to me. Okay, this is fascinating to me. There's more layers to this,
and I promise to our listeners, it won't be all about me trying to understand Dan's business model.
There's pricing stuff here. We'll talk about some other ideas, but okay, I don't, okay,
take me through this. Somebody reaches out for a potential gig. Yep. Your content marketing's working,
your sales team is working, everything's working for you. Who are they reaching out to then?
Your best dev person? Yep. So, usually they'll, you know, they'll come in through an email address,
we have
[email protected]. Joe, who is our head of business development, he's the one that generally
handles that email address, even though all of us get that email. Joe is usually the first point
of contact, so they talk to Joe. Joe usually talks to them about what they need, helps to kind of
diagnose what they need, does the typical sales conversation and value conversation, and all of that
kind of stuff to assess that. He'll update me on that and Crystal, who's our head of operations,
and then we'll kind of talk about when do we need a team, what kind of team do we need for it,
what's the value of the project generally, what could we do it for then against that value,
how could we do it profitably? You know, so all of that kind of comes in that way through Joe.
There are some times where we'll say like, hey, I think I need you to join a call with this client,
you know, either because it's an important account or because there's something that I can do in
that conversation to help land it better. And then other times he goes like, I'll take it from here,
you know, let's read in a producer and then give me a producer as part of the sales conversation
that can help transition that to a project once we've been in. Once all of that stuff is taken care
of, it moves over into our operation side and admin side, we'll write up agreements, we'll write
up subcontractor agreements for our super friends, so all of that happens in parallel between our
legal who's Matt and our admin, who's Nikki, the team producer, right? So there's a lot of
handoff that happens from there going into, we land a project that then a team is there to do.
Okay, so these are all independent contractors, aka freelancers, who presumably also do other
things besides doing super friendly things, right? Yep, that's right. So Joe has his own business
development consultancy called Clutch, Nikki is the admin for multiple agencies, Matt is the
legal counsel for lots of other agencies, Crystal does operations for a bunch of other folks too.
So, you know, super friendly is not their dedicated full-time thing, they're doing that among other
things. Okay, so how do they make money then? Are they paid some kind of pro-rata salary or
how does that work? Yeah, so each person has paid a little bit differently based on their preference,
so we adopt the headache of that, which is like, that is a headache, it'd be easier if all of them
were paid at the same way, some are on a retainer basis, so that just comes out of super friendly overhead,
and then some are on a sort of a commission structure or like some sort of profit sharing model,
where as we get paid by clients, they get paid out of that too. So it's different for each person
depending on their preference and honestly, their season of life, so sometimes we change it
based on somebody goes, I want to take time off, or I want to spend more time with my kids,
or I want to devote most of my time to super friendly, you know, for the next year,
so it depends really on the person. I see. Okay, the natural, I think there's a last
question for this, the natural question is then, are you fearful? I mean, this is the question
of people asking, I don't think you are obviously, that your biz dev person is the main contact point,
that at some point this person's like, you know what, I'm not content with taking a percentage of
this gig, I should just take 100% of this gig and I'll write it myself since that's pretty much
what I'm doing for Dan. So how do you prevent that from happening or what's your take on that?
So fearful. Absolutely. But it's a thing that he, you know, John, I, our friends, we've been
working on this stuff, you know, working together for many years. I talked to him about this,
and I'd say to him like, look, man, I'm terrified that you would do this, and I've even recommended to him,
why don't you do this? You should do this. And so I see my job as, I just have to give him more
upside and super friendly. So, and what I've learned about working with super friends, especially
in this capacity is, you know, some of them want just security and a full-time thing, and I say to
them like, that's not what you're going to get at super friendly. Most people get something else
out of it too, whether that's the ability to mentor or be mentored, the ability to work on things,
they wouldn't have to do otherwise. You know, so for Joe, I'm like, there are other
upsides to why he works with super friendly than just the cash. You know, so part of my job is to
go like, let me make sure I can check all the boxes for him and for Crystal and for Nikki and for
all of our super friends, because if we're doing that, it's not always about money, it's about the
combination of those things, and each person has a different dial, you know, on all of those. So,
I tend to look for people's incentives, and I go, can we provide that? Yes or no? And that, you know,
that's aligned with super friendly's mission, the way that we talk about it is it's to create better
opportunities for those who wouldn't have had it otherwise. So, if there's something that you can
get at super friendly that you couldn't get anywhere else, I'm going to try to dial that up for you.
If not, if it's like, you know, you could make the same money or the same connections or the same
clients or the same teams somewhere else, you probably should. You know, like, you'd probably be
better paid somewhere else, you'd probably be, you know, it would suck for you to be here. If you
could get all that stuff somewhere else, we just do a more difficult version of that. So, why would
you want to do that? So, a lot of it is about alignment, you know, and a lot of it is about like,
if there's something here that's good for you that you won't get anywhere else,
my part and the thing that I try to promise to our super friends is, I will do the most that I
can to dial that up to the, to the highest level for you that you want. And if we can't do that,
I'll be honest about that too. Yeah. Okay, so pre-pandemic, were you all working remotely and has
anything changed post-pandemic? Yeah, so definitely the style of work hasn't changed that much, although
there's a couple of nuances. So, we've always been distributed. I started super friendly in 2012,
you know, and it was just me and then everybody else was distributed. So, we have super friends
around the world. The thing that has changed is the scale, but everybody works remotely and asynchronously
and all that kind of stuff. The thing that's different though is everybody else is home too, right?
So, like, my kids are home and everybody else is kids are home and, you know, spouses are home and
trying to work on the same, you know, zoom link for two different calls at the same time, two different
so that has become more complicated. And that's just been a thing where we've been like, well,
let's just be more forgiving about that. You know, let's just have more grace for that as we can.
If your partner is trying to have the same, you know, a call at the same time, we will move that
call so that your partner can have the call at that time. So, how can we bend a little bit more,
especially because we've been doing this longer than everybody else. The whole world figured out how
to do Zoom, you know, in the last year, but we've been doing it for the last five years. The
whole world figured out remote working, but we've been doing it for the last 10 years. So,
because we have that privilege, maybe we could bend a little bit more because we can accommodate it
better than probably other folks can. So, we try to do that and it doesn't always work, but
that's the general stance, I think. Do you ever wake up in a cold sweat at night and think,
oh my God, did the team deliver the right files? Did they cover that one client note? Because you're
not as involved, maybe, or maybe you are, I don't know. I am not very involved. I have been,
I don't wake up in a cold sweat, but because the work that I do that is very hard for me is to
trust the team. Like, if I didn't, then I have no business running a company like this. You know,
like that. So, I think that's a thing where I sleep pretty well. I don't wake up going like,
oh my gosh, did they, did they deliver that? Because I assume that they either did or they didn't.
And I'm like, either way, it's cool. We can figure that out. So, I'm pretty, I'm pretty collected
on that. I think if that kind of stuff stresses me out or for anybody who, if that stuff stresses you
out, this is not the right model for you. Like, there's got to be trust in the team.
Okay. That's good to know because people are listening to this and they're going to be thinking,
man, I'm going to let everybody go. I'm going to go to this model, super friendly style,
but it requires a certain personality and, and wave being and mindset for this to work because
I have a full-time team and I sometimes sit there and think, did the producer pass this note along
to the designer and designer do give this to the developer? Is this all in check? And sometimes I
just wake up like, oh my god, I'm not sure that's right. And every once in a while, I do one of those
spot checks. And every once in a while, it's like, oh my god, the ball would have been dropped.
Thank god, I asked that question. And it sometimes really basic things. Like, for example,
our team doesn't do a lot of print work. Then I was sitting there thinking, I wonder if all the
images and everything they did was CMYK because sometimes they don't know that.
Correct. And of course, that's the time I check. And I'm like, oh my god, how can we do this?
Everybody should know this, but they don't. And that's why I asked you that question.
Yeah, I mean, if you were on a full-time thing and you're like, this sounds better,
don't do that. Like, you know, part of how I feel about agency owners is that, you know,
for better or worse, I forget the name of that there's a connoisseur law, I think. The idea that
for better or worse, agencies or organizations adopt the personality of their founder, right? So like,
super friendly is more or less me because I started it. And so it capitalizes on my superpowers,
which is, my superpowers is even before super friendly law and before that, I collected a network of
people. Like, I love meeting people. I love knowing what they're up to. I've always done that,
even before I had the idea to start an agency this way. So it's easy for me to run a network-based
agency because that's what I do anyway. You know, it's easy for, so my agency capitalized on the
things that I do well. If you don't do those things, well, you would suck at this job, you know,
in the same way that I would suck at running a full-time agent. I have no idea how to do that. And
My skills don't put me in a place where I can do that successfully, which is why I don't
run that kind of agency. I think I would do a poor job of that. So, I really feel like I run
the agency that I feel very equipped to run, and that means I do things differently than other
others, and sometimes that's more difficult for me, but I adopt that cost because it's actually
easier for me to do that. So, you know, definitely don't throw it all, you know, throw in the
towel if you run a full-time company for anybody listening, you know, because that probably,
you know, hopefully that is capitalizing on the stuff that you do really well, which is maybe,
you know, providing security for your team or providing opportunities for them or, you know,
or any of that stuff. The other thing, and I find myself saying this a lot to our team, is
we can't eliminate mistakes, mistakes. So, you know, if our quality control is to check things
over and over again before they go out because they're used to eliminate mistakes, I think that
sets up the wrong culture. It basically says, like, we don't tolerate mistakes here, and I like to,
I would rather work on the opposite, which is, everybody's going to make mistakes. So, what do we do
about those? Let's just accept that mistakes are going to go out. Yes, it's going to go to the
printer RGB. Like, it's going to happen, you know, no matter what. So, let's put a process in place
for what we do about that. And then, hopefully that never comes up, but I would rather spend the
work on that. I'd rather spend the work going like, how do we make it okay for people to screw up?
Because that's the thing that cripples most super front, especially new ones, they come in, and
they are so worried about doing things really well. So, what do they do? They eliminate risk,
they do only the things that they know how to do and have done before. And I'm like, well,
where are you being creative? Where are you taking risks? And they're like, oh, no, I don't want to do
that because I don't want to mess up. And I'm like, yeah, but in order for you to do something really
cool, I kind of need you to have the ability to mess up, you know, because otherwise, you know,
how do we know if we did something really cool or something really new? So, I'd rather encourage
that culture rather than trying to like, quality control the mistakes out of the process.
So, one of the solutions is to have great insurance, like errors and emissions and just
general insurance, because that's usually like your safety net. Absolutely, we have that, we pay
for it. It's well worth, you know, luckily in the 10 years we haven't had to use it. We got close
once, but we haven't had to use it, but that's definitely a good safety net. And then the other
thing is knowing that there's a support system around you. So, everyone at Super Friendly has a
support system, has at least one person that is in charge of them. And everybody knows that,
they know who they can go to. And so, you know, we try to kind of set that to go like, anything that
happens, it's okay. You know, like, if it went out the wrong way, we'll deal with it. We'll adopt
the cost. So, a lot of that is us having enough margin to go, well, we'll get that reprinted,
because we have to, you know, those 100,000 copies are down the drain. But like, we can do it again,
you know, and we'll eat the cost of that as a way to support our Super Friends. And that's not,
there's no penalty to that. It's not like, oh, we can add a waste to our margin on this now. It's
like, no, that's why we have it. We have it so that you learn now next time, you're not going to,
you know, not going to send a RGB thing to press. Okay. I think you said this before, this model
is highly inefficient, right? Yes. The inefficiency built into the business model. And it's like,
that's, that's okay. Because on the opposite of inefficiencies, innovation, and you can't have
one and the other, like, you can't be efficient and innovative. 100%. Yes. Okay.
All right. This takes me, let's, let's do a pivot here. This takes me to, I think it's 2016,
when you published the book, Pricing Design, which is an ebook, I believe, right? And I'm just looking
at the chronology of your timeline, your education. I think you graduated from Drexel in 2006. So that's,
that's right. It's only 10 years after getting out of school. Yep. What is a young man who just
graduated from school writing a book on pricing? What business do you have writing a book on pricing?
None. Just 10 years out. Yeah. I have no business doing it. I think part of, part of, you know,
and I had no business teaching at the time. I had no business starting a business. I had no business
running, you know, big accounts, but yet people put me in those positions. So I'm like, all right,
I'll try it. I think one of the things I've learned is I don't really try to teach too much. I just
try to share because I think there's a difference between saying to someone, you should do it this way,
and saying, here's the way that I did it, right? Because like, people can glean from either of those
things. I'm less comfortable honestly saying like, this is what you should do. Because I don't know
what you should do. I don't know you. So how can I give you advice about that? So to me, you know,
I wrote a book about pricing, less to say to someone, you should value price. Do I think people
should value price? I think some, I think it'd be more helpful for them, but I don't know that.
But instead it was me saying, let me tell you how I've been able to make a lot more money than I
thought I could. This is how I did it. If that works for you, great. If you need help with that,
here's some techniques. So it's less about trying to convince someone of something or doing something
a different way than sharing my experience. And that's what I tried to do in writing. The book is like,
all right, in my 10 years of working at companies and freelancing on the side, here are some things
that I've learned. Now, five years later, are there some things that I would rewrite in the book?
Absolutely. If I were to do a V2, I would change a bunch of sections and I would update a bunch of
things and I would change a lot. But at that time, that reflected my moment in time of what I'd
learned so far in my career. And that's what I tried to do with that book. And I feel pretty good
that I was able to accomplish that. This is fascinating to me because your 10 years
out of school, you're sharing, you're not necessarily teaching, you're saying, here's how I've
done it. And it just helps you go for it, whatever makes sense. So you felt a pain point out there.
And you're just doing this because obviously if there wasn't a pain point, there would be no need,
right? Totally. So you do this in its imperfect version. But it encapsulates what you knew at that
point in time. Here's what kind of strikes me is really fascinating about you. I go to the resources.
I'm going to ask you this question. I hope I'm not putting you on the spot. On page 47,
there's a list of like 10 books here that you presumably have read implementing value pricing
management challenges. There's a whole bunch on here. Have you read all those books when you wrote
this? Yes. Okay. This is this is where I want to get into your mindset here. I've been running my
business now for 25 years. I've read one of those books. And you're okay. Because yours is not on
the list. Okay. So what's in the mind of a young Dan where you're like, you know what? Instead of
reading about design topography, user experience, comic books, I'm just going to dive in and read all
these books on business, financing, and pricing. What is going on with you? Okay. Cool. So I'll flash back
to my agency days. I remember. So I started as a developer. I just started as a designer.
So when I was at Drexel in school, the program that I was in, I initially went to be an animator
because I wanted to make Pixar movies. And then I realized like, oh, I suck at that. I'm actually
not very good at that when I was in school. And I was lucky that the program I was in is called
digital media. It was half 3D animation and modeling. And then the other half was like interactive
interactivity. So we learned director and flash and HTML and, you know, all sorts of stuff like that.
So I had as much of a coding skill set as I did a design skill set. So I thought I was
going to be a developer coming out of school. And so I got the first couple agency jobs as a developer.
And I remember being handed comps by designers. And they would be like, build this. And I'm like,
cool, I have an idea. And they're like, I don't know, no, no, we're past the idea stage.
And I was like, what? That seems dumb. Like you're like, there's a time where ideas are done.
Like that seems weird. So I just kind of was hitting my head against the wall, like trying to
implement ideas. Like I have ideas. I think I have good ideas or at least I want to talk about them.
But I was being kind of censored in that way, not maliciously by anybody. But it was just like,
well, this is the wrong time in the process. So my thought was, well, let me get farther up in
the process then. So what I did was I took my portfolio down. I took every design gig that I could
freelancing agency. And then a year later, I had enough work to put up a new portfolio as a designer.
And so I got hired as a designer. And so now as a designer, I'm like, all right, well, I got ideas.
And even at that point, it's like, well, no, no, no, we're done with the ideas. The information
architect came up with the ideas for the site. And like, you're just, you just have to skin it.
Like, well, that's dumb too. Like, okay, so I just kept working my way up the chain. Well,
let me learn information architecture. Okay. So I learned that. Let me learn, you know, let me learn
strategy. And then even then, like we start the project. And I'm like, okay, I have some ideas
on how we could do this project. Oh, no, no, we already sold the project to the client. So it's
already in the statement of worth. We have to do two rounds of wireframes. I'm like, but what if
we shouldn't do wireframes though? Oh, well, I don't know. That's what we sold the client.
I'm like, well, that's dumb. So, so then I'm like, okay, well, how do I even get farther
up in the process? So that's when I started asking my, my boss, can I see the agreement?
And he was like, why? I'm like, well, I just want to see what we've agreed to.
And he's like, yeah, okay. So he shared him with me. And I'd look through them and I'd go,
well, why are we charging them this much? And why are we charging them that much for this thing
that I don't think? So it was just reverse engineering all the way up the chain to me.
And then what I realized was, oh, the place to influence the project of the work is in the sales cycle.
Like, that's where you have real influence. And so now, you know, I'm a salesperson, right?
Because because of all that. So that was in the mind of young Dan, young Dan, the designer is like,
where can I have influence? And I realized, you know, on an agency side or in a service business,
you have influence in the sales process. Because that's where you get the ability to shape. And,
you know, I didn't have any of these words, you know, then, but I had the instincts of like,
I want to be able to shape the work. I want to be able to have impact on it and have influence
on it. And that was the place that, that I learned. So then I started reading about economics and
about like, well, so how do we price this? Well, you know, $150 an hour, where do we get that number
from? Like, who made that? We made that up to someone else charge that. So it just started a whole
flurry of research for me into, well, how do we shape it at that level? And what are all the
things that I need to know to be educated there? How old are you when you're like at that point when
you're like, let show me, can I see the bids? Can I see the scope of work 23? 23. Yeah. Okay, okay.
There's something about a 23 year old who has these kinds of questions, this mind, this brain
that you have. If I were to rewind the tape and say, what kind of student were you in, like,
in high school, how would you answer that question? I was an average student. Because I've
felt like school was about memorization to me.
And I was like, "I don't memorize things well."
I've never been good at memorization stuff.
So like history, I did really poorly at,
and all the things where I could,
where I could, I had to memorize something.
I did really poorly at that.
All the things where I had to invent something
or be creative about something,
those were where I came alive.
And this is all in hindsight.
I didn't know that then, as I reflect on it now,
I'm like, those are the things that I was really interested in.
And I was also very arrogant, right?
So like that comes with this too, is like,
for better or worse, I was very arrogant.
I remember, I remember a time where at work,
a colleague said this to me.
Also my wife now and the girlfriend at the time said this to me
and my brother, all the same week they said to me,
you're really difficult to be around.
Like you just think that you know everything.
And like, if it was just one of them that said that to me,
I'd be like, ah, whatever, I don't, yeah.
But the fact that all three of them,
like people that I care about and people that,
whose opinions mean something to me, said that to me.
I was like, well, maybe I should think about
how I actually relate to people in the world.
I love it more than I do.
I remember in a review with my boss,
he, I said to him at one point,
I said, you know, I write the best CSS on the planet.
So this is why I think that I deserve that race.
And he's like, the amount of hubris that you have to have
to say that to me, like even if it was true,
just to say that is like, man.
So I definitely have had, I was definitely very, very arrogant.
I think I still have a touch of that now.
I try to be more humble about it now.
I think I've learned to be softer about that.
But there's still definitely is there.
But you know, 22 year old Dan, 18 year old Dan
was firing on all cylinders and pretty brazen
about stuff like that.
Can I say the contract?
You know, like kind of kick indoors in in that way.
- Time for a quick break,
but we'll be right back with more from Dan.
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Welcome back to our conversation with Dan Mall.
>> You call it arrogance,
but maybe there's two parts to this,
which is youth.
It's like you're too dumb to know
that you don't know and you can't say.
So you don't say anyways, right?
So there's ignorance.
And I think ignorance is actually
when it's used the right way,
it can actually be very powerful.
Because you don't know the rules.
You didn't know that you were bragging the rules,
but you just wind up inventing something new.
The other part to it is,
there's a level of self-awareness
in terms of self-confidence.
And did that come from a childhood?
Did that come from one or both of your parents
or a mentor or a sibling in your life?
I gave you this.
>> I credit my parents a lot for that.
So my parents are both immigrants.
My dad is from Pakistan.
My mom's from the Philippines.
And both of them came from very, very poor families.
Came to the US with nothing.
You know, they met in New York.
But both of them came to the US on full-ride scholarships.
Because that was the only way that they could get in school.
And my mom was in a nursing program.
My dad's an accountant and a CFO now.
Both of them, their families.
So my dad has seven brothers and sisters.
My mom has three sisters.
All of their families pulled their money together
to send them to the US, you know,
to make something of themselves.
And like, you know, you go make something of yourself.
We will all work manual labor jobs here
and raise the money to support you.
And then the un-stated expectation was,
you'd be successful then you help us back home, right?
Like whether it's any money back home
or bringing us to the US and things like that.
So my parents are very self-made, you know, from the beginning.
Like we, you know, I grew up in North Philly.
We didn't have a lot of money.
And I think just the, I don't know if I would call it this.
I don't know if my parents would call it this,
but the confidence to be able to come from nothing
and then make something of it.
Like that, there's a tremendous amount of like,
you just got a grind on some of this stuff.
So I observed that my whole life without knowing
that that's what I was observing.
You know, I observed my parents.
I mean, my dad is wealthy now.
Like just straight up wealthy.
And he made that wealth for himself.
Like, he had mentors and he had teachers
and he had people to help them, but not a lot.
Not as money as I had.
So like seeing that growing up was like, well,
that's how you, you know, that's how you work.
That's how you start very humble
and make something of yourself.
So I think a lot of that came from them.
Just seeing that, I remember my mom,
you know, my mom has like immigrant confidence.
You know, we're like, I remember going to stores
and having a bunch of old white ladies yell at her
for me and my brother, like messing around in the aisles
and her just not skipping a beat
and like really just giving it back to them.
You know, so it's like, like that confidence
I only recognize in hindsight as I'm older,
but I grew up around that.
So, you know, seeing my parents do that,
I think really gave me like, all right,
well, if they made something of themselves,
I could probably make something of myself too.
- Hmm, so in a way, this immigrant mentality,
because there's two ways that immigrants,
I think at least two ways exist, right?
One is they're scared, they're always kind of flying
under the radar, they're considered me
and they don't speak up for themselves.
And that's why a lot of like Asians
will deal with a lot of social injustice
because it's a keep your head low, don't make a lot of noise.
And there's the other kind of immigrants like,
I have a right to be, or just like every single other person,
I've sacrificed too much, too many people
are counting on me for me to be tiptoeing through this.
And you saw that, that was part of the blueprint,
and you just, that's just normal reality for you.
It's not until your girlfriend, your boss
and somebody else or your friend tells you,
yeah, dude, you just chill on the air
against sauce a little bit.
- It's a little too high on that.
- Yeah, it's totally right, yeah.
- Okay.
All right, so you go in and you start reading these books
and now that I didn't realize this,
'cause you know, like new media,
that just means a thousand things, depending on who you talk to.
- Sure.
- So this mindset of yours,
thinking that you're gonna be a developer,
I think is, like my older brother,
he and I are exact opposites in some ways,
he's a software engineer, he's super logical,
very binary, things either make sense or they do not.
He's highly educated, I am not an exact opposite.
So he's very a systematic kind of thinker,
like system thinking and system design.
And I can see, I guess, and tell me if I'm wrong here,
a young Dan saying, you know, this should be the way,
therefore I would just do it.
And I'm gonna read these books, Mofo, you can't stop me.
And you're just like the terminator,
you go and crush these books.
- Totally, very astute.
Like, young Dan was a very black and white kind of person.
It's this way or it's that way.
I learned this and I know it.
Like, older Dan is a bit more nuanced and is approaching,
you know, now, like I think that comes with some age,
it comes with having, you know, being married,
it comes with having kids, I think.
So I'm a bit more soft on that.
I'm a bit more shades of gray on it.
But, you know, young Dan was like, you know,
it's either logical or it doesn't,
or you should not talk to me, that kind of attitude.
- It's like, it has to make sense,
or it doesn't make sense at all.
- Exactly, yes.
- No middle ground.
- Okay.
All right, so maybe this is just,
maybe this is me outing myself a little bit,
nonfiction books.
Books that are like text books, theory, things that I tried to escape normal school from.
Used to not appeal to me.
Now that's all I read, so I have some catching up to do and I'm surrounded by books I have
yet to read, but I'm just fascinated by the title and the ideas in them, but you've actually
read them and then you go and write your book and I have to say like, it's around 50 pages
is, right? Something like that. And it's really just, it's funny because now I know you
a little bit better by watching your videos. Your personality's sprinkled in there, but
you can't tell at the beginning because it's like, all right, this is a book on pricing,
it's called pricing design, right? And and then you sprinkle these little stories and
these jokes and it's like, okay, I get who you are in this and it's a wonderful read.
So if you're a creative person and you're sitting there scratching head and you've not been
able to escape hourly based pricing and you feel like you're working harder for less
money, I highly recommend that you pick up this book. You can read it in a few hours.
You really can because it's just 50 pages. There isn't a lot of fat in there and I like
books like this. You're not messing around. Okay. Can you tell us? Okay, I'm just going
to set you up here. There's a story in there about Esther, not her real name and what
you learned about using the saving the date and what that taught you and where that led you.
Yeah, totally. So I remember when I was first freelancing and the context of this is I'd
always have a full-time job at work today, agencies and then I would always work, I would
always freelance outside of that. And I started freelancing and I wrote an article about
this too. I started freelancing to get things where like, okay, I had a full-time job,
but like I want a new camera. So okay, I had freelance for a new camera and what would
the price of the freelance job be? Well, the price of a new camera. So the new camera
was, you know, a thousand bucks. I would do that next freelance gig for a thousand bucks
because that was my camera gig. If I wanted a new TV, if I wanted to go on vacation,
if I wanted to buy, you know, put a down payment on a car, like that's what I freelanced
for. So I call it object value price, right, which is like the value of this gig is whatever
object I want to get. So that's how I started. And so I was freelancing on the side of agency
work, which meant I had a lot of leverage because if a client said no to me, then I would
just go like, that's fine. I don't need the cash. I'm getting paid well at the agency
already. So a ton of leverage that I could experiment with and I could take a lot of
risks because it actually wasn't that risky. So there's this one client that I was freelancing,
you know, this is kind of on the side of a full-time agency work. And this client wanted
to book me six months out because I was already booked six months out, like on the side.
And I was like, I don't want to be booked out six months from now because what if I turn
away a bunch of gigs and then five months from now, this person drops out, right? As
there says, like, oh, no, nevermind. I don't want to work with you anymore. So I just sent
her like a go-away price, you know, like the one that you just send to clients is just
astronomical. And you go like, yeah, they're never going to say yes to this. So I basically
said to her, look, if you want to book me out, you know, it's March now, if you want to
book me out in October, you have to pay me an additional $10,000 to hold the time. It's
not a deposit, right? That's not like taking the initial $10,000. You know, I think the project
was $10,000. So it's not, it's not a deposit is an additional fee to just hold my time
for that amount. And mostly I expected her to be like ridiculous no way. And I did hear
back from her. And, but then one day I opened my mailbox and there was a check for $10,000.
And I was like, it just, it just broke my brain and like how it defied reason because
if I tried to rationalize it by like, wait, but if I break that down, it was an hourly rate,
like, but I'm not even doing any work here. Like, so how do I rationalize this? And the
only way that I could rationalize is people pay for things that are important to them.
Like, that's it. And that's the thing that turned me on to value pricing. It's like, well,
if I could just make every project something that's important to the client, wouldn't they
pay a lot of money for that? Like, and here's an example of that. Here's at least one
piece of evidence to that, toward that idea. So that kind of opened my mind to the idea
of value pricing is if I could hunt for what's important to the client, rather than trying
to do it input wise. Like, it hasn't many hours I have. And here's my made up, hourly
rate. Like, instead, what's important to you? What's it? And then what's it worth to you?
And then is it worth it to me to do it for that too? Great. Well, we're in business then.
And what I also realized from that experience is with her paying that $10,000, that additional
$10,000, I was like, well, she really wants to work with me. And now I really want to work
with her. And I crushed that project. I did such a good job because she put that trust
in me, like literally put her money where her mouth was, gave to me. And I was like, I'm
going to over deliver on every single thing on this because you know why? Because I want
to do a good job for someone who believes in me. So it just created all of these good things
that came from the idea that we just focused on what was important. I did it by accident
in that version. But it made me go like, well, what happens if I do that on purpose next
time? And that kind of opened the door to, you know, I'm getting out of hourly rates.
I'm getting out of time-based billing and all that stuff. And instead, really just hunting
for value in every client conversation.
So that moment with Esther was like an epiphany for you. You were thinking, I'm trying my
best to kill this thing because I don't want a six-month commitment because who knows
what you'll be doing? You might want to go on vacation. Who knows? And then the unexpected
happen, which is Esther sends you a check. And now you're, I think you're post-rationalizing.
It's like, how does this make sense? I'm going to just construct a narrative. And, you
know, here's the thing about narratives. It could have been anything you wanted.
Absolutely. And your narrative was, what the hell is going on? Why would somebody do this?
And the narrative that you told yourself is, if it's valuable enough to someone, it doesn't
really matter what the terms and conditions are, they will pay. And you bumped into it.
And then you went on this journey to figure this stuff out. Absolutely. And it changes your
life. Okay. That's the catalyst for this. Okay. So in the book, you write, like there
are primarily three pricing methods. Can you talk to us what the three primary pricing
methods are?
Yeah, I forget what they are on top of my head. But, you know, I can tell you, please
tell me.
Yeah, it's been a while, right?
Yep.
So you're talking about the industry standard, the cost plus or the opportunity cost.
Yeah. Gotcha. Okay. So the general just there is what a lot of people do, how they
price, and this is not necessarily a bad thing. Let me preface this to say, people ask
me, like, how should I price? I don't say value pricing. What I say first is, whichever
method you understand best, like whichever method you understand best, and then it works
for you.
Because I think if you try to do value pricing and you don't get it, you will mess it
up. Like you won't do a good job. If you try to do hourly pricing and you don't understand
it, you will mess that up too. So I know tons of agencies and freelancers that are very
profitable doing hourly billing and hourly, you know, a lot of people say, like, this saved
my agency doing hourly. Great. Continue on with that then. And then I know a bunch of people
who are like hourly sunk us, you know, like we cannot run a business on that. So if you
don't get it, cool. So what I try to do is go like, well, let me help you get all of these
things. And then you can pick. So hourly, you know, our industry standard is usually the
one that lots of students start with, you know, lots of free, new freelancers, they go,
like, I don't know what to charge and they ask a friend, what do you charge? I charge
70 bucks an hour. Okay, cool. You ask another friend and I charge 80 bucks an hour. You
ask another friend, I charge 90 bucks an hour. And you go, all right, I'm going to split
the difference. I'm going to charge 80 bucks an hour because that's the average of what
I asked all the friends for. And that's fine. You know, if that works for you and you're
profitable doing that, go for it. I think the problem with that is, is the term industry
standard. It means that you are just doing the standard stuff. It means that every client
that comes to you will be able to price shop. So if you're in the middle of that set, sucks
for you. Because if you're the lowest in that set, you actually could win on price because
you're cheaper than everybody else. If you're at the top of that set, maybe the client
will go like, well, maybe this person is a little bit more premium or does something
a little bit different than everybody else. If you're right in the middle, sucks. Like,
because there's no reason to pick you other than like, I don't know, I like that person
or I like the way that they write emails or, you know, something, something that's different.
So that kind of pricing breaks down pretty quickly. So then you get into cost plus. And
that's what most agencies do is they go, what is our cost to do this and they calculate
their, you know, their salary of their team and all this kind of stuff. And they go, well,
we can't just charge that because the will break even. So we just add a little bit of
margin to that. That's the plus part. And so the, you know, the cost plus is like, you
figure out your cost. You add a little bit of margin to that. And then that's what you
come up with. So, you know, on average, we charge, are we cost $40 an hour for a developer,
a designer, you know, and we don't want to just charge $40 an hour. So we'll add a little
bit of margin on that. Let's say we'll add 100% margin on that. So $80 an hour is what
we'll charge. We have a $40 margin an hour. And then we'll charge the client $80 an hour.
Well, the problem with that is what if the client doesn't can't pay $80 an hour, they can
only pay $60 an hour. So what do you do now? And what most agencies do is they cut their
margin. They go, all right, instead of taking $40 a margin, we'll take $20 of margin.
And then that's where you reduce your profit before you even started the gig. So that breaks
down, you know, at some point too. Again, lots of folks have made a good business doing
cost plus, but it's hard to negotiate and it's hard to find value with your clients.
It's hard to connect with your clients because cost plus is kind of a take it or leave
it price, unless you are compromising the price. In which case, well, then what do you
might as well just tell your client, like, well, do you tell us what you want to pay
and then we'll just do that. Right. So it's like, it either is the client at your
mercy or you are at the client's mercy. It's win lose, you know, cost plus generally.
And then opportunity cost is kind of what I talked about before, which is like, what's
worth it for both parties? Is it worth it to you and worth it to me? Like, is it worth
it to you to spend $10,000 and is it worth it to me to do the job for $10,000 or $1,000
or $100,000 or whatever the amount is? If it's worth it to you and worth it to me, it's
win win. And so that's the, that's the thing about, about value pricing. And this is the
thing that I didn't write about in the book and had I, had I written it now, I would have
tried to add this, this idea and this concept is that a value price is always a win win price.
It has to be a win win price. It means you are getting some value out of doing the work
and the client is getting some value out of you doing the work. Because then both parties
are profitable and that combination of value
the combination of profits, excuse me, is what we call value.
That's what value means.
It means all of the profit that has been generated
from this transaction, whether it's financial profit
or some other form of profit.
People are happier or they get more time back
or whatever, those count as profit too.
So all of the profit that's created in the transaction
is value and that's usually based on opportunity.
So there are some folks, I have some friends
who are excellent consultants and excellent agency owners
and they will get a project,
they'll get a great project from a great client
and the client says, I'll spend $100,000 on this
and they go, I'm sorry, not worth my time.
Not worth my effort, not worth my energy,
not worth my weekend, not worth whatever,
which seems like an incredibly privileged thing to do
but that doesn't mean it's not true.
For some folks, $100,000 is not worth their effort.
For some, a $10,000 project is not worth their effort
or $1,000 project is not worth their effort.
So that's the thing is for a good transaction,
it has to be win-win for every person.
So I'm gonna dive too deeply into that
but those are generally the three kind of methods
that I describe them.
- Okay, so I've been talking about this for some time.
So there, naturally I have a reservoir
of challenges, objections to what you just said.
Not because I believe it, but because people believe this.
Here's what people say.
Chris, you're just putting a fancy label on something
to make yourself feel superior
and some people to feel inferior.
I'm like, no, trust me, I'm not doing that.
It may be how you feel about it,
I'm not gonna deny your feelings, but okay.
So what they say is if you value basic client at $10,000,
let's just say that you're able
to have the money conversation and it's $10,000.
And then you wind up working on it for 100 hours,
then your effective hourly rate is 100 bucks an hour.
Why don't you just call it
that you're charging 100 bucks an hour, Chris.
How would you respond to that, Dan?
- Yeah, sure.
It's a good objection, it's a common objection too.
So I think there's a couple of things to go into that.
The first thing is there's a misnomer or misconception
about value pricing, that value pricing just means like,
you charge a client as much as you can.
And that is not value pricing.
Value pricing means that you are trying
to ascertain the value of the work objectively,
not gut feeling, not as much as I can charge,
not any of that stuff.
So objectively, you have to come to the number
of the value of the work, how did you get to $10,000?
Not 'cause you felt like it, but because you did some
calculation and you said, based on your, whatever,
your current revenue, based on what I think my work would add,
and there's some amount of speculation to this,
but it's gotta be based in some reality.
I think I can get you about $10,000 more.
So the value of the work is $10,000.
That doesn't mean you should charge $10,000, right?
'Cause who would spend $10,000 to lose $10,000?
I don't know that a lot of companies would,
so you're charging a portion of that.
So if the value of the work is $10,000,
maybe you would charge $5,000 or $2,000,
or want that some percentage of that probably.
And so when somebody says, yeah,
but then I have to work 100 hours on it.
I'm like, well, and this is one of the things
I learned from, what book is this?
I think implementing value pricing by Ron Baker
is the idea that value drives cost.
Not the other way around.
If you're doing it the other way around,
you're just cost plus again.
You're not value pricing anymore.
So what does that mean?
It means your job then as the expert is to find a way
to not do it in 100 hours.
To do it in 10 instead or five or one.
Can you do that?
And that's your, you as a service provider,
that's your job to figure out.
Can I do it in less than 100 hours?
If your answer is, oh, I don't know,
the work takes what it takes.
I have an unpopular response that I'll preface to say,
maybe you're not as good at your work as you think you are.
'Cause that's what experts do.
Experts are really good at their work.
And they go, I know how I can create this value.
Confidently, not arrogantly.
He young Dan would have been arrogant about it.
Older, nuanced Dan is a little bit more like,
yeah, I believe that I can do this.
And why?
Because I have a truck record of doing it in the past.
I have good inclinations.
I have good uncle's client trust me on that.
Or don't, if you don't, that's fine.
We can walk.
So I think those are all the things that kind of go into that
is if you are shackled by the fact that you can only do this
in 100 hours, hopefully you know that in advance.
And you would turn down the gig in advance
because you know you're not gonna be profitable.
If the only way that you can figure out
if you're profitable is during the work,
you're probably not as good as the work as you thought.
And there's probably more work that you can do up front
to actually identify some of that and stuff.
Now, that's not easy for people to hear, you know,
but that's the kind of answer to that.
- But if the person that I'm imagining,
if who's saying this to you is still not buying it,
their second push back to you is like,
Dan Chris, I don't care.
You're just like using labels,
you're just using some trickery here.
If the end of the day takes you five or 30 hours
or 100 hours to finish the work,
if you divide the amount of money you charge,
in this case, 10,000 by the hours that you work,
that's your effective hourly rate.
They still say you're just trying to call this something else.
And to that, you would respond by saying.
- Yes, I am.
Yes, I am trying to call it something else
because you know why?
You know why?
Because when I say to a client,
so let me tell you what my effectively hourly rate is.
And I do that by, I track my time.
I know how much time I work on everything.
And I also know how much money I've made.
My Dan's effective hourly rate right now is $814.
So let's call it that.
Let's call it an $814 hourly rate.
So if I say to the next client,
my effective hourly rate is $814.
I lose the gig immediately.
Done, like we're done, that's it.
I'm not a doctor, I'm not a lawyer.
I'm not anyone that they perceive
to be able to make that amount of money.
Now if you ask my former clients
and you ask them like, was the money worth it?
There we go, yeah, yeah it was
because we got this amount of return
or we got this conversion or whatever the goals were.
Yes, money well spent.
But now trying to sell it with that framing,
you know my hourly rate is this, it doesn't work.
So what you need is a new frame on it, right?
So like an analogy that I always talk about is
like a painting that you put on the wall
depending on the frame that you put on it,
it looks terrible or it looks great.
Has nothing to do with the value of the painting itself.
It's how you frame it, literally how you frame it.
So the same thing is true in the sales process.
How you frame it to the client is the work, right?
So am I trying to put a fancy label on it?
I don't know about the word fancy.
You're just being insulting by saying fancy.
I'm trying to put a different label on it
because they don't get it if I frame it one way
but they totally get it if I frame it another way.
That's called being a good communicator, right?
And it's on you to do that ethically
'cause if you're not doing that ethically,
then you're just being a sleazy salesperson.
If you're doing that ethically
because you know you can create value for the client,
call that being helpful.
- Okay, I'm glad you brought up this word ethics
and unethical.
How does one do this unethically?
- Okay, so this is a contentious response
that I have to this, right?
This is usually like some people on fire when I say this.
And I'm not the only one to have said this.
I know that Jonathan Stark has said this
and a bunch of this stuff.
I think that you might have said it too, Chris,
but I've heard this in a bunch of places.
Charging hourly is unethical, right?
Okay, so let's break that down.
- Okay.
- Well, why is that unethical?
Because, you know, and maybe unethical
is too strong of a word there.
But uneth, you know, ethics basically means
what is right to do within a given group
or a given set of circumstances, right?
So what we accept, what is acceptable as correct?
So within our given group, if I say to a client,
well, I just charge $814.
That's my hourly rate.
And they go, okay, we'll work with you.
Should I take their money?
Like, is it ethical for me to take them?
I mean, that's my rate.
They agreed to it.
Like, and this is a bit of a caricature,
but usually when you give a client an hourly rate,
usually you're not having value conversations.
You're just saying, this is what I do.
You know, like, and so you're not talking
about how you can deliver value to them.
And to me, that's the ethical part.
The ethical part is, if you're a service provider,
you should actually be providing a service,
not just charging, you know, charging for what you do.
And there's a lot of people that put stock
into their effort as opposed to the outcome.
Well, I don't know, I'm gonna work 100 hours on this.
So do you deserve to get paid for your 100 hours
that you put on this?
If you didn't actually achieve good outcomes,
well, I did the work.
And here's where it gets even more contentious.
That's a pretty Marxist idea, right?
Like, that gets into the labor theory of value.
That gets in, like, that style,
is that the work itself has value,
not the outcome of the work, right?
And maybe that's what you believe.
I've found it hard to understand that,
which is why I don't do it that way,
'cause I'm like, I don't think that my work has,
I don't think the fact that I did the work has value.
I think that the outcome that the work brings has value.
And so that's what I try to sell,
because I understand that,
and I can be honest about that,
where the other way I can't do that.
Yeah, okay, so a couple of things for people to take note of here,
is when you're pricing based on hourly,
you are literally selling time, your time.
And when you do that,
you have no connection to the outcome or the results.
You just, oh, you wanna use more time?
If I'm inefficient, if I'm slow, if I'm distracted,
if I'm new, I would just continue to charge you more.
Now, I know some people who their business
depends on them charging hourly,
and I talk to them, and they have like 500 people work for them.
And the reason why they have to do that
is they work in a creative space
where the client changes their mind all the time.
And if they were to do fixed-based pricing,
value-based pricing, they would be screwed,
'cause there's no telling.
So this way, there's no tension,
and the client just continues to buy more time,
because they want more stuff done, more versions,
and they're completely content doing that.
But I think one of the other reasons why creative people,
especially, this is a broad statement here,
prefer hourly-based pricing is 'cause it's easy,
there's no headaches.
And you know what, I don't actually want to be tied to any business objectives because I just want to do
my thing. I want to draw a logo all day long. I want to make motion graphics all day long.
And I just don't really care about the other stuff. So there's that idea of accountability
and understanding the larger business goal. And so you had said this at the onset.
Don't do value based pricing if that's not how how you operate in the world. If you don't think
like that, if you are not curious about their business and the larger business goals, don't go
there because you're going to probably going to fail and vice versa. If you if you only think about
value creation, maybe hourly pricing isn't for you either. You got to find the model that fits
for you, right? Okay. Now, I think you and I are aligned in this cause in which we want to help
create a people have a more meaningful conversation about the value of the work with the client and
within them themselves. I just want to know what are your top Dan mall two or three tips,
somebody's listening to it's like, you know what? I was on the fence before. I'm ready. I want to
learn what are the two or three tips that they can do to increase their value in the world.
Oh, that's a good one. That's a tough question. Okay. So, so let's see. One of them that I would say
is, you know, what I like about value pricing and the methodology that comes with it, right? The
culture that comes with value pricing. If you read a bunch of value pricing books or you talk to
folks who have done it well, right? There's there are there are rituals and ceremonies and all the
stuff that comes with it, right? Most of a lot of people who value price will send options, right?
It's not just one price, right? Because if you have an hourly rate, it's one price, right? The only
thing that changes is the amount of time you're working on it, but your hourly rate doesn't change.
So, options come with it. So, if you kind of think about this value pricing thing,
one of the things I love about it is as a designer, it allows me to be creative, right? Because like,
yeah, there's the obvious option where, you know, my hourly rate is $100 an hour. I think it's
going to take 10 hours, so the price is a thousand bucks. Cool. That's option one. What else you got?
And I'm like, oh, yeah, I don't know. And so, it's a forcing function for you to be creative about
that. And that's one of the things I love about the idea of value, whether or not you end up value
pricing, just the idea of thinking of different things that you could do for the client. I see a lot
of designers not even get to that point. You know, they go like, oh, well, they asked for a poster,
so I'm going to make a poster. I'm like, yeah, but if you would have asked like what they're trying to do,
they're trying to sell out shows. Could you run an Instagram campaign for them too? Like, maybe that
would help them sell out shows better than your poster would. Like, and that would be, you know,
10% of the work that you were going to put into making the poster. You don't have to do anything
printing, you know, you don't have to, like, the, and the cost would be lower for you too. So you
could become more profitable. That's a small example of like just a slightly different option.
I think that we as an industry are so tied to, well, the client asked for that, so I have to provide
that. Who said, like, who made that rule? Part of our job as this, especially for designers,
is to go like, why is that thing like that? And how could I make it better? What are different
ways that I could do that? So I'm like, why not apply that to pricing? So I think that's tip number
one. It's like, encourage yourself to be creative about this stuff. Cool. If you want to,
if you want to do an hourly, make hourly one of your options. All right. What are the other two?
You know, so I think that's a, that's a good gateway to going like, well, what else could I think
of? Even if you price those other two hourly fine, but what are two other things that maybe
the client didn't ask for, or didn't ask for specifically, that you could also price hourly.
At one of the exercises that I've seen, you know, a lot of folks do it. I think Chris, you do it,
and I've seen Jonathan do it, and I used to teach this when I taught value pricing is, you know,
you come up with your price, however you want, option one, and then you double it and you have it,
and you go, what could we do for double that, or what could we do for half of that? And it's just like,
a really fun exercise to do just to think about it. You don't even have to sell it, but just
getting in the mind space of that, I think that's the gateway to value pricing is like, it makes you
explore, how could I do this differently? You know, and so I think that's tip number one. Tip number two
is create some leverage for yourself, right? So like, if you're depending on this to eat,
maybe don't take risks there. If you, you know, maybe that's not the first time that you should try
value pricing something. Like, if you're like, this is the only gig that I have on the table,
and I cannot lose this otherwise, I'm not going to be able to buy groceries next month.
Probably trying to do something new there is not the great, there's not a great option. So maybe
what you do, if you really want to try value pricing, is you create some sort of nest egg for
yourself where you go, I'm going to price this thing hourly because I know it can be profitable,
and now I'm sitting on an extra 2500 bucks because that's the profit I made on now I can pitch the
next thing I can value price it because if it doesn't work, I still have the 2500 bucks to rely on.
You know, so so that my second tip is like, maybe you can create some leverage for yourself
to be able to take some risk. If value pricing is new to you, if you're, you know, if you're sold
on the idea, but you're like, I don't really know how to do it, and I want to test it out, don't
test it out in a high risk scenario, test it out in a low risk scenario. The, the third thing I think
is like, you know, and this, this is what worked for me is just learn more about it. You know,
there's so many good resources like all the stuff that Chris that you do in the future, and like
all of that, there's great videos. Jonathan Stark has an awesome newsletter. You know,
Ron Baker and Blair Ends has a great book. You know, there's just so many good resources now for
value pricing. Part of the reason that I wrote my book was that there wasn't good enough good
resources at the time, right? And now there's just so much more. So, you know, educate yourself on
value pricing on how to do it, all the different things like because again, like if you don't understand
it well enough, you won't be able to do it well. So I think those are my three off the cuff. Those
are my three tips. Or go and read 10 bucks on economics pricing theory. It's only, yeah, yeah.
This is the study of economics. Yeah, that's, that's the other way to do it. Okay. This is
wonderful. I have a couple of questions for you before I wrap up here, and I think that to myself,
like in the, in the larger design world, when people think the name Dan Mall, what's the first two
things that they think of? And I'm curious if you're intentionally shaping that or not.
Yeah. I think it would depend when. So right now, I think it's design systems. So super-friendly,
specialized in design systems. That's how I am trying to position both myself and super-friendly,
is like, that's what we do. You know, we say that's what we do. That is what we do. Do we do other
stuff? Yeah. Of course we do. Everybody does position, you know, who positions narrowly. But that's
what we want to do more of. And so the more we say it, the more we do it. So I have to kind of play
that too. At different points in my life and career, like I used to coach agencies and freelancers.
I've talked about pricing a lot. I used to talk about creative direction. I used to talk about
flash and how it works with WebStamp. So like, I had all these experiments on like, what do I want
to be known for? What do I want to be my thing? And honestly, I think it's probably, we'll change
in five years, you know. So I'll probably have to reposition myself. But right now, I think it's
design systems. I think that's the thing. All right. This is fantastic. Before I ask you the last
little bit and say goodbye to you, I want to just prompt everybody. If you are enjoying this conversation,
we're going to include some links and some resources in the show notes. So make sure you track
us back down to the future site so that you can see these things. I saw a talk that you gave to,
I think was last year, AAGA Jacksonville, where you kind of gave these five tips. And one of them
was a brilliant way of explaining positioning to people that are job seeking. Now, I think you
were talking to students, but I think that the way that you did that was such a beautiful exercise
in positioning. How you said that it's like writing a love letter. Your portfolio should be a
love letter to who it is that you want to get a job from or an opportunity. I loved how you went
through the whole process and you kept diving deeper and deeper and how tailored you make it. So
I'm going to include that video in the link. And if you want to share other videos with me, Dan,
I'll be sure to add those in the show notes so I'm producer. I can do that as well. And definitely
pick up this book. It's called pricing design. It's 10 bucks you guys. It's 50 pages. And I think
in the opening bits, Mike Montero says, you'll make more money from reading this book than you will
have spent easily because Dan is a guy who creates value for other people. So Dan, if people want to
find out more about you, where's the best place they can find more about you? Yeah, so I have a personal
website, Dan mall dot me. I write on there infrequently. I write much more frequently and randomly
on Twitter. So at Dan mall on Twitter and the official biz stuff, if you're interested in design
systems or things like that is super friendly co on Twitter or super friendly design dot systems
on the web. So any one of those four places usually. Beautiful. Thank you so much. I love
that I could talk to probably a hundred different people who know things about pricing models and
pricing strategies. And you all have a different way of approaching it. I like your approach. It's very
friendly. Like I guess you live up to your name super friendly. It's super friendly guy to pricing
and value based pricing. And it's very inclusive in its language. And it's it's funny. It's
personal. So can't say enough good things about it. So guys, check that out. I'm Dan mall listening to the future.
Thanks for joining us this time. If you haven't already, subscribe to our show on your favorite
podcasting app and get a new insightful episode from us every week. The future podcast is hosted by
Christo and produced by me, Greg. Thank you to Anthony Barrow for editing and mixing this episode
and thank you to Adam Sandborn for our intro music. If you enjoyed this episode,
then do us a favor by reading and reviewing our show on Apple podcasts. It'll help us grow the show
and make future episodes that much better. Have a question for Chris or me. Head over to the
future.com/HeyChris and ask away. We read every submission and we just might answer years in a later
episode. If you'd like to support the show and invest in yourself while you're at it,
visit thefuture.com. You'll find video courses, digital products, and a
A bunch of helpful resources about design and creative business.
Thanks again for listening, and we'll see you next time.
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