I got an email last week from a Resistance Member asking about Pay What You Want consulting.
She wanted to know two things:
- Does it work? and…
- How well?
Both fair questions.
As you probably know, I’m currently doing a test run using
Pay What You Want pricing for my consulting services (sorry, all booked up for 2014 and 2015). But before I dig into my results – and more importantly: how I engineered them – I wanted to start by asking a question…
Question: what are the highest paid professions (on average) in the United States?
If you DuckDuckGo this, you’ll find lots of top 10 / top 50 lists. While the particular order (and averages) vary slightly from one list to the other, they generally fall into three categories:
1. Medical (doctors, surgeons, etc.)
Curious, I wanted to know more:
- If these professions have the highest annual incomes, what is their hourly rate?
Here’s what it looks like for lawyers:.
“According to the U.S. Bureau of Labor Statistics, the average hourly wage [for lawyers] in 2012 was $62.93. The lowest-paid 10 percent earned $26.11 per hour. At the 75th percentile level, the hourly rate was $80.77. The top-paid 10 percent earned at least $90 per hour. The BLS noted that self-employed lawyers typically earned less than law firm partners.” (source: http://work.chron.com/much-lawyer-make-hour-24397.html)
And for doctors:
“in 2010 the average doctor earned $80 per hour…”
So to be paid like the top 10% of professionals in the United States, you need to make about $80 / hour or better…
And chances are you need to become a doctor or lawyer…
Is This the Only Way?
Is this the only way to get paid a premium?
To willfully enter a profession that requires mountains of debt and years of grinding it out and ladder-climbing to finally get paid a premium?
To be honest, I thought so.
The stats don’t lie, do they?
Which is why I didn’t think much would come from Pay What You Want consulting. After all, if people get to choose the price they contribute, no way I could make a living from it…
Except that’s not exactly how things panned out.
Results from 2 Months of Pay what you want Consulting
In the past two months, I’ve consulted with about a dozen clients.
My client list has ranged from self-employed entrepreneurs, to established tourism companies, to startup telecom companies.
And the list of topics I’ve consulted on is about as broad as the list itself (from lean startup application to PWYW pricing strategy, etc.).
I’ve had a great time doing it and have received some great feedback from clients. I’m excited to continue consulting as time permits over the next couple months simply because I’ve had such a good time doing it.
But the question most people are wondering is: was it financially viable?
I’ll let you decide:
My Pay What You Want Consulting Results:
|Average per Hour PWYW consulting rate in March||$143.00|
|Average per Hour PWYW consulting rate overall (from Feb to April)||$165.59|
|Lowest contribution per hour||$28.53|
|Highest contribution per hour||$250.00|
Another way to look at it: on a bad day, I’m making four times minimum wage and on a good day I’m making 34 times the minimum wage (or about 4 times the average billing rate of a lawyer) per hour.
3 Lessons I Learned from Offering My Services as Pay What You Want
If you’ve read my most recent book The Complete Guide to Pay What You Want Pricing (and checked out the bonuses), then you know why PWYW works. I won’t go into it here, except to say that the same rules that apply to products apply to services.
Instead, I want to focus on a few lessons learned from using PWYW pricing for my consulting work.
Rule #1. Be VERY Clear on What You’re Offering
In the beginning, I offered my consulting services ala carte.
Which is to say: I let the client decide what they want: one hour, two hours, a whole month? Sure.
This isn’t smart.
The reality is: no one can commit to that much time especially when your return could be so extreme (from zero to whatever).
I tried to mitigate my risk by having clients tell me what they thought the value would be worth to them, then commit 50% up front…but, while this was effective, it didn’t feel appropriate having people predict what the results would be worth to them.
Further, because I offered such a great array of options, it seemed like some clients weren’t sure WHAT they wanted from me but thought, given enough time, they’d make progress.
This is my fault for not being precisely clear on what it is I do (and how I do it).
I quickly changed to 1 hour sessions only (while still leaving big project consulting services open), and clarified what I do:
1. Pricing strategies
2. Client acquisition
3. Product Development framework and timeline
4. Miscellaneous online business startup questions
5. Lean business tactics / techniques / procedures
I also tell my clients to have a precise issue or question they need resolved. This means I can actually create positive change (whereas in the beginning I was mostly helping people figure out what questions to ask, which is generally a slow and painful process – and while invaluable, the client may not always realize just how valuable it is).
By getting very clear on what I was offering, I’ve improved the client experience tremendously and I enjoy the process more. Win-win.
Rule #2. Keep it it Simple (Stupid)
When I first started using PWYW consulting, I had it set up so people had to schedule a free 15 minute consulting session with me to decide if they wanted to do a paid consulting.
Then, they had to decide how much time they wanted and what they wanted to focus on, etc.
This isn’t good. There are too many variables and too many steps.
It also wasted my time (as each 15 minute session turned into a 30 minute free session with few results as there was no preparation done beforehand).
I quickly realized I need to create a standard 1 hour consulting service – you get my time for 1 hour and I’ll answer any and all questions, help you get unstuck, etc.
At the end, I’ll invoice you. The invoice is blank – you decide what it’s worth.
This is simple, clear, and erases confusion.
My rates have gone up since doing this.
Rule #3. Pay What You Want Pricing Does NOT Mean Paying is Optional
I received a couple requests from people who straight up told me they don’t have money to pay me for my services.
That’s called pro-bono consulting.
I don’t do that (with a handful of exceptions).
Pay What You Want pricing means you must pay something, although I’ve gone as far as to trade services in some cases with clients who are strapped for cash.
Again, I had to get very clear with my copywriting on my consulting page and make it explicitly clear that PWYW consulting is not free consulting.
Since then, I haven’t had a single issue with anyone paying.
That’s not to say some people contribute much more (or much less) than others. As you’ll notice, the range of prices varies, which is fine – that’s exactly the point of PWYW – that people can choose the price that’s fair for them and that they value my service at.
At the end of the day, though, if you want to make consistent money while still being generous, you have to be very clear that PWYW does not equal free.
Can PWYW Work for Your Service?
That’s a question I help people answer in my book: The Complete Guide to Pay What You Want Pricing.
Obviously, not everything can work using this pricing model, but some things can. And some things can benefit GREATLY from it.
Could I have ever charged $250 / hour for my time just two months ago?
Maybe, but I’ll be honest with you: there’s no way I would have been confident enough to do so (regardless if I provided results that warranted the price).
But now I am.
Which is another bonus of offering your products or services as PWYW: it helps you rapidly validate your product or service’s worth.
Now, if anyone asks for a fixed-rate consulting price, I know exactly what I would charge (and can say so with confidence in my abilities and track record).
That means I get paid more than the median hourly rate of both doctors and lawyers –some of the highest paid professions in the United States.
And I don’t say that to brag, but to prove a point: Pay What You Want pricing works, and can be extremely lucrative if you’re willing to put yourself and your work on the line for it.
Yes, it’s scary.
And that’s why so few will try it – and what makes it so worthwhile for those of us who take the plunge.
Interested in learning more? Here’s a free course on Pay What You Want Pricing.
Hope this article was helpful for those of you interested in using PWYW for their consulting services.
If you have any questions or thoughts, leave a message in the comments below.
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