How To Increase Your Prices, Get Bigger Clients & Grow (With Michael Janda)

In this article, I’m joined by the one and only Michael Janda. He’s an agency veteran and havet built a solid 20 person strong agency with the who’s who of clients from Google to Disney, to Netflix, and many, many more household name brands.

He’s also a business coach and the bestselling author of Burn Your Portfolio and just a genuine all-round nice guy today. He shares his vast experience on how to increase your prices, get bigger clients and grow your agency. 

So if you want to learn the principles of pricing, The core pricing structures and how to upsell your clients to strategy, then stick around for this episode of the Brand Master Podcast.

In this article, I’m joined by the one and only Michael Janda. He’s an agency veteran and havet built a solid 20 person strong agency with the who’s who of clients from Google to Disney, to Netflix, and many, many more household name brands.

He’s also a business coach and the bestselling author of Burn Your Portfolio and just a genuine all-round nice guy today. He shares his vast experience on how to increase your prices, get bigger clients and grow your agency. 

So if you want to learn the principles of pricing, The core pricing structures and how to upsell your clients to strategy, then stick around for this episode of the Brand Master Podcast.

How To Increase Your Prices, Get Bigger Clients & Grow (Pt 1 with Michael Janda)
[The Video Breakdown]

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Junior Designer To Art Director (Michael Janda)

Stephen Houraghan

I love your story and where you’ve come from because I listened to a podcast a while ago, I can’t remember which podcast it was on, but you were telling them about your humble beginnings.

You had that job as a starting off. The one that you kinda didn’t want to take, you took it because you couldn’t get your foot in the door at an agency, but it was designing business cards at a print house. And then, you rise from there, it is astronomical. 

Can you talk us through those humble beginnings and how you were kind of feeling at the start of your career and how you rose so quickly and got to where you got?

 

Michael Janda (Summarized)

It was a blow to my self-esteem, I graduated from University and I’m submitting my portfolio to agency after agency trying to land somewhere and thinking that I would be able to cause, you know, you had my degree and it was getting no traction.

And finally, after it was like two months of job hunting, I got my first job offer and it was at a coffee store.

That was the prepress coordinator, was my title. And I think that for somebody like me, where I’m driven so much by my own competitive nature like I don’t want to settle for mediocrity in my life. 

And so when I couldn’t get a job of anything of stature and all I could get was this copy store job. It just fueled me for years to go and try and

Prove to myself and my competitive nature of proving to everyone else in the world that I was better than that first job that I got.

So I just again self-educated, it was the late nineties. I started learning HTML and flash when it came out and I’d spent $2,000 on my first little computer and just on a credit card. We

had no money, my wife and I, she was still finishing school, but I needed the tool to be able to practice and so I just got after it.

Then within four years later. I was a creative director at Fox studios, living in Los Angeles, managing a team of 50 people and. It came, 

I think more out of not so much my ability to design, but my ability to lead people to speak confidently, to lead a room, to organize a team, to complete a task, all of those kinds of things, to mentor and shape other designers to provide what we needed.

That’s where I think a lot of my success came from, not so much that Mike Janda was the greatest designer in all the world. I sometimes think I’m like one of the most successful mediocre designers that ever lived because I get it and I’m good enough, but I’m not like some of the design superstars that are out there.

3 Principles Of Pricing Your Work

Stephen Houraghan

What I hear you speak about a lot and because you have the chops, you have the experience, you’ve been there and done that is in around the principles of pricing, your work and working with clients and doing it in a way that’s systemic and it’s not, you know, pulling numbers out of thin air.

Talk to me about your main principles of pricing, your work?

Michael Janda (summarised)

So I kind of reverse-engineered how I started thinking about it. When I started trying to write a book about How Do I Price This Stuff? And I had priced my agency over that of my agency run, we did over $30 million in revenue.

So that’s a ton of pricing engagements and then to do it at a sizable profit margin, you have to really understand what you’re doing. To be able to do it. And so I had a chapter in Burn Your Portfolio that I wrote back in 2012 and 2013, that was called the Fixed Bid Pricing Dart Board and it came out of the idea that 

We throw a dart at the board and then we choose a price based on where that dart hits.

But if we dissect the board into three strategies that we’re going to understand, then we have a lot better chance of hitting a number that’s actually gonna work for us. So it’s not just any number from zero to 1 million. 

It’s actually a set of numbers that are strategically calculated and then we throw the dart and decide where we want to have that be.

So anyway, to answer your question, three variables that we look at variable, 

#1. Production Cost

How much does it cost us to produce the work? 

So you got to understand how many hours you’re going to put into it and what your cost is per hour. How much do you need to earn per hour to keep the lights on in your business and in your life? So you understand that that’s variable #1.

#2. Market Value

What do other people like me charge for this same thing? 

Now the like me is really important because people like me are other people in my phase, other agency owners and staff. When my agency had 20 employees, I would look around and say, okay, well, other agencies like us are charging $200,000 for this thing.

But a freelancer working out of their house, living in a middle-tier market or country is charging 20 grand for the same thing. But in my agency, it wasn’t, I couldn’t compete with the 20 grand. And that freelancer can’t charge 200 grand because they’re not bidding on it from an agency standpoint. 

So market value is dependent upon people like you, what are other people like you charging? 

So that’s variable number two that we have.

#3. Client’s Budget

What does this client even want to spend to solve the problem that they’re coming to me with? 

Do they need a new website? We’ve determined that. That’s the thing that they actually need. Now, how much do they have allocated to that? 

We take those three variables, production costs, market value, and client budget. And then we decide, where are we going to price this project somewhere in the vicinity of the ranges of those three variables.

When we’re busy with tons of work, we’re going to bid things on the high end because our price or our hourly time is at a premium.

And when we have no work we’re going to bid things on the low end to increase our chances of landing the project.

So there are a lot of different things that we take into consideration when we’re pricing.

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Pricing Structures: Hourly vs Fixed Cost vs Value Based Pricing

Stephen Houraghan

Businesses are all about systems. Now there is no right or wrong way to do this, but you definitely need a system. And three of the most common pricing structures that we see time, and again are hourly, fixed cost and then value-based.

I’m sure you’ve read the book The Win Without Pitching Manifesto by Blair Enns and there’s, there’s a lot of talk in the future about value based pricing.

Talk to me about your philosophy on pricing structures and what you think of value based pricing versus hourly or fixed costs?

Michael Janda (Summarised)

Here is how I compare each of these 3 pricing structures.

Hourly Cost

Hourly pricing is that it penalizes you for being really good at what you do.

You’ve been doing this a long time. You’re fast, you’re talented. You can get to the solution super fast and you know, all your keystrokes and production secrets to speed up your work and you invested in the fastest machine you can get.

Now you charge less as a result of it. You have a lot of logo designers and brand designers that follow your content based on your titling, you can design a logo in an hour, and if you’re super good. You can get to the right solution in a short amount of time.

And now you can only charge the client a small amount of money because you are so good at what you do. So hourly just sucks for that reason.

Now, when we charge by the hour, if we genuinely cannot scope this project, then maybe you go into an hourly position because you want to protect your downside on that. So there are, there are circumstances when you can charge hourly and it’s the right pricing structure.

Fixed Value

So fixed bid pricing for most circumstances, this is the most profitable way that you can do work because you can factor in the value that you’re producing for the client.

You can factor in the market value, what other people are charging for that same thing. 

It rewards you for working quickly. The faster you work, the more money you make, the faster you get to the solution, the more money you make based on an hourly, based on your time. 

So it is a great way to price your work and you can have a much higher profit margin based on a fixed price or fixed bid engagement. 

This only works successfully if you have a super detailed scope, you have to detail out every single thing.

Then you gotta have a clause in there that says anything not detailed in here is considered out of scope because you’ll be battling the scope with clients sometimes as they try to add new little things here and there, and that’s where you can die in a fixed bid engagement.

If you say yes to the little ad-ons, now you can’t charge for them. Now you’re making less money. So that’s one of the potential downsides to fixed bid pricing. 

Value Based Pricing

I have a lot on the side of value-based pricing. I conceptually love it. You should be charging based on the value that you create for your clients. 

The downside to value-based pricing is that I believe that there are a lot of designers out there trying to value-based price, their projects with clients that have no business.

Trying to do value-based pricing that have no business doing value based pricing because they’re pitching value-based pricing to a client who barely understands their own business. You say to a client, and let’s just agree that the idea behind value-based pricing is you sit with the client and this is the way that I’ve seen it be taught which I think is ineffective. 

You sit with the client and you say, well, how much money do you think you’ll make on this work that we do over the next year? And you get the client to say a number to you? If everything goes right, we’ll make a hundred thousand dollars.

And then you say to the client, okay, we’ll charge you 10% of that. We’ll charge you $10,000 for this thing that we’re going to create for you. That’s just a percentage of what you’re going to make on it. So it’s a good investment for you. That’s the idea behind value based pricing, as I’ve seen it taught from a variety of YouTube videos and things like that. 

The problem is that when you say that to a client, you say, how much do you think you’re going to make on this over the next year, most of your clients, because it’s true that most business owners don’t have a good handle on what their business projections even are.

Most of them have no clue how to even come up with that number. So if you want a value based price, you’ve got to have

  1. A very seasoned and smart entrepreneur who you’re working with, who looks at their business and projects ROI on not just the engagement with you, but everything else.
  1. The other thing that you need to have is a project. That’s the right type of project. You can’t value based price business card design or a brochure or a menu design for a restaurant or a sign for a store.

How To Upsell Design Clients To Brand Strategy?

Stephen Houraghan

Now, a lot of the work that, you’ve come from this creative agency background, and the work that you would have done would have been predominantly creative work design work. 

How much of the work that you did was strateg