Lesson 2 of 5
Price on value, not on hours
Price on what it's worth to them, not on your hours
The idea
A plumber fixes a leak in ten minutes and charges £120. “For ten minutes?” You're not paying for the minutes. You're paying for the flooded kitchen that didn't happen.
That's pricing on value. There are three ways to set a price, and this is the one that pays you for what you create.
Cost plus a bit
Simple, but it ignores what the result is worth to them
Copy the others
Safe, but it makes you one of many
On value
What the result is worth to the customer
What the result is worth
Your ceiling
The most it's worth to them
Their other option
What it costs them otherwise
Your difference
What that's worth to them
Your weak spots
Anything you do worse
The ceiling
What the result is worth. Above it, nobody buys
Your price
Somewhere in between, by customer and option
The floor
Your cost. Below it, every sale loses money
Two or three options
- 1
Good
The way in, for careful spenders
- 2
Better
Where most people should land
- 3
Best
Makes Better look like a fair deal
Cinemas know this trick: small, medium and large popcorn. The large makes the medium feel normal, so lots of people pick it. Price also signals quality: too cheap, and the customers you want start to worry.
Why hours are a trap
Paid by the hour
- You earn less the faster you get
- The customer watches the clock
- AI saves you time, and you lose money
Paid for the result
- You keep the time you save
- The customer sees the result
- AI saves you time, and you earn more
Today, with AI
Customers ask AI “how much does a brand film cost?” and get a range made from prices businesses publish. Hide yours, and you're left out or guessed at.
AI also cuts the hours behind your work, which is one more reason not to charge by the hour.
What AI does well
Collecting rivals' prices, testing different options, and writing a pricing page that answers questions.
Where it goes wrong
It can't know what your customers will pay, and it may quote a rival's price from last year. Check the dates.
What stays yours
The number, and the nerve to try it on your next five customers.
Check yourself
Do it in the studio
Run the numbers
What the job is worth to your buyer
The example numbers are the ones Theo uses in the lesson. Put in your buyer's: how often the job comes up, how long it takes them by hand, and what an hour of their time is worth.
Worth to the buyer
$360
a month: your ceiling
Your price takes
5.3%
of that value
Under a tenth of what the job is worth: there is room to raise the price, or to add a higher tier
- 01
Open Your report → Documents and Read Competitor analysis. Note any prices it found, and check rivals' pricing pages for the rest.
free - 02
Run the calculator above with your customer's numbers. Write the ceiling down next to your cost.
free - 03
Sketch two or three options. Put the middle where most people should land, and the top as the comparison.
free - 04
Add each price on Your report → Facts with the category Pricing and your pricing page as the source. Then every draft quotes the same number.
free - 05
Optional: Ask the CMO about this document on Competitor analysis. Where does my price sit next to my rivals?
15 credits
Done when Your prices are written as options, each with the value it gives, and the team quotes the same numbers you do.
Go deeper
University courses on the same topic, if you want to go further.
MIT Sloan
Pricing (15.818)Pricing strategy, starting from what a product is worth to the customer
London School of Economics
Pricing Strategy (MG403)Pricing through economics and psychology