Episode 327 -- Pricing Strategy
Episode 327 -- Pricing Strategy
Episode 327 — Pricing Strategy
In the beginning of your career as junior artists, it’s fight or flight. You will either leave the industry because it’s too hard or you’ll work hard on as many jobs as you can. You need that exit strategy, however, otherwise you will burn out.
It’s the fear that keeps you small. You are afraid of losing jobs if you raise your rates. A lot of the time, you also undervalue yourself. If you put your brand out there and it’s cheap — even if it’s great quality work — the clients will still view you as a cheap brand. It’s just pricing psychology. It’s all about the perceived value.
In this Podcast, Allan talks about how and when in your career to raise your rates, pricing psychology and creating a premium brand.
HIGHLIGHTS:
[03:43] What Inspired This Podcast
[08:50] Creating Your Exit Strategy
[10:35] Pricing Psychology
[17:00] Changing Your Mindset
EPISODE 327 — PRICING STRATEGY
Hello, everyone! This is Allan McKay.
Welcome to Episode 327! I want to talk about pricing strategy, when in your career and how to raise your rate, the importance of branding and how to make your mark and set yourself up for 2022.
I wanted to do this one to set the year with a bang — and to set yourself up for the next year. During this Podcast, we’ll cover crucial subjects on how to optimize your portfolio, how to select the right clients, pricing psychology and changing your own mindset around it.
Please take a few moments to share this Podcast with others.
Let’s dive in!
FIRST THINGS FIRST:
[01:11] Have you ever sent in your reel and wondered why you didn’t get the callback or what the reason was you didn’t get the job? Over the past 20 years of working for studios like ILM, Blur Studio, Ubisoft, I’ve built hundreds of teams and hired hundreds of artists — and reviewed thousands of reels! That’s why I decided to write The Ultimate Demo Reel Guide from the perspective of someone who actually does the hiring. You can get this book for free right now at www.allanmckay.com/myreel!
[22:44] One of the biggest problems we face as artists is figuring out how much we’re worth. I’ve put together a website. Check it out: www.VFXRates.com! This is a chance for you to put in your level of experience, your discipline, your location — and it will give you an accurate idea what you and everyone else in your discipline should be charging. Check it out: www.VFXRates.com!
PRICING STRATEGY
[03:43] I’ve talked about this to death but 2015 was a big year for me. In 2014, I was saying yes to everything and therefore spreading myself thin. I was getting to the point of having to fire clients, or the quality of my work was going to suffer. It was about ditching a couple of jobs, getting other solutions, lowering the amount of stuff I had on my plate. I decided that 2015 would be my year of no. If a job came up, I would say no to it — unless it 100% aligned with what I wanted.
[04:45] A good example of that was Eddie Murphy coming to me to work with him on the three movies he wanted to direct. The decision in my head was instant, “I’m not going to do it.” Just last week, I was asked to go to Hawai’i to work on a job. Once again, it sounded awesome but I knew instantly I wouldn’t do it. That would be putting me in an awkward situation. For you, that may mean that your immediate goal is to build a premium brand so that you can let go of cheap clients. The year of 2015 was that for me! A job had to align with what I wanted. I was hoping it would give me more time to do the things that were important to me — and I was ready to take a financial hit to get there.
[06:25] What blew me away — is that I tripled my revenue that year. I tripled it! That was an unexpected side effect. I was working with people on jobs that aligned 100%! The money was right because I was ready to push back and stand up for myself. It was really important to realize that I could ask for what I was worth. That also meant that I was available to do the jobs that paid my rate and that I really wanted to do. (In the past, I had to pass on The Matrix, Lord of the Rings, and other projects because I was booked on something else crappy.) When these projects came up, I had the opportunity to say what I wanted. It changed my outlook on everything.
CREATING YOUR EXIT STRATEGY
[08:50] In the beginning, all of us junior artists cannot do that. In the beginning, it’s fight or flight. You will either leave the industry because it’s too hard or you’ll work hard on as many jobs as you can. You need that exit strategy, however. You’re able to survive but what’s the next step? How do you get to those premium rates? You do it:
- By building your brand;
- By positioning yourself as a premium brand;
- By being selective with your clients;
- By scrapping the work that’s not worth showing.
[09:44] Eventually, when you do get bottlenecked and you have to turn away clients, that’s when you raise your prices to what you’re worth. The ones that see your value will stick around. The others can go. Getting paid more money for your work gives you the freedom to do better work and actually save money. If you get sick or burnt out, you can actually take time off.
PRICING PSYCHOLOGY
[10:35] It’s the fear that keeps you small. You are afraid of losing jobs. A lot of the time, you also undervalue yourself. If you put your brand out there and it’s cheap — even if it’s great quality work — the clients will still view you as a cheap brand. It’s just pricing psychology. Banksy, for example, sold his work for $10 one weekend in New York. Meanwhile, this work is worth millions of dollars! There are other examples of that. It’s all about the perceived value. If you raise your prices, people will value your product more and they will not treat your product as a bargain.
[14:07] It’s important to think of these things. This is why people do price testing. You can raise your price and see what people say. If a customer gives some resistance, you can always ask what they’d be willing to pay. By at least having a conversation, you can understand where you stand. You may understand your perceived value but still work toward getting the higher rate eventually. You’ll get a better understanding of what the market is willing to pay.
[15:46] By tripling your prices, you don’t have to work twice as hard. If anything, you can buy yourself more time. I have a friend who charges $30K for matte painting. But if you put the work in front of someone, they may not see that worth. But what makes a difference is his brand and his reputation. It means that he’s built his brand to where he can charge that money for his matte painting.
CHANGING YOUR MINDSET
[17:00] So what do you do to blow up your rates? You put in the time and build a strategy around your brand. What you should be doing is building your brand from scratch: Take what’s working and go back to the beginning, to put the intent behind your marketing. Figuring out what you’re comfortable living with, figure out what you need to do to get to that number. How do you get to the $100K? Go back to the start and create a business plan:
- How to raise your rates to premium ones?
- Who are the clients you want to work with?
- Who are your competitors?
- How do you value yourself out so people understand your worth?
[18:49] Another thing to keep in mind: A lot of us look at money as a bad thing. Money equals freedom. It takes the pressure of and allows you to work with people you want to work with. Eventually, you get spread too thin and you burn out. No money means you can’t slow down. You’re destined to burn out unless you raise your raise. It’s really important to raise your prices so you can get rid of cheap customers. That will allow you to deliver a quality product and become a premium brand. Then you can expand: You can hire other artists while you can focus on bringing more work, customer service and quality control. You will continue to grow and build your business.
[21:34] It’s important to stress the importance of repeat clients. With repeat clients, they know what to expect and how you work. You begin to build that vocabulary. That’s how you get from $50K to $500K to half a million dollars. You do it by scaling to becoming a premium brand. If you do it too soon, you become an outsource vendor. If you can’t get these concepts nailed, your other goals won’t work out. I hope this makes sense.
What did you think? I hope you enjoyed this Episode.
Next week, I’m sitting down with David Adan, a Cinesite Lead who is also my student. I’ve talked about him a lot before. He was able to successfully switch careers and achieve incredible success. I’m really proud of him and excited to have him share his story.
Please take a few minutes to share this Episode with others. I appreciate you.
Until next Episode —
Rock on!
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