How To Run A Profitable Business & Make Money

what is up everybody hello beautiful people do you guys appreciate what's happening in the studio today we got some advanced fancy lighting here and we're gonna keep this one nice and compact what are we gonna talk about today in our whiteboard session that you guys seem to be loving right so let's talk about it right now we're going to be talking about something about pricing as you can see about cost price and value and how we use these terms interchangeably but they mean something very very different okay so let's get into it before i do though before i do i want to just thank some of the fine folks zach who sent me some money on venmo i will let you guys know that we don't encourage you to do super chat if you want to give us money to support our cause don't send it via super chat because it takes money away from us if you want to send me money if you want to send me the future money in support of what it is that we do here if you find value in these kind of sessions i want to tell you up front find me on venmo venmo you can send me cash guys at the chris doe and you can find me right there i'm pretty much this username on almost all social platforms the chris doe i also want to let you guys know that matthew has been encouraging me to do this talk this is originally from our instagram carousel he's like this would make a good video that's why we're doing this today but this is a prelude to us announcing the business boot camp which will be kicking off probably early next year we're not sure yet but it's going to be five thousand dollar business boot camp there will be some details later on in the links below on how you can save money by being um an early bird person okay just let you guys know then after you chris if you guys want to give me money i'll thank you later and the business boot camps will be kicking off i do want to say this and if you follow the whole pricing strategy that i've mentioned before i believe this is the last time we're going to run the business boot camp at this price we're recording some new modules and we think it's worth a lot more than this the testimonials that we've been getting from from previous graduates in the first four cycles have done amazing things for their business we think this should cost more so this will be the last time it's offered at this price let's get right into it okay so when people ask you when they ask you how much does this thing cost how much does this thing cost how much does this logo cost how much does this website cost how much does it cost to run a social marketing campaign for my company how much well when they say cost what they really mean is price and i did a little research there is such a thing and if you type on the internet on google or wherever you can type in what is the difference between cost price and value and you're going to find very different things but i'm going to save you some of the trouble the kindhearted people that we are here at the future along with jonah and ricky who are joining me in the studio today i've done the work for you i've looked it up i've distilled information down to a smaller bite-sized piece so that you guys can understand the difference between these three words let's get into it so cos when people ask you about cost the answer that you're giving them may not be what it is that you think being very careful to put these things away for all the eco conscientious people that it's not being destroyed it's being saved here okay we'll recycle this okay cos cost is defined as measured in time effort for many of you guys and materials that sounds really reasonable and i'll read the definition paraphrase their cost is the amount incurred on the inputs basically the raw materials the salaries rent interest taxes duties etc whatever it costs you to make for producing any product or service okay it is the amount of money spent by the company the company is you in the manufacturing of a product or creation of a service does that make sense okay so if you are only to charge your clients what it costs the best you can hope for is to break even when you're billing hourly you are basically giving them the cost the cost of your time but you're not accounting for things like if you're using your own laptop your creative cloud subscription your your desk the rent that you're paying to be able to do the work there's a lot of things that you're leaving off the table when i was younger i think i was 16 or 17 years old i started a design firm making t-shirts i was working at a six screening company and i wanted to sell my services to people what i didn't account for back then and if you're a young person not familiar with the way the business works here is i basically charge people what it cost me to make thinking that i actually had profit and quickly after a couple of transactions thinking i should have money in my checking account i came to realize i was running at near break even or i was actually even losing money this actually caused some grief between my mom and i because she was the one who opened up the bank account she said honey you are losing money and i just could not figure it out so some basic accounting some basic business would have saved my first real business okay so when you guys charge people what it is what it costs you to make you're going to go bankrupt pretty soon you're going to go out of business because it doesn't account for any mistakes it doesn't account for when your clients change their mind about something it doesn't count for delays it doesn't account for any mishaps or things that you didn't plan for okay now when they ask you for your costs what they really mean is what is the price to do this thing with you and so now we enter a new concept which is called profit so price is what it costs you to make plus profit and this is the valuable lesson i wish i knew when i was 17 years old with my t-shirt company that i actually had to make a profit now if you get into the theory of labor and value and all that kind of stuff which blur ends talks about very eloquently i'm not going to try to do it here myself but i'm going to just try to paraphrase the concept here is that many people think the value of something is what the labor it takes to make it so if it takes a hundred hours for me to make something and i'm a dollar an hour it should be 100 but that does not account for profit now where does profit come from and profit believe it or not is rather arbitrary okay i'm also monitoring the chat here so i can see you guys chatting here and let's see where this goes okay so aly good morning from the philippines hello hi how are you doing okay let's get into this so when a client asks what would this cost they're asking what is the price of doing this and so we feel a little sheepish to talk about profit in front of them but it it is implied profit is implied okay so what is the rule okay how much profit should you include now ricky and jonah you guys have done some freelance work whoever wants to talk about this what have you included before when somebody asks you for the price of your services how much money did you include i'm just curious how much money yeah two thousand so two thousand total yeah i didn't invoice like a huge sheet of like each detailed thing i did i just gave them a ballpark number yeah which is actually pretty advancing as you're doing right there you're giving them a ballpark number and we'll get into that some other talk not for this session but how much profit did you include in the price that's hard to measure i didn't include any you didn't that's the answer i was expecting you to say that you did not include any yeah you included zero profit so you probably looked at your time right so if we were to calculate this you would write down this is the time uh did you have any other expenses um like another camera operator okay so somebody else's time right so we'll call it an assistant okay okay so this is your time here what else jonah um renting out cameras gear gear okay so gear okay anything else editing i don't know what you call labor that's still labor it's still your time and other than that i think that's pretty much it okay now let's cut to this so that people can see what we're doing here so your time which is measured in labor uh somebody else's labor your assistant and some gear how did you know how much you charge for your gear i'm just curious how did you figure this out i think i looked up what other people were charging for their rentals yeah okay how did you find out what other people were charging like a rental house yeah runs okay perfect you did it the right way so you found some kind of industry standard right the standard rate of what it costs to rent gear and then you put that back into your estimate i'm assuming right yeah okay perfect so that's really good because i didn't know that one yeah me neither yeah some of us forget to charge for our gear you know why we say to ourselves well i own it yeah i'm not really renting it is it dishonest for me to ask for that and no it's not dishonest it's actually the cost of doing business notice i'm saying costs here right because who's going to pay for that equipment so you know that cameras especially anything with technology it has a shelf life that means that the longer or the the longer period that expires between when you bought it and that date the less valuable it becomes if you buy a brand new car and you drive it off a lot it's already worth like 70 less just by you driving it off the lot okay so cameras and certain things especially things that deal with technology they just go down in value so what would happen here is if you only build for your time your assistant and not for your gear is when you went to go and replace your equipment if it broke if a new upgrade was necessary to meet the standards of whatever your clients needed you would have to make an investment in that with money that you don't have so what we need to do is we need to recuperate that but what it doesn't account for here is any profit okay so it means that right now if you run the job successfully all you've done is paid yourself so one concept that i want you guys to start to become familiar with that we'll dive deeper on another discussion but not today is who is managing management who's managing all these people so we're missing a layer of management here like a producer coordinator there's administrative time that we're not accounting for here which we need to kind of think about okay and then we need to make profit for example so by the time that you finish 12 months of working you want to have profit left in your checking account after you've paid all of your expenses paid for all the labor that has worked on a project you still have money left over so now that you know this concept about adding profit into your estimate how much profit might you add well there is no easy answer to this but let's put into here okay let's put it into this equation here so let's assume what's a reasonable profit amount to add what have you heard on the street 15 15 20 20 okay i'm going to try to guesstimate so this is uh 25 percent so i'm gonna say like about that much okay roughly guys uh don't get the uh the measurement tool out on me and say chris so we're gonna call this profit here and we're gonna say it's 25 of this pie and you need to save this so i will write here 25 does that seem reasonable to you guys yeah okay i realize i wrote this in a way that nobody can see it i'll i'll fix that problem contrast contrast contrast ricky's going to be lecture on design right now let me tell you something about type will you please teach me something about type ricky so 25 profit and this area here we're going to call cost okay i'll do this in red because people usually associate red with like bad things that's basically what it costs you now you may have heard me say this before that in some instances i may mark up a project 300 400 i can charge in excess in multitudes in orders of magnitude more than what it cost me to make for example some of you guys have followed us on the ole's design example where i was able to build a lot more than just a logo but what it cost me to make the logo is not what i charge my client so this range can actually be as little as five or ten percent which some businesses survive on that little profit margin and some businesses can be as much as well i don't know let's do the inversion of this let's try this where it's like that much okay where this piece of the pie now doing much better on the drawing on the side okay with that is the profit so i'm going to say this is 80 profit now wow yeah so ricky why'd you say wow that would be really nice yes it would 100 profit would be amazing but okay but do you have any other reactions behind besides that would be really nice i'm really under charging my services here well not yet because we don't know what's involved here i'm just saying the range can be quite drastic it could be very dramatic so it could be anywhere between five percent and say eighty percent even more sometimes you know depending on the business so do you guys have any questions about this so far i do not no do not are you sure i'm i'm teaming you up for a question here you are i am i'm hoping that there's a question i know i should see a question here i don't see one well one question would be chris how do i make more of that and what factors drive that up yeah what made you decide that i could be on the right side of the circle well we all can but we have to start to learn a little bit about business and what drives this thing okay okay and i'll get into needs and wants in a little bit right maybe i'm probably going a little bit deeper than i had initially planned for this whiteboard session and do me a favor guys if you're watching this if you enjoy these whiteboard sessions the whiteboard sessions that i'm doing with you go ahead and like this video right now and drop us a comment when you're watching this if these videos continue to perform well and my metric are performing well is can this get to like 50 000 views within a week if you get into 50 000 views i will leave the video up if not i would take this video down and just put it behind a pay wall oh yeah so i'm going to reward you for watching for sharing and pushing this thing out our goal i'm going to write it up on the board here is to get 50 000 views 50 000 views in one week should be able to do this because basically i am teaching you how to do something there's no sales pitch here if you can do this if you help me get to 50 000 views we'll leave this video up and we'll leave it on the channel for as long as we leave all our other videos on the channel now usually what happens here and one big factor that determines the amount of profit is risk risk okay and and peter drucker the famous peter drucker said that all in business all profit comes from risk who is taking the risk let's understand this for example for a second do you guys invest your money in the market at all 401k you got a 401k okay but where do you put the money in in investment do you go mutual fund or you go tech stocks or what do you do commodities i've heard mutual funds and iras but i do not do those so i do not basically both you guys don't really invest right now but let's talk about this in my wheelhouse right now now watch this yes it's not quite in because you guys are fairly young you've not been working for that long so there's probably not even a lot of money to talk about right so when we talk about uh return on investment roi return on investment okay if you were to put your money in a mutual fund or something they might promise you a five percent return right and when we get a five percent return we would do this only if what if it were really safe if it felt really safe right so this is going to be considered a safe investment that you're not going to lose it but if we go on the other side and we we invest in some speculative tech stop stock okay like uh we're in the venture capital space where there's a high failure rate one of the biggest ones right now is we work you guys know about we work yeah they're going it's worth a gazillion billion dollars and now it's worth like they might go bankrupt so there's a there's a lot of volatility here so this is volatile but why would we invest in something that's volatile because we expect a high return on investment and what kind of return investment might we expect 80 yes no actually it would be like like uh 20 000 times our investment oh my god it's that much yeah because you remember when um we had gary vaynerchuk on our show and asked him what's the best investment you've ever made and he says it was in twitter and i invested ten thousand dollars and i got millions back wow so this is why people get into it so high risk high risk on this side high reward low risk low reward okay so this profit has a lot to do with it who is willing to take the risk if you take the risk okay for for example right now if you were to do hourly building which camera am i looking at this one a cam akin this one if you were doing hourly billing who's taking the risk you or the client who's taking the risk the client the client is taking the risk because you have no risk if you work 40 hours you get paid 40 hours if you work five you get paid five so at some point in your work career the client may say you know what i'm taking all the risks because you've put in two thousand hours and i'm not getting anything i actually want you to give me an estimate on what it's going to take how much it's they're going to say cost but what they really mean is price what's the price for you to do this because i want one fixed fee so then you enter into this world and you have to start to figure this thing out now without knowing all the ways that this job can go wrong you have to assume risk what if the client changes their mind what if they don't like this work what if midway through some other stakeholder comes in and changes things what if there's things that you don't think about the unknown unknowns that come into play so then you add more profit you add you increase the price to accommodate the amount of risk that you're taking this is your first step into becoming an entrepreneur a business owner in that now you're assuming some risk all entrepreneurship has risk involved in it so i hope that makes sense to you okay ricky and jonah does that make sense does it make sense to our uh people who are tuning in let me take my jacket here yeah is everybody clear yeah we're getting a lot of likes now too after you ask okay cool great i have to scratch my back here this thing is pokemon all right so if there are no other questions i'm going to move on so we're going to build on each of these concepts so it's very important so far we've talked about cost now we've talked about price but what about this thing called value the value thing everybody needs to know about value and value is subjective it's dependent on the buyer to determine value most of us think it's up to us but i'm going to tell you something right now if i wanted to sell you my watch if i wanted to sell you this hat who gets determined the value who gets to determine the price the buyer okay so let's go one at a time who determines price the buyer the buyer or the seller this is important who gets a determined price seller why do you say that because they're the first touch point they're the person that has to they're the person that has to put it on they have to sell it if there's no pricing that's not a great explanation you're right by the way yes you're right okay no you're right don't guess the other way now people don't understand this but the the seller and i make a good i get to determine the price right if i price it too low i might sell a lot but my margins are going to be really thin if i price it really high i might not sell a lot but my profit margin is going to be really big and we we've talked about this in the last episode on pricing right that sometimes to sell more product you actually have to increase the price so the buyer i'm sorry the seller gets to determine the price okay now here's the thing we're going to get into this what are you giggling about ricky that i knew it well you had an answer it was a 50 50 shot but yes you did have the right answer very good so buyer i'm trying to be less cocky you guys i'm trying to be more human okay now who gets to determine value i know this one you do yeah what is it it's the buyer the buyer and why do you say that can you give us another in-depth answer like before yes because i don't have to buy um what the seller if they say a price i don't have to buy that price i could choose to not buy it yeah you don't have to buy it exactly right so you get to say to yourself is this fair to me is this based on my needs and wants so the last time we had this episode right we we did a sneaker right ricky has encouraged me to draw more because he likes to see me draw i do so i would do my best to do some drawings here so we had a shoe right and say that's the nike shoe trying to draw talk and think at the same time it's kind of tough sometimes okay so that's your shoe right although i think i drew a converse shoe okay it's cool now nike gets to determine what they get to determine the price right so what's are you into nikes sure okay name name a model um the air max air max you know you and i are thinking the same today air max i was like i don't know many shoe names so air max how much does the air max go for standard no limit you know we'll say a hundred dollars hundred bucks let's say 99 bucks okay 99 now for some people they're going to see this aroma maxi that is way too much and for me i have many options to buy before i get to the air max but you being somewhat of a sneaker aficionado a thing you like nice things and so you're like dude that's no problem so you get to say that's fair so some something that confuses a lot of creative people is this is that they think that if they set the price too high that they're taking advantage of the customer the buyer you guys ever feel that way raise your hand in the audience yeah okay so here's the thing would they buy if they didn't see value in this thing can i force ricky through all powers of manipulation if he doesn't value this thing would you ever buy ricky what's something that you see other people spending a lot of money on and you shake your head like that's stupid food i like that [Laughter] way to give me a curve on that when you say normal like a consumable um car it's a very expensive car okay like an expensive car right but you actually drive a pretty nice car yourself you know you could have gone with the difficulty you went with the nissan maxima right uh nissan altima yeah ultima so you you could have gone for the sentra or the what's the baseline model that they have uh i don't know i think like the center like the note i didn't yeah it's my card no i mean there i mean you could buy it you could buy a lot of cheaper cars you could have okay but you wanted something that you know you're gonna have a nice whip right it's like you gotta have something yeah yeah yeah so so you could say like for me for some people like diamonds oh okay okay like diamonds okay like precious stones uh do you do you believe in those things no me neither thank god well we're not getting married so it's all right okay so there's a diamond here you know ten thousand dollars for an amazing flawless diamond beautifully cut sparkles in the light that's worth ten thousand dollars then for me it's a rock it's a shiny rock is what it is i don't see value in that so you can't convince me to buy this no matter what you do no matter how many ads you run on the beers or whatever like a diamond is forever so this is the thing so first of all you guys need to understand is when you set the price the buyer gets to determine if it's valuable to them and if the perception is is more value than what they pay a deal is done they buy so when value exceeds price buyers give you money everybody needs to write that down say one more time when value exceeds price people give you money thanks for the smash zoom i appreciate it we're having a good time here you guys it's all okay the old me would be like what are you doing i'm trying but this is a newer cooler more improved version 2.0 of crystal okay so everybody understand that so far so there cannot be such a thing unless it's extortion or bribery or blackmail or you're holding somebody at a gun point the buyer gets to determine the value let's take a couple of more examples into play and see how this works now are you guys familiar with the concept of the this word called keystoning the double keystone model i am not are you familiar with it jonah no okay i want to introduce this concept okay we're about to learn so there's a manufacturer and that could be you well and you could say it's creative too right and you're one part of the supply chain and then somewhere on here is the buyer the customer okay i'm not mapping the space out and sometimes there's a middle option here somebody will call this the retailer and i'll explain how this all works and the retailer could be an agency that's bigger than you and we'll we'll examine it one way and we'll examine it how it applies to creative people sorry i'm just getting my markers out here i need to wear my smock i think i need to wear my smock here yeah okay so a manufacturer makes something and they need to sell it okay so we're talking about say shampoo or something okay okay shampoo the manufacturer wants to sell it for five dollars okay to the retailer they want to sell it to the retailer because usually the manufacturer like procter gamble they don't sell to consumer directly they don't have customer service they don't want to display they don't want to deal with returns they just want to make a great product let's just say okay so for the manufacturer to make money they have to make it for less than two dollars and fifty cents they need to keep it less than this okay because they need to make fifty percent profit here now if you guys ever watch a show like shop shark tank or dragon's den they always ask these questions of the entrepreneurs what is the cost what do you sell it for and they're looking for this ratio so if you sell something for five dollars and it costs you four dollars to manufacture they're gonna say there's not enough profit in there for them so there has to be usually about 50 so they sell it to the retailer whenever you go to buy shampoo and then the retailer buys it for five dollars okay so they bought it for five bucks and how much are they going to sell it to the consumer for i'm going to guess you guys 10 12 10 is the right answer 10 just double it okay they're going to sell it for 10 and you the customer are going to buy it for 10 dollars everybody clear on this yes so it only costs costs two dollars and fifty cents to make wow and what did you pay i paid ten yeah so to understand this a little bit better it and costs cents to make now if the manufacturer sold this to their retailer with zero profit in mind how long are they gonna stay in business ricky not very long chris like a very short amount of time so they add profit and their profit in this case is two dollars and fifty cents so they're doubling it they're doubling the price right or with the cost and that's how they get to that and so you take this chunk right and then you go to the retailer and they add their profit to it so this is what it costs the retailer right it cost them five dollars so they add their profit so they're going to 2x it too and then that's the price you the consumer pay so i i i hope i haven't lost too many people i think their eyes are rolling the back their head i guarantee you guys if you can understand and stick with me just for a little bit while longer because we're almost done i only have three more pages here three more flip charts here if you can stick with me if you learn some basic business concepts one is you'll make more money you'll sound a lot more credible when you're speaking to your client and perhaps and this is like the probably the biggest benefit you can actually have a real conversation with them about their business and how doing something may may or may not make sense for their business everybody understand that so far i'm gonna pretend like you do internet i can't really see your talk to you right now okay uh thank you ali omar for saying he's loving this okay so this is the consumer price so you see there's a disconnect here between price and cost because it includes profit now something interesting is happening manufacturers are starting to sell to the customer directly and we can see this now via kickstarter campaigns a manufacturer can bypass the middle person and sell directly to the customer that benefits two people you the customer can buy a good for less let's look at this model here okay if the manufacturer goes to customer direct and this is going to make a lot of sense in a second customer direct okay they can sell it for say 750. previously the price here was ten dollars right they can sell it to you for 750. they now make originally 250 plus five dollars they've now doubled their profit they've doubled this profit now okay and you have saved how much have you saved ricky 25 so it costs less for you to buy and they make more money this is a win-win situation a win win i love shampoo you like this right yeah ricky any questions so far no this is really clear okay super clear everybody so far so good okay this is known in the retail world as the double keystone model because it goes out and it goes out again so there's they're both marking it up twice now i i said in a second it's going to make a lot of sense to you because i'm going to bring this home about creative services now you're saying chris i don't i don't manufacture anything i'm a creative human being my product is my creativity and the time that i put into something right is there a model where there is a middle broker a middle buyer of your services yes there is so this usually happens when a bigger agency or studio usually an ad agency or a design studio probably 30 or more people ish they need subcontractors they need someone to do logo design maybe they need somebody to develop the website for them or somebody who can do animation and so they hire out people and then they determine their costs together and then they go and sell it to the customer which is the end customer the end buyer okay so if you can have the ability to sidestep the middle person and go sell directly to the customer you will make more money and they will spend less money so the middle person for many of you especially if you're watching this from a developing country you might be working with fiverr upwork freelancer or any one of these other sites so the software in the middle is brokering the deal and they're taking the money they're taking the money from you and they're taking the money from you so what we have to do is we have to learn how to brand ourselves we have to learn how to market we have to learn about customer service and sales but if we do that we can double our profit so if you learn this if you're able to apply from the last 15 minutes of what i've been talking about you could very well double your income for next year so we should set aside some time right now let's take a moment and say in 2020 what kind of income are you going to make what i would set your goal as to be double what you did this year so 2019 let's say you did 50 000 in sales this year say next year you do a hundred thousand dollars by applying these principles that i'm teaching you today for free i want to take a moment again to mention my venmo account you guys want to feel free no no strings attached there's no obligation i'll give you nothing more than what you're getting right now except for the promise i'll continue to make content for you is you can go to venmo v-e-n-m-o and you can send me a donation of whatever size you want a dollar ten dollars 200 500 whatever you want i'm at v chris doe you can take me out to lunch i can take you out to lunch yeah no no strings attached to this okay so now let's talk about another concept i wrote on here i almost forgot the t-shirt the t-shirt so here's the interesting thing about value we know that you can buy a three pack of t-shirts like haynes you know the ones that michael jordan is hawking out there haynes three-pack t-shirt at target for probably about ten dollars right ricky is that about right yeah so you can buy some hanes a three pack t-shirts for like 9.99 on the other side there's a designer called james purse and he sells t-shirts for how much do you know i have no idea uh somewhere on the internet they'll look it up for me but a james purse t-shirt might cost you 40 50 or 60 i haven't bought one in a long time but they're super soft you know there's this thing called pima cotton now you know pima cotton is like the most premium cotton and when you touch it it's so soft and the cuts and the colors it fits differently and it feels really good and that same t-shirt just for the argument's sake let's just say it's 39.99 for one shirt for one shirt same purpose same function so how is it that two t-shirts from the outsider perspective from an objective point of view are exactly the same but subjectively they command a very different price what's accounting for that the buyer is placing a lot more value yes and why do they do that because they're using premium products and their branding okay it's 1.35 well done 135 dollars at a one 135 that'll one oh 135. yeah it's going up a little bit yeah did you just look it up jonah yeah you just looked yeah well done jonah 135 okay it's gone up a little bit since the last time i checked okay okay so it's 135 for our t-shirt versus uh basically three dollars for one shirt wow so we're adding 132 dollars that's why previously remember this guys bring this chart back here remember this remember i said there's a wide range of profit from 5 to 80 so we need to figure out why this is happening and we're going to get into it okay okay there's a driver there's something that's secret that's happening inside each person to make them want that shirt now i'm sure most of you guys that are watching this especially people are commenting right here are probably sitting there thinking this is insane 130 135 for a t-shirt that's the stupidest thing i've ever heard of right yet you're driving around an audi or bmw yet you're sporting a fancy luxury watch like maybe this one or a rolex or something like that okay or maybe you will spend 300 for dinner so we all get to determine what's valuable to us and this is why i want to say one more time the buyer determines the value the buyer you get to decide what's important jonah do you splurge on anything i know you do film stuff yes you do yeah yeah you old school guys you should film again but you are going to buy a three or four thousand dollar camera with the 2 000 lens because you value this thing whereas your mom your dad or your cousin your brother somebody's like dude just get point and shoot my iphone's great honey why are you why do you need that they all take pictures right so you assign a different value to it now there are technical differences for sure but the biggest driver is something else it's emotional it's your it's what you want to feel we'll get into that let's say we're going to talk about logo because this is very relevant to our community the logo the logo let's assume you guys both have some kind of business right so ricky i remember a little while ago at adobe max you wanted to start a clothing line called the chill boys i did we're having some fun with it you were designing a logo it didn't turn out well no because it didn't happen now let's assume you have some money and some ambition to start a company how much would you pay for local let's say i could design any logo in a week's time let's just say and i would design a logo for you how much would you pay to get chill boys logo that you could own outright um i would pay two thousand dollars for that you would pay two thousand we should have been talking dude oh my god you should have been talking to me yeah all right i think you messed up on that one chris i think yeah there's an opportunity that was dropped i won't miss it again so ricky says two thousand dollars for chill boys logo we'll follow up with you later okay you also do some freelance work right yeah and then how much would you pay for a logo like 500 500 you cheap bastard okay i'll splurge it on the logo you don't i guess your business is not that important see my business is important jonah yeah i think you're gonna say i thought you're gonna i'll do ricky and say 10k dude it's a freaking 2k is chump change i'm going places chris okay so here's the thing i could design a logo for both of you in a week's time you guys have some confidence i would be able to give you something with a week's worth of work i mean if you send me your resume maybe we can maybe we can talk yeah i'll send you my resume right so you i would be able to do it so why is it that one week of my time is worth something totally different to the two of you how could that be see like i can sit there and shout and scream from the top of the building to jonah joney you should be paying me at least two thousand dollars and jonah's like you know what it's really just not worth that much to me it's just not i don't see the value in that so no matter how smooth of a salesperson i am no matter my pedigree which you know what i've been able to do you're just gonna be like uh-uh just like i'm not gonna buy 135 james per shirt just not going to do it you understand here so a lot of people ask me this question how can i convince the buyer that it's worth more you just cannot you cannot do this all you can do is to help them understand that the business problem they're trying to solve and it happens to line up with the logo you've done yourself a favor okay this is not to say that there aren't techniques to negotiation and talking about value but you you can't invent value in the buyer's mind if one doesn't already exist so by asking them questions while scaffolding while doing discovery you can help them to realize the value in their mind and if they agree with that then the price will go up okay let's move on how many people are watching now five hundred and twenty four five hundred twenty four six forty three is what i'm seeing six what oh six forty three six forty three guys we're doing pretty good here yeah this is good this one i should have warned everybody up front was going to be a media episode just like it's not one of those impossible meat things okay let's get into it what are we talking about coca-cola here for i should have done this differently i should have done like this okay hold on pretend you guys didn't see anything i'll cut away see what cut away cut away jonah stay over there while i like doctor this thing up here for a second give me one second no no no we're thinking on our feet you guys we're still good okay there we have people commenting chill boys i know dude okay i'm sure uh some very talented designer can help ricky out for less than 2k i would suggest you spend very little on this venture of yours but anyways let's get into this now well that was for you chris that was for you i would pay that much yes i i see thanks for clarifying i appreciate that i'm feeling it right here i would still pay you 500 no we have three cans of coke that are identical objectively exactly the same these are 12 fluid ounce 140 calorie cans of original coca-cola classic it's the real thing is that what they say no i don't know it's the real thing it's the real thing i don't know i don't know we're nobody's paying attention anymore to their marketing so coca-cola uh you're maybe not spending your money wisely here but who am i okay anyways if you go to a wholesale place like costco you know where they sell you things in bulk you're going to pay one price for the coke if you go to a vending machine you're going to pay a different price for this coke and if you go to the movie theater you're going to pay yet a different price for the same amount of liquid and what is the determining factor on that i would love for you guys to read a couple of questions or comments from the audience while i go get some supplies i'll be right back okay you got that yeah so do you want to just read give shout outs and that kind of stuff so the question is what would change the price between the three sure okay is that what it is what do you think it is i don't know i wasn't paying attention oh my god for use okay per use per use the deluge okay don't show them what i'm doing right now all right all right just go to the wide while i work on this a little bit here the location we have someone commenting the location i have to think of my feet i think i remember you talking about this so i i might remember the answer you might you remember the answer yeah why don't you just read uh some comments not not even questions like shout outs and things like that somebody think oh okay um go ahead yes purchases they get more thirsty at the movie theater so that would uh determine it maybe you get more thirsty i don't know you thirstier at the theater now people just want to coke that's okay coke we're looking for a sponsor i see someone commenting that i remembered yeah you remember the answer should i say it no no okay we're gonna get into it this is good so you can say their name i think uh jason47 got it you know give them a shout out you lost it the moment's gone oh they're coming in so fast okay forget about that guys let's get back into this so if you go and buy this at a wholesale i'm gonna do it like this now it's totally interactive whiteboard not right and you're going to pay basically i've done the math 30 cents per serving 30 per serving and it's cheapest to buy it's the most inconvenient because you got to drive out to costco the warehouse place you got to wait in line and the lines for these things can be brutal you know this right it's almost like sometimes i go in my wife said go get in line right now we just got inside like go get that line because by the time i'm ready it should be ready to go okay and it requires the most planning time and effort to buy this and usually these locations are not so convenient they're kind of in more industrial areas versus like the suburbs okay next if you go to a vending machine i've i've done the math here usually the vending machines are 1.75 per serving you put in almost two dollars you get a quarterback and it's 1.75 why does it cost so much what's driving the cost difference here well this allows for spontaneous purchase you walk around it's hot outside you're dang i'm thirsty and i'm nowhere near anything but i have cash so you're paying for the convenience the fact that somebody went to costco bought all the cans of cokes put in the machine chilled it for you waiting for you to consume right on the spot it's ready to consume rtc right and that's why it costs a lot more same thing the movie theater it costs 450 per serving so this is an orders of magnitude more than if you bought it wholesale and why does it cost so much at the movie theater well a couple other things one is they have a monopoly on this you're not allowed to bring in your own drinks and where movie theaters make most of their money is the concession stand not the ticket price so they bring you into the theater they might even consider the movie itself as a lost leader which is they will lose money on you coming in and going out because they're probably paying more for the screening and the room and the upkeep and the ushers then they are making money they're making the real money in the popcorn the drinks and the candy so let's get into this the theater has an exclusive monopoly okay and we are conditioned to feel because my son and i feel this way that when we go to watch a movie in the theater you gotta get that bucket of the tub of popcorn and the icy cold bubbly drink it tastes better feels right yeah it does taste better it really does and maybe because it's on tap they've got the right level of carbonation and the syrup and they're you know it's really good and here's the thing here's the thing it triggers an emotional response we're sharing a moment my son and i so when we go even though i don't want to drink soda water or consume a tub of popcorn together i just feel like we're bonding or i remember when when i was younger and i was dating i was dating you know and i went to the movie theater with my girlfriend i felt like i was compelled to buy a tub of popcorn candy and two drinks right it can't be cheap i can't be cheap but i can't come across as being cheap so there's an emotional benefit to this is there an emotional benefit to going to costco not usually not really not really is there an emotional benefit to the vending machine maybe but mostly it's one of convenience so we know a little bit about how we can increase the price of something let's see if you guys are paying attention ricky yeah how can we increase the price of something based on what we just talked about right now attach an emotion to it how how can we attach an emotion yes you're right but how by looking at what people value okay yes dive deeper for me please um seeing what they value most and okay what do you value the most in a transaction like this convenience and um convenience that's not an emotion yet help me out jonah oh i have no idea you might want to feel a sense of accomplishment right because i can't afford oh yeah right the lucky lady gets some popcorn oh i see yeah you see what i'm saying the feeling that i can afford this we can go here there's a couple other things that we can talk about is when you have exclusive monopoly you can pretty much charge whatever you want this comes through positioning this comes through positioning okay by being exclusive monopoly okay and if you can trigger emotional responses in the person okay so when you have something that's nice when you're flossing and you got the drip on ricky with your sneakers your 100 sneakers and everything right yeah what are you feeling i'm feeling good i'm feeling why why are you feeling good i feel you feel successful i feel empowered yeah okay you feel empowered you see what they're doing to you there ah look at those suckers yeah no you're not the sucker yeah you're the sucker you feel successful okay so what we need to do is we have to understand a pain point that your customer is going through and we market and sell towards that we have to sell towards the emotion part this is where the money is at understand the pain point everybody got that understand your client's pain point so they're not necessarily buying a website what are they doing they're trying to increase customers they're trying to look like how they feel about themselves most of the clients that come and hire us to design a website for them they say chris we feel like we're a multi-million dollar brand we feel like we're a billion dollar company and what we put out there is crap it doesn't make me feel good it's like i'm driving in the junky car i'm wearing that cheap suit i'm rocking the ugly sneakers i'm rocking the fill in the blank brand and i want the nikes i want the fear of god bran i want the off-white sneakers i want the bellies i want the whatever you feel in the blank the gucci is the proudest i want to feel that way if you can help them to feel that way because at all if we all kind of boil it down to what are some of the raw emotions that driving all of us status status yes that is it ricky i don't know you're on fire today you are on fire how do you say that in spanish you are on fire today dude we are looking to to attain greater social status that's it you're done you can just drop the lens just drop the no i can go home we need that lens this is the next question should we just call it status is what i'm seeking thank you this is the sharpest you've ever been on the live stream oh jesus okay it's almost like you're trying to impress me now from that last one okay so that's it you guys this is the talk that we're having about okay this is it we're gonna bring it home i promise you guys one whiteboard session we're almost done here making this thing so now we understand the difference between cost price and value cost is what it what the sum total of what it costs to make something it doesn't include profit when you add profit that's your price the amount of price that you would charge depends on how much profit you have how much risk you're taking on how well you can understand what is valuable to the customer almost always when a customer comes to me and tells me they need an ex i always ask him is this a big important problem that you want to solve if it's not let's find one that is big and important because that's what i want to focus on i want to do something that will have material impact on your business i want to move the needle for you with you together we can do that and this is how i stand out okay if this was valuable to you guys i'm going to check on my phone later today hey do me a favor first of all like this video share as we've said if we get 50 000 views within the first week i will leave the video up if not i will take it down it's got to get to 50 000 views okay and if you want to you can send me some money i appreciate it just to support the future it's at v crystal maybe i can then buy those nikes those air maxes that ricky's rocking that i just don't buy okay and i just want to let you guys know these are the kinds of concepts we teach inside the business boot camp it's for an entrepreneur a solopreneur somebody who wants to grow their business you probably need to do north of 75 000 a year before i would even consider taking this because if you're not making that kind of money you're not ready in that case what i encourage you to do is watch and consume as much of the free content put out there and there's lots of it on our channel before you get there my goal is to help you make money that one day you can afford this or to join us in our private coaching community or something else we're going to finish it off with a quote from probably the shrewdest financial investor of our times and that is mr warren buffett warren buffett said famously price is what you pay value is what you get boom that's it i hope you guys enjoyed this whiteboard session let me know in the comments below we'll include some additional details for when the business boot camp is going up i'm wearing the goddess of designer hat we're almost sold out of these if we're not sold out already and i just want to say thank you i want to remind you guys you are not defined by your past the future is what you make it see you guys next time bye

Channel: The Futur

Views: 591,432

Rating: 4.9628587 out of 5

Keywords: business, how to, price, logo design, logo system, client, pricing design services, value-based, pricing, what to charge for logo design, what should i charge, how to price design services, pricing design, how to price logo design, make money, value based pricing, pricing creativity, strategy pricing, what is cost, what is price, what is value, value, cost, what is the difference between cost, price value, how to run profitable business, small business

Id: aNu000cQZmU

Length: 52min 23sec (3143 seconds)

Published: Tue Dec 10 2019

Reddit Comments

[u/berzma]

I’ve seen him on TED talks and others videos. I like him! The way he explain, so confident. A must to follow.

[u/ohlongjohnsonohlong]

I know some people find this guy cringy but actually this dude is 100% right

[u/MuckYu]

He mentioned you should add your laptop, subscriptions, rent etc. to your price.

Can someone give an example on how to calculate the price based on that? Like do you take a percentage of the laptop value? 10% or so? Or is there another way

[u/opposite14]

My hipster moment.

I've watch Chris before he and the Futur blew up. #theskool

He gives some amazing biz info, stuff I never would have thought about because I was a designer who didnt know anything.

He gets a little self helpy at times....but some people need that which is fine.

Finding the biz info videos, resources, books to read etc. That is where it is at.

I dont mind his arrogance. Homie is almost 50 and has built 2 businesses being creative, he knows his stuff.