table of funtents

1. 👋🏼 it’s me, hi

2. 💰 how to price your services

3. 💩 no bs good to knows

4. 👑 misfit wisdom nuggets

👋🏼 it’s me, hi

HI MISFITS! Hope y’all are settling back into the swing of things 🫶🏼

I’m keeping this section brief today for two reasons:

1. This is probably the most important (and hopefully valuable) episode I’ll ever write, so I want you to dive straight in.

2. You may have seen my hometown, Los Angeles, is currently on fire. I’d be lying if I said I was anything other than worried this week, so in the spirit of no BS, this section is meme-free today.

I’ll offer these up instead, without expectation other than to share with anyone impacted:

1. Free / discounted resources for fire victims (updated daily)

2. Fellow misfit and founder of travel biz rota, my incredible friend Emily has compiled a spreadsheet of places offering discounted accommodation

3. If donations are your thing, here are some options. Closer to home, my dearest cousin in the world had her house destroyed in the Eaton fire. We’ve started a GoFundMe for her family and are nearly at our goal should you wish to support.

Thank you to all who’ve checked in and others for understanding. Here’s hoping the worst is behind us and we can return to normalcy (and memes) next week 🤞🏼

💰 how to price your services

Friends, I won’t lie to you: pricing has been the most complicated part of starting a business for me.

On the one hand, there’s an abundance of information covering every pricing type out there (useful), but they’re also written with extreme confidence (“value-based pricing is BEST BY FAR AND EVERYTHING ELSE IS SHIT” - ok but why and how tho?).

Since starting keshty, I’ve experimented with 3 pricing strategies:

• time

• retainer (“subscription”)

• value-based projects

While it’s hard, it is doable and above all, necessary. You need to get paid.

Today, I’ll share my no BS experience on all three so you can make an informed decision that works best for you.

PS: I’m still ever-experimenting, so these thoughts represent where I’m at today. If and when they change, I’ll (as always) keep y’all updated with my learnings.

SaaS vs. services

Think “tech startup” in its truest sense: the formula for selling a digital product (e.g. software as a service or SaaS) is repeatable and scalable. That’s why they’re a VC’s wet dream.

SaaS products typically have a tiered subscription model with higher spend unlocking more features. You’ll often see a middle offer sandwiched between a high and low (or freemium) price point, with enterprise qualifying for a bespoke service.

Here are a few examples:

On the other side of SaaS-land, you have professional services.

For the big boys, you’ll find yourself down a rabbit hole trying to find their prices. No really: try looking through McKinsey, KPMG or Accenture and see if you can easily find their service fees.

This is partly strategic, part simply fact: there’s no easy formula for pricing a service because no two projects are the same. Each requires a different investment of time and resource, and therefore is priced as such.

the fractional COO conundrum

Note: if your service directly generates revenue for clients, feel free to skip this part. E.g. CROs, CFOs, to some extent CMOs and their associated support teams (e.g. SDRs, accountants or ad marketers respectively) can quantify value in revenue.

Now Fractional COOs, amongst other services that improve / transform systems and people, increase revenue by proxy. 

For example, fCOOs exist to enable the rest of the business to do their best (and generate maximum returns). We give CEOs the gift of time, a good nights’ sleep, relaxing holidays, a whole career’s worth of insights and a significantly longer runway.

So why aren’t founders RUNNING to give us all their money?

In general, there’s major inconsistency across fractional salaries (another one to research; spoiler: it’s hard).

Through no fault of their own, founders simply cannot compute - these aren’t typical roles with typical salaries, after all. It’s on us to educate the market.

But this is HARD, and we end up demotivated because we know COOs are the glue holding an entire organisation together, yet we struggle to translate our financial value.

The good news: as more of us trial pricing and openly share learnings, the closer we’ll get to a fractional standard of repeatable, scalable and most importantly: equitable.

1. time

This pricing strategy is simple: an hour or day rate in exchange for time.

In the UK, for example, some sources suggest £800-£1500 / day on average, while in the US, some report significantly higher ranges of $1600-$4000 / day (no surprises).

2. retainers

Retainers offer clients a fixed cost per month to access your services.

Let’s use keshty’s Scale Advisory offer as an example:

• Cost: £2.5k for 12 hrs / month for an initial 6 month commitment

• Cadence: 10 hours are spent in meetings with co-founders / mentoring their leaders and 2 are spent writing recommendations

• Remit: Unlike our fCOO offer, I only offer advice (vs. do for them)

Using this example, we can arrange the retainer as:

• Fixed: We agree / schedule the 12 hours each month to ensure they’re used

• Rolling: We keep it flexible, the client reaches out when they need and whatever they don’t use rolls off to the next month(s)

• Use it or lose it: We keep it flexible, the client reaches out when they need and accepts whatever they don’t use they’ll lose

I currently do a combination of fixed and rolling. We book 8 meeting hours in, giving the client 2 flexible hours for ad hoc needs. The only rollovers have been around holidays, which I prefer to be understanding about.

Notice I didn’t mention starting Fractional COO projects on retainer (though after the initial project term, they can transition to one if both parties are up for it).

Imagine offering 30 hrs / month with the option to roll over / use it or lose it. This is a time forecasting nightmare for me personally.

Enter pricing strategy 3.

3. value-based projects

I price Fractional COO projects (minimum 1 day / week) on outcome.

Value-based projects clearly scope, address and solve a specific pain point. The cost, then, is the value a client can expect to receive once you successfully deliver your service.

But let me be straight with you: they are complicated and time-consuming to work out, and sometimes even more so to negotiate.

The closest I’ve got to a formula is:

1. Deeply understand what the pain / getting it wrong could cost your prospect

2. Factor what they’re willing to pay to eliminate the pain / get it right the first time

3. Bring in past case studies (e.g. saving £X on a mishire, increasing revenue by £X through an operational efficiency project, etc.)

Like all things, only practice makes confident and efficient. The higher value deal should demand more of you and therefore be harder to win.

Despite many rejections, as I’ve put more of these proposals together, the easier they’ve become to draft and the more effective I’ve become at closing them.

💩 no bs good to knows

🚪 Remember your outgoings

• Don’t forget profit margins, overhead costs and sick time / holidays when building your prices

• If you’re a VAT-registered, limited company paying yourself a salary or into a pension, you’ll also need to consider the cost of your enmeshed relationship with HMRC (in the UK) / the IRS (in the US)

👋🏼 Be upfront on payment terms

• I don’t split costs, have 30 day payment terms or get paid after the gig ends

• I ask prospects in the initial meeting if they’ve seen our pricing on the website and if it aligns with their budget

• I ask for payment upfront with a clear clause in the contract stating I will stop working if this isn’t paid within 5 days of the invoice issue date

• For longer-term clients who’ve always paid me, I’m more relaxed about this thanks to existing trust and dependability between us

🦠 Part gut-feel, part feedback

• As you trial and error your offer, some if this will simply come down to gut feel. Ask yourself: am I comfortable charging this amount?

• If it feels too low, it probably is; if you’ve just started out and feel you’re charging too high, you probably are

• As you get gigs and build relationships, don’t be afraid to ask clients and even prospects for feedback; based on their reactions and input, you’ll know if you’re charging too little and need to up those prices

👑 misfit wisdom nuggets

🫡 Yesterday, I posted an organised ramble on LinkedIn and the fractionals DELIVERED.

This week instead of one misfit, I’m featuring multiple - all weighing in on getting paid in cash vs. equity. 

Check out the post and a treasure trove of insights here.

Thanks for joining episode 11, misfits! As always, shout with any questions, comments or thoughts via email.

Before you go, let me know what you thought of this issue with the pulse check below! Good intent feedback is always welcome ⬇️

xo, Neds