What is Your Living Wage?
So, it's just time now to welcome our instructor. We're so excited to welcome her back. As I said, Tara has been with us just a few months before. Tara is actually a business strategist. She's the creator of the Customer Perspective Process and she's also an ambassador for the You Economy. Tara works with entrepreneurs to create truly social business models and marketing strategies. That generate more profit while meaningfully impacting customers and communities. Her work's been features on Forbes, on US News, on World Report, on Design Sponge, and she's also been on the New York Times best selling book list with The $100 Startup. So pleased to welcome back to Creative Live, Tara Gentile. (applause) Lovely to see you Tara.
Lovely to see you too.
Welcome back to Creative Life. I have to start with the pants.
Tell us all about it. Now, these have been painted.
Well, they're actually digitally printed. But they're based on a painting by my best friend Meghan Aman. Meghanam...
an.com. You can get your own pair. She also does scarves and pillows. But yeah, they're pretty fantastic.
They are fabulous and they go, so forget about my vest. This is what you need to be talking about in the lounge because these are truly fabulous. Well Tara, I know we've got a lot to get through in the next few days. Really excited to have you back. Gonna hand you that and get out of your way.
Tara, take it away.
All right, thank you so much. Guys, it's so great to see you. It's great to see all you guys out there as well. I'm thrilled to be back. This morning, today we are talking about value pricing. And so what it is to charge, what the worth of your work is. I've got a whole lot to say about this topic. Tons to say about this topic. But I just kind of want to put in a plug for that. So often I hear, creative entrepreneurs talking about I want to charge what I'm worth. And by the end of today, I want you to erase that question from your mind and start talking about what your work is worth. What your product is worth. What your service is worth. You guys, you're priceless. We can't quantify that. We can't put a value on your worth. Let's talk about what worth is in terms of value, in terms of your business, in terms of the products and services that you're putting out into the world. So that's just kind of my plug for the whole day here. Our first segment today is, what's your living wage? And I'm gonna talk a whole lot more about what you need to know to be able to price from your perspective. Later in the day we're gonna spend a ton of time talking about pricing from your customers perspective. But this morning it's about you. Before we go any further though, I want to talk to you about a big problem that I see in creative entrepreneurial businesses. And I hope, and I know actually, that this is going to sound pretty familiar to most of you. If you're just starting off in your business, you may not be here yet. But I can guarantee you, you will get to here. So what is here? So first of all, when you're starting off in business, you know, you're excited about what you're putting out into the world. You are constantly investing energy, and effort, and work into building your product, putting your service out. Maybe you're getting your website online. Maybe you're just kind of selling friend by friend by friend. And you're wins build up fast. And it's exciting. And even if those wins are kind of coming just at a time, at a time, at a time, and they're not even paying your bills yet you still get super excited about it. Because this is new. It's awesome. Oh my gosh, I'm really doing this. Right? So you're constantly on the upward trajectory. Things are going great. You're excited. All of a sudden, and it really can feel all of a sudden, you start to bottom out. And it's not that you're not still being successful. It's not that you're still not getting those wins. It's just that they don't add up as exponentially anymore. They don't feel as easy anymore. And on top of that you are hustling, hustling, hustling. Putting more and more energy into your business. And that means you are also burning out. Because that win to effort, that win to hustle ratio has started to get all out of whack. It's easy to hustle when you're seeing all the results come so fast. Right? It's a lot harder to hustle when it just feels status quo. And that's what's happening. This right here, that's what I call the micro business earning plateau. And it is a wasteland. So people burn out here and then a lot of times they drop out here. And my goal for this workshop is to give you the skills, give you the knowledge, give you the tools that you need to instead of dropping out in the micro business plateau, you go up here and you reach that big revenue goal that you have. Do you guys have big revenue goals? Yeah? Online? Do you guys have big revenue goals? I thought so. But how do you do that? What is the secret sauce that gets you from the micro business earning plateau up into the stratosphere of that revenue goal that you've set? Well, there are three things as I see it, that go into this. The first is prices that serve your customers. Now I know I said we're gonna talk about pricing from your perspective this morning. But in the end, prices have to serve your customers. They have to make sense, they have to, we're gonna talk a lot about your prices telling a story. They have to tell a story to your customer in a way that gets them to buy in. Prices can do that. Prices can be part of your marketing. You also need products and services that address your customers needs. And you need products and services that address your customers needs as those needs change. You know, a lot of times I hear from business owners, well this has been working, this has always worked before. Why doesn't it work now? Well, have you been paying attention to how your customers are changing? Have you built in things on the back end that keep customers buying, that keep up their relationship with you? Probably not. And then, the last thing is marketing and sales strategies that give you freedom. Marketing and sales strategies that give you freedom. See, part of the problem with that micro business earning plateau is that all that hustle, all that energy that you're spilling into your business is dependent on you. It's dependent on you showing up in your inbox every day. It's dependent on you showing up on Twitter every day. Showing up on Facebook every day. Showing up on your blog, whenever you blog. What if you could create marketing and sales strategies that actually feed your business without you having to be there? And this isn't just about automation. Automation is great. But this is really about creating a system that all it needs is a little tap and it starts moving faster, and faster, and faster. You can build that into your business with a solid business model. And so that's what we're gonna spend the next two and three, or days two and three talking about. So, are you in the right place? Are you in the right place? You're in the right place if you own a business or if you want to. We all own businesses. Right? Or maybe some of you are just getting started. That's fine. You know, like I said, a lot of you are in the micro business earning plateau right now. How many of you guys are in that plateau right now? Yeah? But many of you are kind of approaching it. And what we want to do is get you out of that as quickly as possible. You're in the right place if you value your own time and energy. All right? It's very easy I think, to kind of lose track of your own time and energy in your business. All those late nights starting your business work after you get home from the day job, and suddenly it's 2 am, and where did all that time go? If you want that time back, you're in the right place. You're in the right place if you want to make a big impact in people's lives. We're not going small here. You may have a business that only serves five customers a year. Ten customers a year. But how big an impact are you making in those customers lives? I want to help you set this up so that not only can you go big audience wise if you want to, customer base wise if you want to. But you can go deep. And then finally, you're in the right place if you want to create a solid revenue system. Do you want to have a system for making money in your business that makes sense? That runs itself. That's sustainable. That's what we're here to create. So I'm gonna break this down over the course of the next three days into four main steps. And we're actually gonna start with step three today. So the first is, you have to be able to understand your customers as their needs grow and change. Understand your customers as their needs grow and change. Number two. You need to create a set of offers that reflect those changing needs. I'm gonna help you set that up. Number three. We're gonna price these offers to tell a story about what you're offering. Yes, your prices can tell a story. So much more on that to come. And then, number four, we're gonna connect those offers with marketing and sales strategies that build your audience and leverage your strengths. Later on, I'm gonna ask you to think about what makes you really unique. What makes you really interesting to your customers? What makes your brand really interesting to your customers? And how can you use that to make your marketing and sales strategies more effective? But like I said, we're gonna start with step three today. That's value pricing. Everyone loves talking about pricing. So I figured, you know, we'll just get that out of the way right at the beginning. So let's get started. Tell me if this sounds familiar. This is what I hear all the time at least. You say, my customers won't pay what I need to charge. You guys have heard that before? My customers won't pay what I need to charge. Ah! So you lower your prices or you start with low prices to begin with. Right? Because you think that your customers are making a buying decision based on price. Which leaves you feeling cheap. Right? We don't want, I don't want you to feel cheap. That is a sucky place to be. (laughter) Here's something else that people say. I want to make things that are affordable. And this comes from a good place. This comes from a good heart. This comes from, you know, wanting people to be able to access whatever it is that you make. So you say, I want to make things that are affordable. So you create small products and small services that don't really deliver on larger or deeper means. You go for more quick fixes, quick wins, than you do the longer term bigger wins. The bigger stuff. The bigger changes. Because you think it's easier to sell small stuff. I made this mistake so many times. It's easier to sell small stuff. It's easier to go small and get people to buy more. The problem with this is, it ends up leaving you feeling unfulfilled and underutilized. I know I can do more. I know I can create a better piece of jewelry. I know I can create a better program. I know I can write a bigger, deeper, longer lasting book. And if I'm not doing those things, if you're not doing those things, you end up feeling unfulfilled and underutilized. And again, that's not how we want to feel in our businesses. I want you to feel like you are on fire with fulfillment. That you are completely utilizing your strengths, and your talents, and your skills. So as I said earlier, prices tell a story. Prices tell a story. When you, think about maybe the last thing you were shopping for. Maybe it was a program. Maybe it was a piece of jewelry. Maybe it was just your dinner. You know, when you go out to eat and you look at the prices on a restaurant menu, if everything's priced in the five to 10 dollar range, what kind of story do you tell yourself in your head? Well, it's probably not the best ingredients. It's probably not the most innovative chef. This may be an Applebee's. (laughter) But you know, you go someplace else, maybe the prices ar ein the 15 to 20 dollar range. Maybe they're in the 20 to 40 dollar range. Maybe they're way higher. I hope those are the kind of places you're going to eat. Those prices tell a story too. They tell us a story about maybe the background of the chef. They tell us about where they get their ingredients. I live on the Oregon coast and we go out to eat in Portland all the time. And I know that in Portland, I know that the prices reflect, I know that the places I eat reflect a high value for local produce, for local meat. For innovative ideas. And prices are part of what tells that story. So let me ask you this morning, what story are you telling? What story are you telling with your prices? When someone goes on your website, when they see your product in a store. What story has your price told them? When they flip that tag over. Or when they get to the bottom of your sales page. What story do you think pops into their mind immediately? Okay. So the chief problem with pricing is actually a lack of information. You need to have information to be able to tell a story. Right? So we're gonna spend some time today going through all the different information you need to be able to create a price that tells the story you want it to tell. And a price that's sustainable for you, that keeps you in business. That keeps you feeling abundant instead of cheap. That keeps you feeling utilized instead of underutilized. So we're gonna go through all this information. But that's really what I find. You know, people ask me all the time, what's the formula for pricing this? What's the appropriate price for an ebook? What should I be charging for my e-course? And the answer is, well you got to tell me a whole lot more. I don't know. You know, I can give you a pricing formula for a piece of jewelry. I can give you a pricing formula for a pair of pants. But even with physical products like that, that's just the beginning. It's not enough information. Just because you know how much each component of the jewelry cost, just because you know what the manufacturing costs are, just because you know what the labor and the overhead is, doesn't mean you know what the price of that product should be. We need so much more information. So, what do you need to know? First, you need to know how much you need to earn. You need to know how much you need to earn. You also need to know how your customer values your product. What does it mean to her? What does it teach him? What does it allow him to accomplish that he hasn't been able to accomplish before? What story does it allow him or her to tell about their own life? And finally, you need to know how much your customer expects to pay for that value. How much does your customer expect to pay for this value? And so this is where we get into questions of what's the market value? What are other people charging for what you do? And later on today, we're gonna talk about how vast the market is. You know, Sasha does coaching on personal transformation, on singleness, and dating. And she does that on the personal coaching level. But people also buy books on this subject. Right? They also read blog posts for free. They also go to seminars that might cost thousands of dollars or tens of thousands of dollars. All of those things are selling a very similar value to the customer. It's answering the same question. So you need to know what your customers or the customers you want to attract, what they expect to pay for that value. Are you trying to attract customers that are excited to pay tens of thousands of dollars to go to a dating seminar? Or are you trying to target the customers who are used to paying 10 dollars for a book on the subject? And that can tell you a lot about what you need to charge, the kinds of customers you need to be bringing in the door, and how you need to be positioning your products to get the price that you want to get. So by the end of today, day one, you'll know how to find the information that you need to price with confidence. You'll now understand the role pricing plays in buying decisions. And you'll feel confident in your ability to set prices. Now, keep in mind, nothing I do is an overnight fix. You will not suddenly feel amazingly confident by the end of the day. But, I guarantee you, you will have a completely different outlook on the way you price your products and that outlook will make you feel better. So that it's not such an anxiety inducing experience. You will have more confidence to set prices on whatever it is that you are making, creating, putting together. So that you are in control of the story that you're telling with the prices that you charge. All right. We need to do a reality check. What's your current hourly wage? What's your current hourly wage? What do you pay yourself by the hour? Now, most of us don't have businesses that are literally paying us an hourly wage. That are literally paying us a salary. That's fine. That's not what I'm talking about here. What I'm talking about is the way you are earning on the things that you are making and selling. So that breaks down in three, I think it's three ways. How much do you pay yourself per hour? In other words, when you sit down to make a piece of jewelry. Or when you do an hour of coaching. Or when you put together a program that's leveraged. What are you figuring as your hourly wage? What's acceptable to you? What is, you know, just what's that number in your head? This also includes the time that is unpaid. So you need to ask yourself how many hours of unpaid work does it take to get one hour of paid work? Here's a hint. It's at least one. (laughter) But it may be three, four, ten. So how many hours of unpaid work does it take you to get paid for one hour? And how many hours per week can you work? How many hours per week can you work? Most of us automatically think 40 hour work week. How many of you guys are actually working 40 hours a week? How many of you are working more than 40 hours a week? How many of you are working less than 40 hours a week? Good on you. Unless you'd like to be working more. In which case, we'll get to that. So yeah, okay great. So, but the thing is, right, most entrepreneurs are working 50, 60, 70, 80 hours a week. So another question that you can ask that's not on this list, is how many hours per week do you want to be working? Me? I want to be working about 20 hours a week. And for most of last year I was very successful with that. Then these Creative Live people started calling and I had to start working more. Which has been great. Because it means I have to work less other times. So you know, it's give and take. But on an average I really like working 20, 25 hours a week. I'm not lazy. I just have other things to do. Right? So how many hours per week do you want to work? So I'd love to get some answers for these questions from you people out here. So, Robin.
How many do I want to work?
Well first, how much, if you feel comfortable, tell us how much you pay yourself per hour. So when you're figuring in your business on what you need to make per hour, what would you say that amount is?
So here's the little tricky thing is that I actually have more than one business.
So there's, they each kind of pay me a little differently.
So why don't we start with Flourish and Thrive, since that's what I'm most familiar with and since that's what you were talking about before. And let's talk about kind of the consulting part of that. So what's your consulting rate per hour?
My consulting rate per hour, it actually ranges, but it's around $200, $150, $200 an hour.
Great. And you don't have to have a hard and fast number for this, but how many hours do you think you work for every hour of consulting? Just take a guess for me.
Oh my goodness, I don't think there's enough hours in the day that I work. Especially with a business that's just starting out.
I definitely am working more than an eight hour day.
So it's getting up there. If I say it out loud it becomes reality.
That's okay, I won't make you say it out loud. But I think, you know, that's a good way to look at it. So you're like, I'm working more than eight hours a day. Are you booking one consultation session a day? Are you booking one consultation session a week? That's a nice way to think about that. Now I know you guys have a lot of leveraged income in that business as well. And so certainly that offsets that really scary number a little bit. And we're gonna talk about leverage later in these three days. But so okay, well we know. And then how many hours per week would you like to work?
Oh goodness, I would love to have a four day workweek. So a four day work week where I'm not working past 5:30.
Yeah. I think that's a great goal. I started taking off Friday's, oh gosh, four years ago. And that was one of the best decisions I've ever made. My schedule looks a little bit different now. Now my day off tends to be Tuesday or Wednesday. But, I love working a four day week. Because, if you do need to work that fifth day suddenly your calendars wide open and, you know, we're all creative people. That extra day of openness can be so productive. But, also I just like taking a three day weekend too. So that's great. Bridgette how much are you figuring on paying yourself per hour?
Um, it's hard to say because I just started my health coaching business. So I'm still really developing it. And my day job is a personal chef right now. So I do that, you know, two to three days a week.
And you know, my hourly wage may be like $60 or $70 an hour. And that's been great in terms of, you know, I do only work two to three days a week. But now on my spare time I'm working on the health coaching and building the online business.
Yeah. So actually, this is a great example for the next question, which is how many hours of unpaid work you need to do to earn one hour of paid work. I would imagine that in your personal chef life you need to work less unpaid work to get more hours of paid work. Whereas in your business right now, you are full steam ahead on unpaid work.
Exactly. And is the personal chef business your own business too?
Awesome. So this is a great example of how businesses change over time too. And you know, everything that we talk about today are, this is information you should be regularly revisiting. And so, it's really good to know, probably helpful for you to know that eventually you can take this new business and move it hopefully to a place where you feel like you're getting paid more often for the amount of unpaid work that you're doing. And we also want to talk more about leverage as well, and how does leverage effect the amount of unpaid time that you're doing that's really time in support of work you've already been paid for that you're being paid for at scale. Great. And how many hours per week would you like to be working?
No more than 30. Like 25, 30 I think is more than enough.
Fantastic. And how many hours per week do you say you're working now?
With my personal chef stuff, like 25. And the rest maybe like 15. So enough, but the health coaching stuff is fun and it doesn't really feel like work right now.
Yes, right. Which, you know, is another thing that we're going to have to talk about because when work feels fun we tend to charge less for it. Yes?
I had a question.
So do you think you could pay yourself differently hourly based on the task that you're doing? Because it seems like, as an entrepreneur you're doing a service that is more in the marketplace, but then you're also doing business side of work that then I think I would pay myself less doing. Than the actual service I'm providing.
So this is a great question. So I would say, on a more advanced level, that if you are thinking about your division of labor such that you get paid a higher hourly wage for the real work and a less high hourly wage for the not real work, that that not real work should be being outsourced.
So a VA should be doing it. A virtual assistant. Or a graphic designer, or a social media strategist. Or your mom. (laughter) No, but seriously, a lot of times as entrepreneurs we get really stuck in the mindset of doing everything ourselves.
Or of feeling like, I'm the only person that can do this. That's actually part of the information that you need to price better too. You need to be able to know what kind of labor is involved with getting your business off the ground and what that labor costs. And you shouldn't be paying yourself less for lesser tasks. You should be working toward the goal of paying other people to do it so you can spend more time at the higher end of your wage spectrum. Okay?
Okay, that makes sense. And then ideally, you want to get yourself out of that completely so that you're the CEO, you're the business owner. Not the service provider. If that's where you want your business to go. I shouldn't say that that's ideal. But it is a really good goal. So, I want to tell you a little bit about how my wage has changed over the years.