I have found that value based pricing provokes more fear for me. I want equity. How am I supposed to know what value is? And if that # changes between clients, are we then not opening to the inverse of a "pay gap" or the ways we penalize poverty? What is "equal pay for equal work" in consulting? I get so stuck setting rates and have since I started freelancing in 2015, before I began my biz.
You're right that value is often very hard to define. When Phil Knight paid some college student to draw the Nike "swoosh," he paid like, maybe $200 or something. Later on, the Nike logo became worth much, much more. Blair Enns does a great job explaining how to "price the client" in his answer to the question "how much is a logo worth?"
Here's a TL;DR example of what I mean:
Tropicana paid a bunch of money to redesign their orange juice cartons. When they released them into the wild, they instantly started losing millions of dollars per month. In this case, getting the design right was worth literally millions of dollars to Tropicana.
Maybe that makes sense.
Either way, I don't have a clean answer about "equal pay for equal work" other than to say I don't think it exists in our current market. Sometimes the same work is worth more to one client than it is to another client. I'm not saying that's ethical or the way it should be, but it seems like that's what the market looks like right now.
Of course, this system definitely doesn't work for everyone--as you've already described. Right now, if we want to make money, we need to go after clients with money who have problems that involve more money. Where does that leave social impact work or nonprofits?
My opinion about this is that nonprofit problems and social impact work are actually worth a lot but we just don't know how to properly "value" them.
You know my background is in Neuroscience and Child Development. I've recently noticed that funding for preschools and early care is starting to come more from the economic development centers in towns rather than from the local tax base (how public schools are generally funded). This is because a bunch of smart people figured out how to tie important work like Social Emotional Learning (SEL) to economic outcomes for kids.
One example: researchers showed that by investing in the SEL skills of kids ages 0-5, those kids were more likely to have higher-paying salaries later on--which would then increase the tax base for the area.
Again, I'm not saying this is the way it should be, but I think this is where we are. Plus, I think there is a ton of value in social impact work that isn't being articulated to decision-makers.
Just look at real-estate developers looking to buy low and sell high. They literally say things like "follow the artists." Do the artists get anything for their work? Not really, in comparison.
Sorry this feels like not a very satisfying reply. I think my understanding is just limited to where we are right now and I don't have a good solution for how to fix the well-documented and unfair "pay gaps" and inequities baked into our system.
I have found that value based pricing provokes more fear for me. I want equity. How am I supposed to know what value is? And if that # changes between clients, are we then not opening to the inverse of a "pay gap" or the ways we penalize poverty? What is "equal pay for equal work" in consulting? I get so stuck setting rates and have since I started freelancing in 2015, before I began my biz.
You're right that value is often very hard to define. When Phil Knight paid some college student to draw the Nike "swoosh," he paid like, maybe $200 or something. Later on, the Nike logo became worth much, much more. Blair Enns does a great job explaining how to "price the client" in his answer to the question "how much is a logo worth?"
Here's a TL;DR example of what I mean:
Tropicana paid a bunch of money to redesign their orange juice cartons. When they released them into the wild, they instantly started losing millions of dollars per month. In this case, getting the design right was worth literally millions of dollars to Tropicana.
Maybe that makes sense.
Either way, I don't have a clean answer about "equal pay for equal work" other than to say I don't think it exists in our current market. Sometimes the same work is worth more to one client than it is to another client. I'm not saying that's ethical or the way it should be, but it seems like that's what the market looks like right now.
Of course, this system definitely doesn't work for everyone--as you've already described. Right now, if we want to make money, we need to go after clients with money who have problems that involve more money. Where does that leave social impact work or nonprofits?
My opinion about this is that nonprofit problems and social impact work are actually worth a lot but we just don't know how to properly "value" them.
You know my background is in Neuroscience and Child Development. I've recently noticed that funding for preschools and early care is starting to come more from the economic development centers in towns rather than from the local tax base (how public schools are generally funded). This is because a bunch of smart people figured out how to tie important work like Social Emotional Learning (SEL) to economic outcomes for kids.
One example: researchers showed that by investing in the SEL skills of kids ages 0-5, those kids were more likely to have higher-paying salaries later on--which would then increase the tax base for the area.
Again, I'm not saying this is the way it should be, but I think this is where we are. Plus, I think there is a ton of value in social impact work that isn't being articulated to decision-makers.
Just look at real-estate developers looking to buy low and sell high. They literally say things like "follow the artists." Do the artists get anything for their work? Not really, in comparison.
Sorry this feels like not a very satisfying reply. I think my understanding is just limited to where we are right now and I don't have a good solution for how to fix the well-documented and unfair "pay gaps" and inequities baked into our system.