I have just finished reading ‘The Subtle Art of Not Giving A F*ck’ by Mark Manson (which if you would like an alternative perspective on life, I recommend reading). In the book, Mark talks about the Picasso napkin story which was new to me. If you haven’t heard it, the story goes something like this…
Picasso used to draw or doodle on his napkins when at a cafe and one day, he was asked by a woman if she could have the napkin to keep. She offered to pay whatever the napkin with his drawing was worth, to which Picasso responded that it would be $10,000.
Slightly taken aback by the high valuation, the woman pointed out that it had only taken 30 seconds to create the artwork. Picasso promptly folded the napkin away into his pocket and responded ‘no, it has taken me 40 years to do that’.
Depending on what website you visit the story varies slightly, and whether it was dollars, pounds or another currency, it was a considerable amount of money. There is, however, a good argument for not basing the price on how long the drawing took.
When it comes to selling your services, do you quote an hourly rate depending on how long it takes to do a task? Do you price your products on the value to the customer? Or how many years of experience it has taken to learn the skills you have acquired so that you can deliver what you do… and so quickly?
When talking to customers, and in my book Psychology in Marketing and Sales, I discuss different ways to price products to get the right results. A web designer, for example, might be able to create a website in one day and charge a daily rate - but if the customer does it themself, it might take days or even weeks. Added to this, a DIY website might not look as good, It might not function as well and it will most likely not convert web visitors into paying customers as effectively (resulting in lost sales in the long term).
Similarly, a training instructor, coach, consultant or security business (just to name a few specialities!) can make a huge difference to anyone’s life or business, but only because of the skills they have developed over the years. And the prices they charge should reflect this.
It’s true that you need to consider other factors when setting pricing such as what the competition is doing, how much competition there is and who your target audience is, but creating pricing based on ‘cost plus margin’ or an hourly rate could mean you are losing out considerable amounts of money.
Sometimes it can take years of practice and experience in order to be able to continually create masterpieces in a very short time. That experience has a value. What’s your napkin worth, and what are you charging for it?
The opinions in these blog posts are those of marketing expert and book author Darren Hignett.