Liam (name changed) runs an online business where he sells digital goods on a subscription basis. After approaching nearly $1 million in revenue, he experienced a mindshift. The shift was subtle and unconscious; he didn’t realize the harm he caused until later.
On the side, I consult for Liam’s company. For weeks, I tried to convince Liam to test changes on the site that could potentially increase sales to no avail. I couldn’t understand, why didn’t he want to make more money? Or at least try? Wasn’t that why he was paying me?
Exasperated, I exclaimed, “You’re essentially telling customers to cancel during every step of the process! And then they do. How can we ever expect to grow revenue?”
Liam paused. “You know what, Rebecca,” he said. “When we came close to $1 million in revenue, I thought, is this bad? Are subscriptions evil? Am I taking advantage? Is my business model inherently wrong?” His answer was to place detailed instructions on how-to cancel everywhere on his site.
More than 150,000 people have downloaded Liam’s products. He’s a smart guy. He’s also part of the Google generation where “Do No Evil” is the motto for life and business. Increasingly, that means making stuff, but not making money.
Freelancer Amber Adrian (disclosure: she works for me through Alice) recently launched a series of essays on perfectionism. Her pricing strategy was “pay-what-you-can,” with a suggested price of $5.
“I wanted to get this into as many people’s hands as possible,” she said, “to pave the way for a bigger package that will be a set price. I’m hoping that people find it super valuable and share it around and that brings in more people.”
She told me readers paid more than what she would have charged, but I still cringed. I had heard about the amount of work she put into those essays. Not to mention, she already wrote (for free) about these topics on her blog. If she believed the essays to be super valuable, why not come out swinging with a price that indicated that value?
The truth is, unless you have an extremely wide reach, discount or zero pricing does not work. And hardly anyone has that kind of reach. The majority of us (start-ups, freelancers, small business-makers, entrepreneurs) are in markets with smaller audiences and niche targets. And that means premium pricing.
Charging for your work or products, however, just doesn’t seem to jive with the so-called basic rules of the Internet. Somewhere along the line, Free! became an acceptable business model, and revenue and sales became a sign that you didn’t get how the new economy worked. Suddenly, we’re afraid to make money.
“It feels weird to be selling to my blog readers,” Amber says. “The lines are a little blurred and I’m working to draw them more firmly. I’m very emotionally attached to my blog and it feels weird to try to turn it into a business space.”
But the lines don’t get less personal when you aren’t marketing to friends. Liam spoke to me about how his customers are from modest means, and he is often more concerned that his customers save money, rather than he make it himself. Even with a healthy level of success most would be envious of – and a growth rate a fully-backed and funded start-up would salivate over – Liam is often worried. And he seems to feel bad and apologetic at his success.
A good many of us want to start and grow businesses (or nonprofits or blogs or something). But the majority of us cannot. Our minds won’t let us. We put up all sorts of barriers and paradigms that tell us no, this isn’t right. Even if you manage to get an idea off the ground, your negative nellies will tell you that the product isn’t great/has bugs/isn’t ready/is stupid and the big one: you’re not good enough.
We all tell ourselves these invisible scripts every day, and they go into overdrive when we try anything new. We literally have a physical and biological reaction that tells us to stop, back away and let it go. Financial expert Ramit Sethi has an exercise in one of his courses where he asks people to identify these scripts. Here is a sampling of what people say:
What will I do if I succeed? Do I deserve to succeed?
Not good enough – Just writing those words makes me irritated as hell. But that’s what I battle with.
What skills, expertise do I have that someone will be willing to pay top dollar for? I’m afraid I’m just not good enough, special enough, have great enough ideas to warrant the financial life I so desire.
And the fear of not being good enough, or un-deserving, does all sorts of weird things to us when we try to implement our ideas. We decide it’s more important to be right, than effective (we don’t want to fall flat on our faces, after all), and we move forward with assumptions that are clearly incorrect.
Despite the current obsession with tracking, testing, metrics and analytics in the start-up world, we still primarily make business decisions based on emotions, not data. Business risk doesn’t depend on your conversion rate, but what you say to yourself in your head.
“It did feel more comfortable for me to do pay-what-you-can,” Amber said, “because I’m still a little uncomfortable with this whole Pricing My Work thing. There’s definitely some fear involved.”
For Amber, having people pay-what-they-could helped her plow through that fear. “Most people ended up paying the suggested $5, but a large number paid in the $10 range,” she reports. “One person even paid $50. Only one person paid less than $5, at 99 cents.” Amber plans to charge upwards of $50 for her next product.
As for Liam, I asked him to reframe his worldview. Instead of worrying if he was ripping people off, he should focus on providing as much value as possible to his users. If you are providing value, there is no reason not to charge, no reason to feel bad. We don’t need to be so wrapped up into “do no evil” that we talk ourselves right out of profit.
Instead of our emotions plowing us into despair over success – or potential success – we should focus on the fact that growth, even and especially financial growth, is healthy. Of course it will take work. Things will change, and with it will come more responsibility and expectations, but only if we can accept that we’re worthy and good enough to provide mad value and make mad money in the first place.
8 replies on “The Grief of Growth”
I love this posting! This is SUCH a huge issue with my friends that are in business for themselves. Being afraid to charge “too much” which is really what they are worth. Being afraid people won’t be able to pay for it.
It faced it myself for a short time. I tried to be in business as a wellness coach for a while (i’m certified) and I also struggled w/charging a fair rate for my coaching services. I think part of that fear for me was around what it would take to find and MAINTAIN clients that would pay that rate.
Somehow charging for service became unhip and too sales-y. I feel like social media in some ways made it worse for those newer entrepreneurs because there is an unspoken rule about not selling on those venues (including blogs). To provide value through your ideas. Being cheeky, bold, interesting on those vehicle gets you a huge following — being sales focused repels the hipsters. But how to make a living? How to do both? That is they key.
I thought it was bold that you charged for your blog for a while due to this very conundrum. I think it is smart that you are still exploring this area. The new wave of entrepreneurs need to figure out a balanced model.
Thanks for the comment, Miri! I totally get that piece about fear being what it would take to MAINTAIN – we all get so comfortable with our current ways of doing things, but to make more or be more, we have to do more, and we have to decide if we really want to. I wanted to put that in the post, but it was already getting long, so I’m so glad you brought it up :)
And thanks for the kind words. Experimenting by charging for Kontrary in the beginning definitely taught me so much, and a lot of what we’re saying here and in the post was true for me. It’s taken me several years to get to the point where I can say, okay, I’m worth it. Maybe I should star in a L’Oreal commercial? ;)
I’m really happy that you brought up Ramit Sethi – who I ADORE – and his position on invisible scripts because I feel like that’s what everything boils down to; what we tell ourselves about ourselves and about the world we live in. A lot of people – if not most of them – have issues with money. Part of this is the dialogue around wealthy people – “how we should take their money because they don’t deserve it and give it to people who do”. I see this mentality in the people you’ve quoted in this post – “I don’t deserve money”/”don’t have the right to earn money”.
Somehow, somewhere money became evil. Charging people to pay for goods and services became wrong (even though that’s what money is FOR, it’s a tool meant to acknowledge goods and services rendered!). Somehow it became more altruistic to be poor and happy than wealthy and happy. People who are rich and happy are a facade, and no one wants to believe that money (ie: being paid to do what you love since we’re speaking specifically about money via working versus winning the lottery for example) has any real part in the equation of self-esteem.
It’s not about being DEFINED by money – that’s bad and leads to poor self-esteem. It’s about realizing that you’re valuable enough, worth enough to charge $50 for a blog post, or $30 for an ebook (or whatever). Loads of people have poor self-esteem and no sense of self-worth. It’s practically an pandemic. And nothing is being done about it because it’s so pervasive lots of people don’t even notice that they have it, or if they do notice they normalize it by saying other people have it too and so they’re content to do nothing because everyone else is doing nothing too. It’s much easier to rationalize our problems or faults instead of trying to understand them and see if they can be overcame.
And there’s also the issue of change. Even though there seems to be this idea that people are always changing and growing – that’s BS. Most people are terrified of change – it’s why we have the problems now that we’ve had for decades, if not centuries, as a species. And why the problems are getting WORSE because people don’t want to change. Again, these are scripts about the necessity of change, how if things worked fine before they’ll work now but ultimately, it’s the fear of change that holds people back. And wanting things to remain as they are because the unknown (or rather fear of it) can be paralyzing for many.
I loved this post.
Ahhh, I loved your comment. First, this, ”
even though that’s what money is FOR, it’s a tool meant to acknowledge goods and services rendered!” is so true. We forget that our economy, our livelihoods and our relationships are built on that basic exchange.
And yes, that bit about change is so right on. I wanted to include that too in the post, but as I told Miri, the post was getting long, so I’m so glad that you both brought up crucial points. I do think people get really comfortable. And you say you want something, but do you really? Are you willing to sacrifice sitting on the couch and enjoying yourself to work harder? Do you want the new thing more than your existing life? Sam Davidson wrote a good post about this awhile back. Most people don’t look at it that way. They believe there are all these external factors at play, when really, they would just prefer to stay in their same life.
Thanks for the thought-provoking comment!
Great post! Very inspiring, speaks the truth and provides links to some great resources. Thank you:)
Thanks!
It is so nice to hear that other people feel the same way. I think the social media piece definitely plays into my script…”These are my friends! I can’t charge them!” Aye.
Thank you for writing this. It will be my go to post (along with the comments so far) when I have my next “Why would anyone pay for this crap?!?!” freak out session.
Are they really friends though? I have so many people on Facebook I would never consider my friends in real life. I don’t know, we need more words than acquaintances, friends, family now. I’m glad the post may give you some courage in the future :) Thanks for the comment!