This pricing makes sense if your only competition is your client just going at it by themselves, in which case you clearly demonstrate that you offer a superior deal. But job seekers have a lot of consultants/agencies/headhunters they can turn to and I’d imagine your price mostly depends on the competition. In the worst case, you not only lose good clients to cheaper competition, but get an adverse selection of clients who would really struggle to find a job in 22 weeks and so your services are cheap/free for them.
One interesting feature of the OP’s pitch is that he’s offering not to help the client find more/better options, but to accelerate them finding any job. It’s not clear to me what happens if the client rejects the offers OP finds, but that seems critically important.
I’d have to assume that as you say, these are clients who aren’t in-demand enough to go through recruitment agencies or headhunters, or to find a job themselves.
If he’s made $25,000 from 5 clients, then assuming he got 11.5% of each of their salaries, his clients are on average starting at around $25,000/5/.115 = $43,000/year, or around $22/hour.
Jacobian, what is the alternative to a service like the OP’s for someone in this income bracket? My sense is a temp agency, but that they’re typically placing people into jobs paying roughly minimum wage.
Those are good points. I think competition (real and potential) is always at least worth considering in any question of business, and I was surprised the OP didn’t even mention it. But yes, I can imagine situations where you operate with no relevant competition.
But this again would make me think that pricing and the story you tell a client is strictly secondary to finding these potential clients in the first place. If they were the sort of people who go out seeking help you’d have competition, so that means you have to find people who don’t advertise their need. That seems to be the main thing the author doing and the value they’re providing: finding people who need recruitment help and don’t realize it.
I think there’s a relevant question of ethics here.
If I learn that these competitors offer a product / service equal to mine or better, I’d feel obligated to change the business model or innovate my product / service in some way.
I don’t think you’re obligated to negotiate against yourself. Your pricing is already far more transparent than most industries. You’re offering a quality service for a justified price, and it seems plausible that you’re finding value where few have found it before. That’s a service worth a reward, and you’re claiming it.
I don’t see an obvious ethical issue here, personally.
I’m proposing that if I find out that there are other products in the market that offer the same value for free, I might feel like it’s an ethical issue. I don’t have strong evidence that suggests that there are products which offer the same value for free (There’s a lot of issues with recruiters e.g. incentive misalignment issues, they cater to specific people, etc.). Still learning though.
But job seekers have a lot of consultants/agencies/headhunters they can turn to and I’d imagine your price mostly depends on the competition
This is true, but also often overrated, especially when it comes to individual customers. If you’re selling to businesses, do consider that they’d be willing to shop around and optimize to some extent, so differences from your competitors matter a lot. Individual customers however really hate having to search around, compare options, and risk choice overload; if they’ve found OP as a provider of this service, they’d really prefer to be able to choose them. At this point, OP is not in equal footing with the rest of the competition, and thinking so would lose them income.
I run a similar kind of business to OP, and what I’ve learnt over the years is that unless your prices are outrageously higher (as in an order of magnitude or more), pricing higher than your competition doesn’t significantly affect your business, and often results in higher earnings (i.e. what you lose in raw customer numbers, you more than earn back with the larger individual revenues).
RE Jacobian’s point: This is fair, though it works on the assumption that the competitors offer an equally good service (i.e. they get the job seeker the highest paid, the most fulfilling job for them, etc.). This is open to debate because a) these competitors serve their network of businesses not job seekers so they’re selecting from a smaller pool and/or b) incentives aren’t as strongly aligned with the candidate. I’m still exploring the space though so I can’t speak to what side of the argument is stronger.
This pricing makes sense if your only competition is your client just going at it by themselves, in which case you clearly demonstrate that you offer a superior deal. But job seekers have a lot of consultants/agencies/headhunters they can turn to and I’d imagine your price mostly depends on the competition. In the worst case, you not only lose good clients to cheaper competition, but get an adverse selection of clients who would really struggle to find a job in 22 weeks and so your services are cheap/free for them.
One interesting feature of the OP’s pitch is that he’s offering not to help the client find more/better options, but to accelerate them finding any job. It’s not clear to me what happens if the client rejects the offers OP finds, but that seems critically important.
I’d have to assume that as you say, these are clients who aren’t in-demand enough to go through recruitment agencies or headhunters, or to find a job themselves.
If he’s made $25,000 from 5 clients, then assuming he got 11.5% of each of their salaries, his clients are on average starting at around $25,000/5/.115 = $43,000/year, or around $22/hour.
Jacobian, what is the alternative to a service like the OP’s for someone in this income bracket? My sense is a temp agency, but that they’re typically placing people into jobs paying roughly minimum wage.
Those are good points. I think competition (real and potential) is always at least worth considering in any question of business, and I was surprised the OP didn’t even mention it. But yes, I can imagine situations where you operate with no relevant competition.
But this again would make me think that pricing and the story you tell a client is strictly secondary to finding these potential clients in the first place. If they were the sort of people who go out seeking help you’d have competition, so that means you have to find people who don’t advertise their need. That seems to be the main thing the author doing and the value they’re providing: finding people who need recruitment help and don’t realize it.
I think there’s a relevant question of ethics here.
If I learn that these competitors offer a product / service equal to mine or better, I’d feel obligated to change the business model or innovate my product / service in some way.
Still exploring that question.
I don’t think you’re obligated to negotiate against yourself. Your pricing is already far more transparent than most industries. You’re offering a quality service for a justified price, and it seems plausible that you’re finding value where few have found it before. That’s a service worth a reward, and you’re claiming it.
I don’t see an obvious ethical issue here, personally.
I’m proposing that if I find out that there are other products in the market that offer the same value for free, I might feel like it’s an ethical issue. I don’t have strong evidence that suggests that there are products which offer the same value for free (There’s a lot of issues with recruiters e.g. incentive misalignment issues, they cater to specific people, etc.). Still learning though.
This is true, but also often overrated, especially when it comes to individual customers. If you’re selling to businesses, do consider that they’d be willing to shop around and optimize to some extent, so differences from your competitors matter a lot. Individual customers however really hate having to search around, compare options, and risk choice overload; if they’ve found OP as a provider of this service, they’d really prefer to be able to choose them. At this point, OP is not in equal footing with the rest of the competition, and thinking so would lose them income.
I run a similar kind of business to OP, and what I’ve learnt over the years is that unless your prices are outrageously higher (as in an order of magnitude or more), pricing higher than your competition doesn’t significantly affect your business, and often results in higher earnings (i.e. what you lose in raw customer numbers, you more than earn back with the larger individual revenues).
RE Jacobian’s point: This is fair, though it works on the assumption that the competitors offer an equally good service (i.e. they get the job seeker the highest paid, the most fulfilling job for them, etc.). This is open to debate because a) these competitors serve their network of businesses not job seekers so they’re selecting from a smaller pool and/or b) incentives aren’t as strongly aligned with the candidate. I’m still exploring the space though so I can’t speak to what side of the argument is stronger.
RE digital_carver: What biz do you run?