TBD: What’s the reaction been to the book? Have you had any real pushback or any valid criticisms that have pushed your thinking in unexpected ways?

BE: Expectedly, I’ve had some design feedback from designers which has been valid. As far as book designs go, it’s pretty plain and I do wonder about designing it up a bit more for the second edition.

I’ve had more people comment on the price – that it is too much money for a book. I laugh about it because it’s fully guaranteed. Meaning, if you buy it and it doesn’t work for you, you can send it back. When I read a comment on social media like that, I laugh my ass off. It’s the funniest thing. As I highlight in the book, some people are price buyers and some are value buyers. The former see every dollar going out as an expense and just can’t get their head around the package – the fact that it’s a book. They don’t understand the concept of an investment.

I had one person email to say they felt that the eBook was worth it, but thought there wasn’t a whole lot of ‘new’ in the book not already available online. In part, I agree. If someone were to diligently comb through all of the stuff I have in the public realm they might be able to cobble together nearly 75% of what’s in the book. However, that would be an incredible undertaking. In several of my speeches or webcasts from even 2-3 years ago, I was exploring this idea of value-based pricing. This led to some new concepts that I was formalizing my own thinking around. The book illustrates those concepts and new ideas realized for direct application to business.

My opinion is, if you’re a price buyer yourself and you think that way, the likelihood that you can successfully transform or transition to value-based pricing is probably pretty low. So, if you think the book is too expensive for you, it is.

TBD: Breaking down the math, as you’ve illustrated in several interviews, of how much it should increase agency revenue and for how many agencies extrapolated over a reasonable amount of time and the cost vs. return, the price of the book seems insignificant. Yes, the price is high for a book, but if you’re thinking long-term investment, is it priced high enough?

BE: I think it’s ridiculously low-priced, but because it comes in the package of a book, that’s what you have in your mind. People don’t necessarily know the value when they see a $320 price point for a book. They just think, “Oh my, that’s a lot of money for a book.” But what if the package was different? If it was a couple of hours for consulting time, is that too much money? I’ll give an example.

I did a day of training with a firm on this. The price was $15k for a day and at the end of it, when we’re workshopping these exercises with real-life proposals, real-life opportunities, and client situations, you can see the transformation. You can see these people – who had all read the book, all understood the theory, had even been applying some of it – once we workshopped the teachings in the book, I really got them out of their mold and got them thinking and behaving differently. I can’t give away too much, but one client at the end of it asked if I was collecting information on how well people are doing from the book. I said, “Well, have you been able to quantify your success?” And one guy quickly added it up, “Since we’ve read the book, we’ve clearly earned in excess of 200k pounds of profit.” This is only a couple of months in and before the workshop! So, I do find it laughable. The amount of money that’s being made is incredible.

Now, if you lack opportunities, if you’re undifferentiated, if nothing’s coming to you, etc., then it’s not going to do that much for you. It’s a pricing book. However, for a firm that’s got a pipeline of business, a steady stream of opportunities, the value of it should be incredible. The claims I’ve made have been less, but I really think that most firms should be able to double and even triple their profit.

TBD: What’s been the biggest takeaway?

BE: The number one takeaway I’ve had, the most common even, is people saying to me that, “I’ve put out four of my first three-option proposals with a high anchor and the client immediately bought the high anchor.” This execution is the second and third rule covered in the book and the results of its use highlight that the average firm is systematically underpricing themselves. The light that goes on when they share their stories is, “I thought there was no way I could charge anymore and now I realize I’ve been seriously undercharging my clients.” In addition to that, I hope they’re seeing that they’ve been making these incorrect assumptions about what’s valuable to the client and what clients’ are willing to spend money on.

TBD: There were some bigger “a-ha” moments while reading that are worth discussing – the anchor is one of them. Diving into that, you’ve mentioned the concept of the decision-making heuristic outlined by Kahneman in “Thinking, Fast and Slow.” These don’t appear to be natural connections to sales, so what spurred you to seek that book out and why hasn’t that theory been incorporated into sales on a wider scale?

BE: Oh, you couldn’t dive into the subject of value-based pricing today and not bump into Kahneman and Tversky. You quickly get to behavioral economics. See most people think that pricing is an economic or accounting construct. Ron Baker, who’s been a massive influence on me and considers himself a reformed accountant, went from an accounting point-of-view on pricing – all cost-based – to what he would say is an economist’s point-of-view in that the idea of all value is subjective. However, what you would call judgement and decision-making is essentially behavioral economics.

The decisions we make around choice, or choice architecture, that’s behavioral economics. Anything around options, around charm pricing, it’s all behavioral economics. You can’t begin to scratch the surface of value-based pricing and not bump into the likes of Kahneman. “Priceless” by William Poundstone, is another fantastic book that distills the behavioral economics field into 50+ stories. It’s likely one of the most readable books on pricing riddled with references to Kahneman, Tversky, Ariely’s “Predictably Irrational,” Chaldini, and Richard Thaler – often referred to as the father of behavioral economics, who wrote “Nudge” and “Misbehaving.”

TBD: Why do you think that firms aren’t yet incorporating principles of behavioral economics into their sales strategies? Is it because they haven’t been exposed to it?

BE: Behavioral economics is invading the advertising field. Rory Sutherland, Vice Chairman of Ogilvy UK – one of the smartest and now likely the most famous ad men – is well steeped in behavioral economics. Ogilvy Change is a division that he founded in London that terms themselves “The Leading Behavourial Interventions Agency” and produces a podcast called O’Behave where you can listen to Rory ostensibly interviewing authors about theories on behavioral science.

In fact, attending any advertising conference, certainly in the UK, you’ll see behavioral economists working in ad agencies up on stage talking. I’ve even tweeted that “its behavioral economics that makes advertising interesting again.” If I were getting into this field today, I would get a degree in behavioral economics. Its rife in the UK and coming this way quickly.

TBD: Then why does the anchor feel so new coming from “Pricing Creativity”? Why doesn’t this concept feel more familiar after learning what it is and how to apply it?

BE: I’m not sure. It may be that the science of anchoring has only really been in the broader public realm for five or six years. Even “Thinking, Fast and Slow,” which outlines the science, is only seven years old, which I first became aware of via Michael Lewis, author of “Moneyball” and one of my favorites, who interviewed Daniel Kahneman prior to the release of his book. This was before I was even interested in value-based pricing.

What’s interesting is we all anchor, right? We do it intuitively. Creative people do it by presenting the “out there” option first and then reeling it back. I say in the book that I’m always anchoring with my wife. “Guess what I bought?” “Oh my God, what did you buy?” “A boat!” “Oh my God, you bought a boat?!?” And then I’d say, “No. I bought a fishing rod.” “Oh thank God!” So, we’re all anchoring all the time – we just weren’t aware of the science behind it.

TBD: You make the anchor seem so obvious, especially as you’ve pointed out the landscape of software companies that do this publicly. Why hasn’t this been adopted into agency proposals? Do you think being able to showcase the science behind it is the tipping point to get the light bulb to go on?

BE: Before I was aware of the science and how powerful the anchoring effect is, I’m not sure I would’ve been able, or even thought, to articulate that there’s something meaningful here. Even though a lot of us intuitively do it, it’s actually profound. Consider a creative entrepreneur just retiring now thinking back on the money they’ve made throughout their career. If they were to look at the principle of three options and a high anchor and how it could’ve been applied over the years, they’d probably be thinking, “Man … I’ve left millions of dollars of personal income on the table.”

In fact, I now know solopreneurs that have been transformed by value-based pricing. I’ve spoken about a friend of mine that’s written about a client of his who had a $30k budget. He anchored with a $30 million option. And although they didn’t choose that, they did choose the middle option, which was $300k. Think about that. He got 10x the budget by anchoring at 1,000x the budget. And that was one of his less impressive stories about how he’s been transformed by value pricing.

TBD: Moving onto another “a-ha” moment for some, we imagine the idea of reversing the sales conversation to establish value before considering solutions will be a big shift in how agencies conduct new business. Can you elaborate on what influenced you’re thinking here?

BE: I got that from Ron Baker who I believe got it from Holden Nagle, et al who wrote “The Strategy and Tactics of Pricing.” I’ve heard Ron say that it’s probably the book on pricing, but I think you have to be an academic to read it.

Look, I’ve seen the transformation in myself. We’re a productized service business, so there’s only so much value pricing I can do, but once you become a master of the value conversation [covered in a chapter Blair labored over] you put the focus completely on the client and let go of any “solutions” that you may have. Therefore, the experience that the client feels is completely different. Since you’re not thinking about solutions, you’re not thinking about costs. This allows you to uncover so much more. Taking it further, if you allow yourself to think beyond the bounds of your current business model, you can come to the table with some incredible solutions that might be quite different than what you’re used to selling.

I mentioned the workshops I’ve done in which you can just see it. By the end of them, the participants are no longer thinking about themselves as “a type of firm” that sells “this type of service” and they can only charge “from X to Y.” By the end of the day, they’re now thinking way beyond what business they thought they were in. They’re thinking like entrepreneurs.

That’s what happens when you reverse that value chain. You become focused on the client and the value you can create – letting go of everything else at that moment. When you go back to put everything together from their desired future state, your metrics of success, your value, your price range, before you start thinking about solutions, you become so entrepreneurial.

TBD: The concept of removing the actual dollar value as the determining choice factor and shifting the focus to how much risk is the client willing to assume was a point we reread multiple times. What made you think about pricing as it related to “risk” instead of monetary metrics?

BE: That’s throughout value pricing theory. Again, I likely first encountered it through Baker, but it’s a great tool, right? What I was hoping to do with that chapter in the book was to quickly draw the connection between price and risk and then give people permission to then talk openly to the client asking, “How much risk do you want?” If a client says, “Oh, that’s too much money. I don’t want to spend that.” You can say, “Well, we can do it less expensively, but it would see you taking more of the risk. So, you tell me, how much risk do you want to assume and how much do you want me to make go away?” That’s an overt conversation that we should all be having with our current and prospective clients.

TBD: Shifting gears a bit, “Pricing Creativity” focuses on setting pricing based on value. “Win Without Pitching” is about selling and communicating from a position of expertise. What’s missing is how to get started. In blog posts, you’ve described an ideal roster would be ten clients a year, but zero to ten is a sizable gap even for an established firm. Given your expertise in new business, how can new firms build their initial stream of interest?

BE: Ultimately, we’re all going to get to this place where we’re just trying to add a new client per quarter, but if you’re starting from zero, there are different ways to get some traction. If you have some expertise and you’re launching a new entity, or you’re repositioning a firm, then you’ve got to get that expertise out there. You’ve got to be found by people searching through Google. Think about what your lead generation strategy could be.

One of the challenges today is the volume of media platforms. So, I’m a big fan of picking a major and a minor. Launch a podcast or a YouTube channel or write a book or hit the speaking circuit. The latter is admittedly easier when you have a book. So, in that example, the book might be the major and the speaking circuit is the minor. Although, it’s hard to write a book when you’re new in business, which makes this a longer-term strategy. Whatever the choice, pick one thing and apply 80% to it – that’s the major. Then, ask yourself what’s the minor that you’re using to support it.

TBD: Clearly, getting from startup to expert practitioner with an inbound sales funnel is no small feat. What can new firms, built from the desire to function as expert advisors, do in the beginning to gain the necessary client audience in order to implement your practices? And after getting those initial clients, how can they gain the traction necessary to secure one after the next?

BE: So the question is if you’re really the expert, should you be doing outbound work? There is something that David C. Baker spoke about in one of our podcast episodes. He said that in the developed world, a sign of expertise is inaccessibility. Meaning, if you are trying to position yourself as the expert, you should not be readily accessible. If you’re actively doing outreach you could be diminishing that position a bit, but there are just very few ways around it if you’re in the early life of your business and trying to build something quickly.

What I would suggest is appropriate outreach, not spam, from CEO to CEO on more of a peer level. If done right, it won’t harm your position as the expert. If it feels like spam, then it’s not done right. For instance, you could reach out with, “I don’t really do this that often, but I’ve just noticed ‘this’ about you guys and was wondering if you have a need in this area? I have some ideas on how we might be able to help. If you don’t, that’s fine. Just say so.” A polite, concise, respectful outreach from CEO to CEO, I think that could be done.

I did something similar in the beginning of Win Without Pitching when I got lucky tripping over a really good published list of principals of small advertising agencies. It was complete with email links, so I started my outreach. Then, I wrote content steadily for years and got to as many stages as I could.