A price is a claim, not a receipt

Most people build a price upward from what the work costs them. That method feels honest and it quietly concedes the only argument that matters, which is what the work is worth to the person paying.

There are two ways to arrive at a number. You can start from your costs, add the margin you think is reasonable, and present the total. Or you can start from what changes for the buyer when the work is done, and take a defensible share of it. The first method produces a receipt. The second produces a claim. Almost everyone starting out uses the first, because it can be justified line by line, and because it feels less like asking for something.

The trouble is that the buyer is not purchasing your inputs. They are purchasing an outcome, and they have no way to check your hours anyway. When you show them a cost-built number you have handed them a different conversation than the one you wanted: now the discussion is about whether your costs are reasonable, which is a discussion you cannot win, because there is always someone with lower costs.

Where the number should come from

Start by describing, in one sentence, what is different after the work is finished. Not what you did, what changed. A backlog is cleared. A process that took four people takes one. A decision that had been deferred for a year gets made. If you cannot write that sentence, you do not yet have a pricing problem, you have a scoping problem, and no number will rescue it.

Then estimate the size of that change in the buyer's own terms, honestly and conservatively, and price at a fraction of it. The fraction is a judgement, not a formula. What matters is that the number now sits inside an argument. When someone pushes back, you have something to point at that is not your own convenience.

“Cost-plus pricing answers a question the buyer never asked.”

A worked example

Suppose a small operation asks you to sort out how they handle incoming orders. Cost-built thinking says: six days of work, a day rate, done. Value-built thinking asks what the current handling costs them. Say two people spend a third of their week on it, and a predictable share of orders is entered wrongly and has to be fixed later. That is a recurring number, and it is much larger than six days.

You are not entitled to all of it. You did not build their business and you will not carry the risk of running the new process. But a price set at a visible fraction of a recurring saving is a very different object from a price set at six times your day rate, even when the two numbers happen to land in the same place. One of them survives a second meeting.

The objection you should expect

The common objection to value pricing is that it is a euphemism for charging more. Sometimes it is. The discipline that keeps it honest is that you have to state the value first, out loud, before you state the number, and you have to be willing to be wrong about it in front of the buyer. If you are not prepared to say what the work is worth, you should not be pricing off it.

The second objection is that some work has no measurable outcome. That is usually a claim about effort, not about the work. Very little commissioned work has no consequence. If the consequence is genuinely unmeasurable, price on scarcity or on risk instead, and say which one you are doing.

What to do this week

Take the last thing you priced. Write the one-sentence outcome. Estimate its size to the buyer. Compare that to what you charged. The gap between those two numbers is not a mistake to feel bad about; it is the size of the argument you did not make. Make it once, on a small piece of work, and watch what happens to the conversation rather than to the number.