This Week, In Recruiting - Issue 82

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Open Kitchen: Pricing Maturity Model for a One Man Show

I am getting asked a lot about pricing, especially from freelancers, independents venturing out for the first time, community members doing side hustles with income potential and other content creators / curators with a growing audience that is attracting sponsorship enquiries.

As anyone who has bought any sponsorship from me will know, I have very little true idea of what I am doing when it comes to pricing, other than being clear that my priority is to minimise my 'cost of sale' rather than maximise the 'value of unit'. Everything is priced the same for everybody, I don't pitch nor negotiate, it is take or leave. As my friend Juan González Pérez recently observed:

Hung, you don't have a pricing strategy!

Juan is right - I don't have a pricing strategy, but I do have a business strategy. Am I under valuing the service? Absolutely. Do I sell out on every channel 12 months in advance? Always. These are outcomes which work for me because as a 'one man show', you have finite amount of time to do your work, so any time spent doing anything else other than curating content and creating conversational spaces where the community can connect is a very costly spend of time.

I wasn't always like this. In fact, I used ask the same questions to other people as I'm getting asked now. No one knows how to price anything I suspect, but there are fundamental starting positions on how people come up with a number and I thought this would be a good idea to explore them a little bit as the return of Open Kitchen today.

1. Time / Labour

This is the classic 'contractor rate', usually charged by hour or by day. The number is typically arrived at by dividing annual income by number of working hours in the year. Experienced contractors will know their number but the occasional contractor might have to make this back-of-the-envelope calculation. I had a friend of mine who was asking about how to charge for a presentation he was going to deliver and basically made such a calculation. Presentation wasn't new, so it just had to be delivered and delivery would take no more than 30 minutes, so rounding a couple areas up, this was thought to be 1 hours worth of work - circa £100 - £250 ballpark.

Of course, I told him immediately that the charge must be at least £1K, with the error being a discounting on the work involved in the presentation build, as well as the years of accumulated experience required to commentate on the topic at all. But that number felt too big, so he compromised to £500 and all sides ended up happy with the result.

Time / labour as the foundational principle for pricing is probably the first method of calculating price that we do and consequently the most commonly found in the market. I think it is the least mature model and I suspect it is almost always a huge undervaluation of the work.

2. Tailored to Customers Budget

Most people are uncomfortable with variable rate pricing. It's the sort of the model that your business is paying for LinkedIn right now - you get a quote based on what LinkedIn thinks is your ability to pay, and this may be different from their assessment of another companies ability to pay. The folks that apply this model are usually consultancies and service providers with a dedicated sales team who not have fulfilment responsibilities and thus can dedicate themselves to maximising the value of the sale, figuring out what the budget is, make the quote, renegotiate and closing the deal.

This approach can greatly increase your income but is expensive to you in terms of time commitment if you are a solo flyer. In fact, it is usually not tenable unless you have this separate sales unit handling the increased burden of customer management. My first business tried to charge this way and it was the biggest business failing of my life to date - too hard to convert, and took tons of time to do. If you find yourself making pitches, coming up with quotes and negotiating back and forth, then you are using this model of calculating price, with the typical outcome of the 'feast or famine' experience.

Customers ability to pay is the model used by most first time freelance consultants, and I think it's usually a mistake because you can't afford the time spent in negotiating the sale. The cost of the sale is too high and eventually the famines will drive you back to the income security of full time employment.

3. Market Rate

What is everyone else paying for this? This method of pricing calculation is really motivated by not wanting to appear too much over / under the market rate. This question I get most from other creators / curators who are starting to get sponsorship enquiries and want to set a fair number. I want to helpful and hope my interrogators can confirm that this is the case 🤣However, I am careful to explain my philosophy, which is relentlessly focused on reducing cost of sale, not maximising value per unit. Hence, Brainfood is probably not a great guide for market rate (too cheap!) and may even have a deflationary effect if used as such!

Now it's not a bad idea to gather intelligence on what is paid to comparable or competitor service offerings but truth be told, most buyers are not buying on price. They don't decide let's go with X vs Y because X is cheaper. They will park the budget based on expected outcome and price is a small component of this. In any case, most marketers will have a 'marketing mix' where placement will be diversified across a number of different channels in order to build brand awareness - and your solo business is likely to be small component in what is a mid to long term exercise of always being prominent in places where the audience is most interested in operating.

Market rate is a mature way of calculating price, but I find it also has the effect of commodifying your offering; psychologically, you've made a decision to measure yourself against others - a reactive position which is think depletes morale.

4. Your Opportunity Cost

Linda Evangelista was famous for not only being one of the biggest stars of the golden era of supermodels, but also for quipping that she wouldn't get out of bed for anything less than $10,000. It was an outrageous quote and it's taken me a long time to fully understand it. But basically what she is saying is that there is a minimum opportunity cost of doing anything, especially as a model being in one location means she cannot be in another.

This happens when you more fully realise the limited resources you expend when doing any kind of work - time, effort, opportunity of other things. The super rich of our world do not work, not because they are lazy, but because doing 40 hours a week, 48 weeks a year deprives them of the opportunity of discovering other ways to make money. Now I don't hang around with super rich but I do know a few people who are very successful and they work hard in different ways - by cultivating circumstances where more opportunities emerge, rather than spending time in negotiating price or delivering a service. In so doing they are centring themselves in the calculation of the price.

No doubt this is a privileged position, one in which you don't income insecurity or have managed to remove income insecurity from your life, but the mentality of thinking about what other opportunities you could be otherwise be uncovering is a self re-affirming one which has a value in itself.

Final thoughts

Anyways, I need to get better at pricing - I think we all do - and I'm hope this rumination here has helped somebody out there. Let me know if it has or whether you have any thoughts on each of these models or whether there are any other models which we can discuss. Like I said at the beginning, I have very little idea what I'm doing 👊

Out of the kitchen, onto the lounge 👇

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What's in the News?

Cost of Living Crisis to Push UK Employees Back Onto the Market?

News in the UK has been dominated by cost of living crisis, exacerbated by new PM Liz Truss / Kwasi Kwarteng's blockbusting mini-budget, which required a massive corrective intervention from the Bank of England. With interest rates sure to rise, mortgage holders are facing significant increases in their monthly costs. This will push employees back onto the job market in order to find higher paying jobs, says Lee Biggins, CEO of CV-Library who surveyed 2,300 people on their job search activity. Have a read of the insights blog here

Adzuna Launch Petition to Make all UK Job Ads Show Salary

No small matter when Adzuna do it - UK's biggest aggregator of job ads, is making a move to make salaries displayed. Thoughts on this? Love to hear from you - I suspect we want this if we were job seekers, but might have different view if we are recruiters. Check out Doug Monro's commentary here and sign the petition if you support

If you are a recruitment service provider or technology business and have any news to share, comment below, this is your application to get into next week's addition of This Week, In Recruiting. Make sure to @ mention me so that I see it

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What's On Offer?

Talent Intelligence, by Toby Culshaw

You know it is a serious book when the hardback version retails for £90.00 so I am especially pleased to be able to offer Toby Culshaw's definitive book on Talent Intelligence on market beating rates. £29.00 for the paperback, 25% off this price to £21.75 of you use this promo code: INRECRUITING25 on this link

Get to it folks - no TA department can afford to ignore Talent Intelligence; this tome will be lay a framework for how to think about it and do it.

If you are a recruitment service provider or recruitment technology vendor have any exclusive offer for the community, comment below with your offer in order to be included in next week's edition of This Week, In Recruiting. Make sure to mention me so that I see it.

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What's Going On?

HR FEST, 11 Oct, Akvarium Klub, Budapest

So I find myself giving an opening talking at what people tell me is the biggest HR event in Hungary. Good job I have today to do the slide deck! Posting this from the airport so en route to this event, and looking forward to my first visit to Budapest, reputably the most beautiful city in Europe. Come up and say hello if you are at the event or are otherwise in town! Tickets here

Brainfood Live On Air - Ep176 - Sourcing & Recruiting on Discord, Fri 14 Oct, 2pm

We are back with another edition of our hugely popular how-to sourcing series; this time we are going to be talking about the decentralised community platform which is already the default for the gaming and streaming communities and now moving as the default for many community builders. Brainfood has a discord server and will be on there shortly! We're with Wim Dammans, Talent Sourcer (Tennet) who will be talking about sourcing and Rosie Sherry, Founder (Rosieland, ex-Indie Hackers) who will be talking about recruiting in-community. Must attend folks - register here

How to Detect Candidate Fraud in Remote , 17th Oct, 2.30pm

Didn't expect this webinar title did you? I've been collecting cases of candidate fraud ever since the remote working revolution took off, because it seems to me that this is one of the under discussed implications of a physically dispersed workforce. My friends at FloCareer say that as high as 10% of all interviews conducted on their platform are flagged as potentially fraudulent, an extraordinary number and perhaps the first time anyone has been able to collect any data on it. I'm with CEO Mehul Bhatt to figure out how recruiters can detect fraud. Register here

Unlocking Human Capital, Culture & Leadership, during Unprecedented Times, 17 Oct, 5pm CEST

Another fantastic charity event set up by the formidable Anna Golovchenko who has been putting together these webinars and events in support of Ukraine since the start of that terrible conflict. Each time the quality of the speakers and guests are on point, so do your bit, buy a ticket and hear from Anouk De Blieck on how to unlock human potential in your organisation. Register here

Compensation Intelligence in a Troubled World of Work, 18th Oct, 2pm BST

Sad that this is the final part in the series! It's been amazing to do a deep dive into compensation, a topic which I had been ignorant of until now. The last episode is going to contextualise the compensation intelligence into the world we have today - how do we apply it when we have to make tough decisions on growth, headcount and redundancy? With Rachel Gibbs, Founder (Merities Consulting), Dr Sarah Ali, Global Economist (Radancy) and Virgile Raingeard, CEO (Figures). Don't miss this folks - register here

Hacking EU & UK Tech Hiring: Challenges and Opportunities, 18 Oct, 5pm CET

Double header for me as I'll be joining my buddy Ilya Brotzky, CEO (VanHack) and Kevin De Pauw, CEO (Summ.link) as we discuss what tech hiring looks like in Europe, especially as the world has globalised and de-globalised seemingly at the same time....register here

In-House Recruitment Live, 19th Oct, Business Design Centre, Islington, London, UK

Look at this line up here. We've had to reschedule this due to planned industrial action but if anything the line up looks even better now than it did before. FREE to attend for an in-house recruiter, this event is entirely sponsor supported, so a fantastic opportunity to network and learn from some of the best in the business. I'm moderating one of the stages, so come up and say hello if you're about. Register here

The Importance of DEI in Volume Recruitment, 25th Oct, 12pm

Loving this series with our buddies Crooton - it's familiar recruiting issues, viewed through the high volume lens. And it's always interesting to hear stories from recruiters of unique organisations, which the City of London Police certainly is. Me, Daniel Sandhu and others in this conversation on DEI - don't miss this one folks - register here

Hiring Strategies: Planning Ahead for 2023, Thu 27 Oct, 2.30pm BST

Are you thinking about 2023 headcount folks? I guess we had better be as we're already in Q4. I'm not sure whether it has ever been more challenging to try and figure this out, so I'm with my buddies at Screenloop on a webinar on this essential topic. We're with Danny Hodgson, CEO (Foresight) and Andrea Marston, Senior Director, Global Talent Acquisition (VMWare). Register here

If you have an event, webinar or podcast going on next week and want it featured on next week's newsletter, comment below with the link and event details. Don't forget to @ mention me so that I see it

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Who Is Looking?

Bringing this back to assist any community members made redundant or else openly looking for work. The bad news hit Vivino last week, and Heidi Wassini, Head of Talent, now finds herself on the market!

Find out more about Heidi here on Brainfood Tribune, and reach out directly on LinkedIn if you are looking for a TA leader to head up your department. Based Denmark!

If you are a recruiter or HR person, openly looking for work and want to be highlighted in next week's issue, comment below with situation and what you are looking for next. and you'll get in for next week

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Who's Hiring?

So Pallet, the software I used to power the Brainfood Jobs Job Board has moved to subscription vs pay-per-post model. I need to review impact of this on companies who want to use this service and see whether it can still be made to work for the benefit of employers looking for recruiters and HR people.

This is poor timing as I suspect we might need a job board dedicated for recruiters more than ever, so I will endeavour to bring this back in some form asap. You can still use the board, but it looks like you have to subscribe to a minimum 1 month to post.

If you want to get your job featured, post jobs on the Brainfood Jobs Job Board here

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Who's Moving?

Jenni Kivikoski joins ThoughtWorks as Head of Talent Acquisition, having previously lead TA at tech scale ups such as Wolt, Silo.AI and Solita. I had the pleasure of meeting Jenni the first and last time I visited Helsinki, what must be 4 years ago now - great person and delighted to see this career move!

Gautam Ghosh joins ETO Motors in a fractional role as Digital Media Consultant. A long time fixture in the digital scene in India HR, Gautam is also an ex-colleague in the early days of startup in the UK, at BraveNewTalent. Good to see this move move, keep us updated on how it goes hombre 👊

Juliette Rouquet joins Mercer as Senior Talent Acquisition Sourcer, leaving Danaher Corporation after 4 years of stellar service. Working in an enterprise organisation is something which I have never had the experience of doing and I wish had had the chance in my employee days - would've been a great experience! Good luck with this move Juliette, we need to get you back onto Brainfood Live at some point.

Jerry Collier returns to big time consultancy, joining Korn Ferry as Solutions Lead, having previously held numerous leadership roles at AMS. I had the pleasure of e-meeting Jerry when he was one of the early participants in Founder's Focus - great to see him return to the limelight with this new gig 👊

Melissae Elhajj joins Gamma as Visual Product Designer, leaving HackerRank after 4 and half years! Anyone who has ever seen any of HackerRanks collateral will know how amazing a visual artists Melissae is. Not to mention that Melissae is also the designer of the Brainfood logo! Good luck in the new gig Melissae, I know you will rock it.

Alia Khattab promoted to Senior Director, Talent Acquisition at ServiceNow and Tim Sanchez, expanding scope and stepping up, now as Director of Talent Acquisition and Employer Branding at Milicom - congratulations both!

If you have made a senior exec appointment to your business, and feel the wider community needs to know about it, comment below with the details and see it featured in next weeks issue. Don't forget to @ mention me in it so that I see it

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What Are You Doing?

Kasia Tang, Founder (SuperSource Me) has a new book published - the Recruiter Workbook. I have had the pleasure of previewing this and I can tell you that this is a unique book, beautifully designed and actually something you can use to train. Great resource, better gift. Hardback copies here

Peter Gold - really Mr ATS - is producing an ATS comparison resource, called The ATS Guidebook. It's one of the biggest decisions a TA Leader is likely to make and as an industry, we really could do with some neutral support on this. This will be useful if the data is kept current - and if it stays neutral! Take a look folks

Paddy Lambros, Head of Talent at Atomico, are launching some research on the State of European Tech. If you are working in a technology business HQ'd in Europe, take 10 minutes to complete - you will get a shout out on the report, a ticket to an awards ceremony and - of course - early access to the report. Give it shot, here

If you are doing something new, comment below with what it is and share a link to where you want people to go. Don't forget to @ mention me in it so that I see it

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End Notes

I'm in Budapest for the next 3 days. Let me know if you are going to HRFEST or if not, whether you have got any recommendations for things I should do about town. I daresay I won't be short of things, heard a lot about the jewel of the Danubeand am looking forward to visiting!

Hung

Hung Lee is the curator of Recruiting Brainfood, and now This Week In Recruiting. Subscribe to both if you are into recruiting or HR or just interested in world of work.