Why you should be offering guarantees.

Ditching Hourly 026: Why You Should Be Offering Guarantees

Hello! and Welcome to Ditching Hourly. I'm Jonathan Stark.

Today, I'm going to talk about offering guarantees.

One of the tactics I advocate for increasing your fees is to offer some sort of guarantee.

This typically horrifies developers.

They immediately have visions of an unreasonable client demanding a 100% refund after six months of work. 

Yikes, right?

Still, I think you should consider offering guarantees. 

And here's the thing... you probably already guarantee your work! 

Ask yourself this:

• Have you ever eaten an hour to mollify a disgruntled client?
• Have you ever done some work for free because you screwed something up?
• Have you ever issued a refund because you ended up being a bad fit for a client?

If you answered YES to any of these, then you ALREADY guarantee your work.

So...

Why not make your guarantee explicit instead of implicit?

How and when to offer guarantees for the kinds of work that software developers typically do is a touchy subject.

Over the years, I have offered different sorts of guarantees for different sorts of products and services.

The type that I choose in a given situation depends on a variety of factors like:

• the type of product/service
• the level or risk involved
• the scope of work

For example:

• Software projects - Case by case, but usually my guarantee is along the lines of “I’ll keep working until we’ve reached the stated goals” or “If at any point in the next 12 months a bug crops up, I’ll fix it for free.” rather than “I’ll refund your money for the entire project.” (This only works if you give a fixed price for the project, of course.)
• Monthly retainers - I offer full refund at any time during the first month to make sure we’re a good fit. No refunds after that. 
• Private speaking gigs - I do not offer refunds, even if client cancels prior to the event. They are allowed to reschedule at no charge, however. 
• Online training classes - No refunds, but student can retake for free. 

For fairly fixed scope dev work (e.g., a productized service) that I can finish quickly, I’d offer a 100% money back guarantee on my sales page. 

(I’d also price the service accordingly, but that’s another story.)

So, for something like a half day of SQL performance tuning, I’d offer a 100% money back guarantee if the client was unhappy with the outcome. 

I see this type of service as analogous to bringing my car to a mechanic to have it tuned up... if the car is still running rough when I leave, I’d expect them to either redo the work or refund my money. 

Here's the key point about guarantees:

Explicitily stating up front how you will “make things right” if things go wrong will differentiate you from the vast majority of your competitors.

And remember: if you can’t differentiate yourself from your competitors, you’ll probably end up competing on price.

That's it for today. I'm JS and this is Ditching Hourly. Thanks for listening.

The next time someone asks you for your hourly rate, this is what you should say: "I don't have one." To learn what to say next, visit http://valuepricingbootcamp.com to signup for my free email course. Again, that url is: http://valuepricingbootcamp.com