How to package and price your service offering are difficult decisions to make. Most entrepreneurs wrestle with them for years. I discuss how to do it faster and more effectively with my guest, Alex Shartsis.

Alex is a multi-exit founder and go to market strategist who has led go-to-market at venture-backed startups including Drawbridge, acquired by LinkedIn, and TripIt, acquired by Concur, and ran corporate development at Opendoor.

Today he’s the co-founder and CEO of Skyp — an AI-powered outbound email platform that helps founders and sales teams book more meetings without hiring an sales development representative. He built Silverwood Advisors, an advisory practice focused on GTM strategy, into a go-to resource for teams in Silicon Valley and beyond.

We dive into topics including:

The difference between charging hourly, project-based, or retainer pricing options.
Where to start when you’re packaging a service.
The importance of understanding your clients’ needs before determining pricing models.
How to make promises that you can follow through on.
The importance of setting expectations before the sale and how to do it.
How to do research about how to price your service offering.
The importance of having a deep understanding of your clients’ business models.
How to position yourself for success in the marketplace.
Why most service providers underprice themselves and what to do about it.
Why pricing low to win business rarely works.
How to pick the most profitable target markets.
The one thing, above all else, that you need to do to package and price your services successfully.

…and other golden nuggets of advice!

Living in the Startup World

Alex has worked with a lot of startups, at least 20 or 30 at this point. He prefers early-stage startups where he must figure out their product market fit and figure out what their customers want. Alex has been advising and selling consulting services for six years now, and he’s become great at packaging his own service as a result. In addition, he’s spoken with many other consultants about how they package themselves successfully. Alex has ended up with a wealth of knowledge that he never intentionally set out to get; but he’s grateful to have it now.

The Origin of How Alex Packaged His Service Offerings and What You Can Learn from His Experience

For Alex, it’s a funny story.

Originally Alex wasn’t looking to get into consulting. He had just left his startup, and it was a rough time. A venture capital friend asked Alex to become an advisor to one of his companies. Even though he was planning to take some time off, Alex agreed.

Alex spoke with friends who were in the consulting world. One had only done consulting throughout his entire career. His advice to Alex was to charge $300 an hour. The challenge with that was that startup founders often don’t know how many hours they need.

More Ideas and Suggestions for Fee Structures

Alex continued his conversations. Next, he spoke with people that worked only on project-based fee structures. He liked that because he believes people don’t want the surprises that come from charging hourly rates. It can hurt your relationships if the hours go over the amount initially proposed.

The project-based work they discussed involved payment at certain milestones. When you hit a milestone with your clients, they pay you $10,000 and so on. That structure aligns the work with the results. And then the third fee structure Alex discovered was the retainer-based model. For example, he would charge $10,000 a month for one day a week, and $20,000 a month for two days a week. Then there was the option for $30,000 to have Alex for a full week.

Alex realized was that he had a strong opinion after having been a founder who hired consultants, and that was that.

Immediately, he didn’t want to underprice. He believed the biggest risk he faced was underpricing his time.

And second, he wanted to make sure he didn’t get stuck in a cheaper-will-get-you-more-clients mindset. He didn’t want to be the poor salesperson who drives a Honda Accord, who asks “Why would you ever spend $150,000 on a car?” Thinking that way is self-defeating when it comes to pricing your services. If you put yourself in your buyer’s shoes, they may have a completely different perspective of budget and value than you do. Value and budget are equally important.

Alex didn’t want to make that mistake and didn’t want to have to track his hours as the sole way of delivering value. He notices that the consultants that took the hourly route were working with founders who had lots of different things going on and needed a variety of consulting services. An hour here for this project; an hour there for another project.

More Decisions About Pricing Models

For example, if Alex took the hourly route and asked a client to review his work on their website and then move onto the next step, if it took the client two weeks to get to the next step he couldn’t bill them anything for two weeks because he was waiting for them to review the web site. In that case you must track your billing and you’re at the mercy of wondering if your client will do the thing they said they were going to do (and in a timely manner). In that scenario you can’t send them an invoice that month because they didn’t follow through.

So, the retainer model was what Alex decided to go with, at a price point that he initially thought he would have never paid at that rate when he was a founder. But now, looking back on it, Alex says he probably would have in the end because he realized that it reduced the risk for him as a founder. With the retainer model he gradually increased his retainer as he had more clients.

And that is just the beginning!

Listen to or watch the interview to continue this story and get more golden nuggets of advice!

You can get my book here: “Idea Climbing: How to Create a Support System for Your Next Big Idea”

About My Guest

Idea Climbing Podcast Alex Shartsis

Alex Shartsis is a multi-exit founder and go to market strategist who has led go-to-market at venture-backed startups including Drawbridge (acquired by LinkedIn) and TripIt (acquired by Concur), and ran corporate development at Opendoor. Today he is the co-founder and CEO of Skyp, the best AI outreach tool for sales teams — an AI-powered microcampaign platform that helps founders and sales teams book more meetings without hiring an SDR. He also runs Silverwood Advisors, an advisory practice focused on go to market strategy and early-stage M&A for founders.

Alex writes the Seed to Sequoia newsletter on strategy, and the Skyp Go to Market Newsletter on outbound and sales strategy for founders and operators. You can connect with him on LinkedIn.

Want to learn more about entrepreneurship? Check out “How to Go from Employee to Solopreneur to Entrepreneur with Sys Savanh“