We only buy things if we think they are worth more (or at least as much) as we have to pay for them. For our purposes today, we will focus on money transactions. Value can be delivered with attention, timely decisions, etc., but it is just easier to make it all about the Benjamins.
Here is the overarching concept for creative businesses: absolute value does not matter nearly as much as timing of value delivery with payment. Chew on that one for a while.
I have written about value delivery many times starting back in 2013. My goal here is to set out the framework for everyone to understand why it matters so much and when you get it wrong (or, worse, ignore the concept) you literally shoot your art and your creative business in the foot. Every time.
Absolute value delivery is what you think it is. You buy a bar of soap for a dollar and it is worth a dollar and ten cents to you. Awesomeness. And for contemporaneous transactions, absolute value and timing of value delivery are the same. You pay for the soap and then in pretty short order you use the soap. If you like everything about the soap – how it smells, how long it lasts, what it makes your skin feel like – you will probably buy the same soap again. Value cycle repeats itself.
Creative businesses do not work that way though. Why? The cycle is over an extended period of time. Most creative businesses measure client projects in months, if not years. As the value cycle stretches, timing of value delivery and payment takes over as the main driver far more than absolute value.
For those of you who live in colder climates and have young children, how much would you pay for cable/internet access during wintertime (say beginning mid-November to mid-March)? What about when the weather is nice and you want them outside and off their electronics? Some easy math. Say you would pay $160/month for the four winterish months but do not want to pay anything for the spring, summer and early fall months. Your value is $640/yr. Now say the cable company charges you $50/month for your cable/internet. You only have to pay $600/yr. Huge win, right? $40 extra dollars in value! Not so fast.
You feel amazing to only have to pay $50 to get $160 of value in January, but you are mad mad mad to write the check in July when you want everyone outside. Absolute value is outweighed by value delivery. If you have enough mad mad mad months of feeling short-changed, you forget about the overall value you have actually received. Translation: you feel ripped off more than you acknowledge the great deal you actually got.
Of course, behemoth cable companies need to standardize billing to be efficient so they cannot have surge pricing ala Uber and they rely on the fact that you are not going to give up your cable/internet when you do not really need it because you want it there when you do. They literally do not care about the mad mad mad months because they know you are not going anywhere.
Your creative business is not the cable company though and your clients are awful at assessing absolute value.
The value of creation is, ahem, creation. Once something is created the value declines precipitously. The first time you hear a song you love is way more powerful than the thousandth time. Yet, so many creative business owners try to get paid for the value of the first time after they perform the song for the thousandth time. Here is how that works: Your creative business charges a fee that is randomly collected and not tied to any value marker – say fifty percent down, fifty percent two weeks before delivery or some other permutation of randomness. Shocker of shockers clients do not enjoy the process of creation and production as they should because you made it all about the end. They do not want to pay for the road map when they are already (or almost) at their destination. Even if the road map and the journey there is what made the absolute value what it is.
The answer is simple: get paid for the value you deliver, when your creative business delivers it. The work is fundamental – you know the steps your creative business needs to take (and in what order) to create your best art. Write them down. Assign a dollar value to each one. If the steps can be batched, batch them (say the design process), add up the dollars and get paid when you are finished with the batch. Then move on to the next set until you are done. That is the secret sauce.
Each moment with your client matters. How much it matters is up to you and your creative business, not your client. If you are unwilling to do the work to demonstrate the value of the moment, why should your client care? As every silly pop song will tell you, when the moment is gone, it is gone. So get paid for today and tomorrow and leave yesterday alone.