by May 18, 2010

Show me the money!

Last month, I had the opportunity to speak at DrupalCon San Francisco. I had a great time speaking. I did a case study of Lullabot itself, in which I talked some about how the company is structured, some of our core beliefs, and about my own business ideas and strategies. (You can watch the slides and hear the audio here, or access the slides here.)

I'm a huge advocate of giving things away (creating value), and then using smart business models to capture some of that value. Part of what I talked about during this session was how to determine one's value as a Drupal shop. When I first came to Lullabot (about a month after Matt and Jeff founded the company), the company was swamped with work requests. Raising our rates was a great filtering mechanism for us, and also helped "buy" the free time that our awesome team members need to do things like write books, co-maintain an entire release of Drupal, and maintain four billion modules. But for us, it was a total guessing game. We basically raised our rates until we reached the point where we started meeting some pricing resistance. We've done careful tweaking of our rates over time, but we're at a point (after 4 1/2 years in business) that we're confident in our rates and very confident in the value that we provide for those rates.

However, I'd like to make it easier for you. Trial and error can be messy, time-consuming and expensive. I sometimes do freelance consulting (I love helping to build something out of nothing) and I recently worked with the team at Rapid Waters Development to get their business set up for success. (Lullabot has since acquired them - success!) We spent a lot of time figuring out pricing models. I really wished at that time that I could get my hands on some concrete information about what a variety of Drupal shops are charging... and so now I've gone ahead and gathered it.

This is a super small sample, and it is entirely unscientific. I asked 10 people to take the survey; 9 did. (Go open source mentality!) I hand-chose who I asked - I wanted the answers to come from established, credible, full time Drupal shops. I'm very grateful to those business leaders who filled out the survey. I decided against opening up the survey for anyone to take because I thought the results would get diluted if there were one-person shops or huge outsourcing companies whose Drupal services may only be a portion of their business. (If you guys think a larger survey would be valuable, let me know. I'm totally open to doing one of those, too.)

So, what did I learn?

That we're all over the place. Lullabot is a boutique shop - we charge a lot of money, we kick a lot of ass, and we give a ton back. Other shops work more with NGO's and non-profits, and by necessity need to charge different rates. Some shops may want to compete on price, and thus would want to fall more to the commodity level end of pricing. There's no right or wrong rates to charge. However, I believe that we should all know where we are on the pricing scale, so that we can plan and market ourselves accordingly.

Whatever you do with this information, I encourage you to ensure that you're adding as much value as possible, and taking good care of your people. Happy clients and comfortable employees make for more successful businesses, and they are a great way for us business peeps to contribute back to the Drupal eco-system.

The pricing only slides are available as a PDF; I hope that you find them helpful!

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