Pricing Model Portfolio
Match pricing to risk, value, and cash-flow needs instead of using one model
- Difficulty
- Advanced
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 98%
The Pricing Model Portfolio organizes service pricing according to what is sold and who assumes risk. Input pricing sells time and materials, leaving duration risk with the client. Output pricing establishes a fixed deliverable and transfers execution risk to the provider, who must estimate and pad for uncertainty. Value pricing anchors the fee to the client's stakes, expected gains, losses, and desired outcome. Performance or royalty pricing shares risk and ties compensation to measurable improvement, while subscriptions exchange a continuing stream of value for recurring revenue. Rather than treating the models as a rigid maturity ladder, the provider maintains a portfolio. Stable fixed-fee or value-priced work funds operations while a limited number of performance or equity engagements offer asymmetric upside without threatening survival.
Origin
Extracted from The Jasmine Star Show, where Chris Do explained the pricing structures he teaches creative entrepreneurs and related them to his own fixed-fee, value-based, equity, and recurring engagements.
Core principles
- 01Pricing determines who carries the risk
- 02Greater uncertainty should command greater potential reward
- 03The client's business stakes matter more than production effort alone
- 04Recurring relationships can replace repeated acquisition costs
- 05A diversified pricing portfolio protects cash flow
How to run it
- 1
Assess the Engagement
Clarify the deliverable, uncertainty, client stakes, expected outcome, and ability to measure success. Determine which factors are actually driving the buying decision.
Pro tip Separate the requested artifact from the business outcome it is intended to produce.
Watch out Do not assume every client receives equal value from an identical deliverable.
- 2
Evaluate Risk Capacity
Decide how much delivery, market, payment, and partner risk the business can safely carry. Include personal obligations and current cash-flow needs in the decision.
Pro tip Set a maximum proportion of speculative engagements in advance.
Watch out Royalty or equity work can fail because of the client's operations even when your work is excellent.
- 3
Select the Pricing Model
Use input pricing for uncertain exploratory labor, output pricing for predictable deliverables, value pricing for measurable high-stakes outcomes, performance pricing for shared upside, or subscriptions for continuing value.
Pro tip Hybrid structures can combine a dependable base payment with performance upside.
Watch out Do not force a fashionable pricing model onto an engagement that cannot support it.
- 4
Price the Risk
Add contingency to fixed-fee estimates and demand greater upside when accepting greater uncertainty. Ensure the economics remain viable under a plausible downside scenario.
Pro tip Model the expected, best, and worst outcomes before proposing the fee.
Watch out A high theoretical payoff does not compensate for cash-flow failure today.
- 5
Define Success and Responsibilities
Document the outcome, measurement method, baseline, time period, and each party's obligations. Performance arrangements should distinguish your contribution from the client's execution.
Pro tip Include access to the data needed to verify results.
Watch out Ambiguous attribution creates disputes when compensation depends on performance.
- 6
Balance the Portfolio
Combine reliable engagements with a limited number of higher-risk opportunities. Rebalance as financial reserves, family obligations, and business maturity change.
Pro tip Treat client pricing structures like an investment portfolio with different risk levels.
Watch out Do not place the entire business on one pricing model or one uncertain outcome.
In the wild
Chris Do holds equity stakes in several companies that have not performed well, but those positions do not endanger his business because they represent only a handful of engagements. If one succeeds, the payoff could rise from a conventional fee of roughly $20,000 to approximately $1 million.
→ The business preserves dependable income while retaining exposure to asymmetric upside.
Instead of charging $80,000 upfront for a website, a designer could charge $6,000 per month under an annual contract. The designer builds the site and then continues supplying analytics, optimization, and improvements. The first year's revenue is slightly lower, but a valuable ongoing relationship can continue beyond the initial term.
→ The client reduces upfront risk while the designer can earn more over a multi-year relationship.
Common mistakes
Using One Model Everywhere
Putting every engagement on performance, subscription, or value pricing concentrates risk and ignores differences among clients.
Ignoring Client Dependencies
A performance fee may fail because of the client's inventory, quality, sales, or operational problems rather than the provider's work.
Pricing Only the Deliverable
Identical-looking work can create radically different economic value for different clients.
Is it for you?
Best for
It is best for experienced freelancers, consultants, studios, and agencies with enough demand to select among several commercial structures.
Not ideal for
It is not ideal for providers who cannot define scope, measure outcomes, evaluate clients, or absorb delayed and uncertain payment.
From the transcript
“There are essentially four pricing models.”
“So when you're pricing, you don't want to take on only value based price or subscription or whatever because it can go upside down.”
“Yes, you can have a variety of different models that work for you so that there's a level of risk tolerance that you can take.”
From the episode
Sophisticated Marketing: Creating Content That Builds Community with Chris Do
Chris Do