To get where you want to go in life, you have to take chances, step out of your comfort zone, and sometimes do things that scare you.
How To Charge More For Your Services — Part Two.
In my last post, You’re Not Charging Enough For Your Services, I gave an actual example how other companies have the chutzpah to charge 50 times the price for a service because they can (and do it). They were charging almost $400K to build a website that could easily be built for $8-10K. So you can say this is 'Part Two'. I received a huge response for the post (and a lot of texts/emails/calls from readers - thank you!) who requested a number of techniques to help them raise their pricing. Here's the best part — increasing your price can positively affect people’s perceived value of your product/service.
1. Increase your fees for every new client — I recommend this strategy frequently to my clients. It's the easiest of the bunch — no pressure, no hassle for your existing clients. You don't have to go crazy, but you can jump your pricing by 10-25% and the new client will never know. This works with service-oriented practices where one client will never know your fees for another. Of course, will not work with established or advertised prices.
2. Increase your fees based upon their apparent wealth — This is an oldie, but goodie. If you find out their income, their home/location, their car, or their company/position, you can modify your fees accordingly by upwards of 25%-50%-100%. Trust me, it's done all the time. I know it might be a bit unfair, but if a service-person is standing in front of a 10,000 square foot mansion with three Bentleys in the driveway, they will certainly charge more than the person with a used car in a duplex.
3. Increase your fees by a small percent at a key time in the year — This one is a little harder than the rest, but it is equitable across your entire client list. Bump up your pricing at a certain time of the year and most people either won't notice, acknowledge the increase, question the rise and acquiesce, or defect. If it's a small increase 5-10% and it's done in a personal or professional manner, clients most often never defect. The ones that do leave don't value your services and are looking for the biggest bang for their buck. You probably don't want them as clients.
4. Extend: Provide an extra service — Your prices should be commensurate with the value you are providing. But there might be an additional service or product you can provide where your client will acknowledge the price change but won't care because of the extra service. The product or service might not cost you a lot, but over the long run, the up-charge on services will bring in mucho dollars.
5. Streamline: Reduce your service. Review the entire client/customer interaction from beginning to end. List out every step and deliverable — be very specific and granular. Stack rank each one from most important to least important to the client. Take the bottom step/deliverable and eliminate it. Or if you're a bit queasy about doing that, ask a few clients if they really need or want that deliverable. Most of the time, they don't even know it exists. If you cut out specific steps or deliverables and your clients see no diminution in their service, you are streamlining your product AND saving time and money.
6. Position differently. Add tiers. This is a bit harder than the rest, but the benefit is powerful. Take your offerings/products and re-package them. Add services, combine services, reduce services, move pricing around to sound advantageous and more specialized to the customer, while you save money (or increase fees). This strategy is frequently performed by many service industries in food and merchandise.
7. Change the packaging. A mainstay by manufacturers who dabble with size, weight, quantity, box, etc. Like positioning, you are altering the deliverable in some way to seem bigger, but in reality, it's less (or streamlined). Take a look at your product(s) and investigate how you can alter the packaging to give the appearance of delivering more to the customer.
Some of these suggestions are just suggestions — I'm not here advocating one over the other. Some are 'morally' better than others, but in the end, they're all viable alternatives to going out of business. In my 20+ years in marketing and advertising, these seven strategies are the most employed in the marketplace. Pick the one best for your business and charge more!
Can you think of any other one? I'd love to hear from YOU.
You're Not Charging Enough For Your Services.
The other day, I came across an old contract when I worked at <confidential> from a famous consultancy called <confidential> in NYC. The contract was signed prior to my employment and after 2 months, I fired the consultancy based on their incompetence with the project. I was amazed with the short and cavalier agreement and the associated fees for each service:
- Project Management: $39,800
- Creative Development: $45,025
- Website Development: $57,350
- Audio Production: $8,550
- Testing & Delivery: $27,350
- On-Site Production: $98,580
- Electronic Mail Campaign & Fulfillment: $5,875
- Recording Studio & Equipment Rental: $15,885
The Grand Total? $298,415 for approximately 2 months work building a simple web site with six hour-long webcasts. Oh by the way, the price doesn't include any changes/additions, overtime, hosting, travel expenses, or technology. That's extra. (I get the feeling they came up with the number and worked the financials back into logical groupings — again just a feeling)
Three-Hundred-Thousand-Dollars. Granted, the agreement was dated 2000, so in today's dollars, we're talking over $400K to build a simple site.
But I present this contract to you to illustrate one simple fact:
MOST PEOPLE DO NOT CHARGE ENOUGH FOR THEIR SERVICES.
Why? You're afraid of losing clients and scaring away any potential prospects.
Guess what? GOOD! You don't need to work with them! It's time for you to fully understand the value of your services and to get a better idea what the market will bear. What would happen if you increased your fees by 50%? 75%? or 100%? I know what would happen . . . it happened to me:
- You would have less clients. You can then spend more quality time with your current client base.
- You would have higher paying clients. People who are probably more successful.
- You would have clients who are serious about working with you. You will be working with people who play better tennis, so you'll have to bring your 'A' game.
- You would have clients you really want to work with. Charging more allows you to be picky and not just take anyone.
- You would begin to build a long list of clients who demand your services.
Are there lines around the door when HTC releases a new phone? No. How about Apple? Absolutely. You need to be the Apple of your industry.
At first it's scary. Clients will bolt, they will complain. But new clients will appear and start telling their friends.
As an example, I have a client who was charging some of her clients $100-$125 per session. After much prodding on my part, she is now charging $200 per session, and her clients are telling their friends — and her appointment book is overflowing with new clients. (By the way, she just hit her all-time yearly revenue goal in 2016!)
I also coached another client who was feeling unappreciated in their current role. They have been delivering key improvements to the company for over five years (most making the annual report). But for some reason, they received no raise, promotion, or accolade from management. They tried to inquire, but were rebuffed time and time again. Ultimately, I had them look outside of the company and within a month, they had a brand new position at a bigger firm with an increase in pay of 20%.
Raise your prices with chutzpah and the clients will line up at your door.
P.S. I'm not a hard-liner on this. I do coach two pro-bono clients every month. So there.
Top 10 Most Read Articles In 2014.
Every year, I go back and track my website analytics to uncover what articles really resonated with my readers. Here are my top ten for 2014 to get you ready for 2015!
1. The Most Important Thing You Should Do In The Shower.
Acknowledge and feel gratitude for all the special things in your life.
2. How To Network Like A Pro.
Last night, I was invited to attend a gala event at the prominent investment firm in NYC. Here are some key techniques that I used to make the night a fruitful and productive one.
3. Build The Best Standing Desk For Your Office.
Lately, I’ve been reading about the healthy aspects of standing desks and learned about all the attributes of standing: better posture, more active, easy to reach items, etc.
4. Be Like Jack LaLanne.
I grew up with Jack LaLanne. I used to watch him every morning on TV. Jack taught me a lot of things about life — especially to stay positive all the time.
5. How To Eliminate Guilt About Not Doing Everything.
Some Shiny Objects are good. Some are bad. Let’s talk about the BAD Shiny Objects.
6. Be A Better Leader – 30 Leadership Hacks For Managers.
Here are my top 30 hacks to make you a better leader.
7. Top Five Regrets of the Dying.
When dying patients were questioned about any regrets they had or anything they would do differently, common themes surfaced again and again. Here are the most common five.
8. Five Tips To Fix A Bad Relationship With Your Boss.
You're getting the feeling your relationship has soured with your boss. How do you repair it?
9. Hitting A Wall In Your Career? You Need A Breakthrough.
It's tough today. It’s hard when everything is coming at you. Hard to think. Hard to act. Hard to react. As they always say — the first step is always the hardest.
10a. You’re Not Charging Enough For Your Services - Part One
10b. How To Charge More For Your Services. - Part Two
I received a huge response from readers who requested a number of techniques to help them raise their pricing. It became a two-part article. Enjoy!
If you truly want to change your life, career, or business this year. Check out my complimentary Test Drive.
This One Phrase Will Transform Your Business.
This weekend, I was hiking with my family in a state park — lots of trees, streams, and ticks. We all had a great time and the summer heat wasn't too oppressive. While we were exiting the forest, we were speaking about the economy and business, and my brother Jeff mentioned a quote I've never heard:
"Shame on you for not charging enough to stay in business."
It hit me like a thunderbolt. How many businesses do we encounter that bemoan the fact they aren't making enough money to survive?
Here's a little financial equation I use to understand the financials of your business and career.
- How much money do you want to make this year? Let's say $125,000 to make the math easy.
- Divide it by 50 weeks (you get 2 weeks off for vacation) = $2500 each week.
- Divide it by 5 days a week = $500 each day.
- Divide it by 8 hours = $62.50 per hour. But you have to have 40 solid hours of billing. If not, you need to increase this figure — even double it.
That's your hourly rate you need to make to pull in $125K a year. It doesn't take into account overhead, materials, help, etc. But it gives you a generalized idea of how much you are WORTH.
Then I have my clients build their business model the other way:
- How much can you charge each client on an hourly basis? Let's say $100 an hour.
- How many billable hours a day do you have? Let's say 5 = $500 per day.
- How many billable days per week? Let's say 4 = $2000 per week.
- 50 weeks per year = $100,000. A $25K shortfall.
This is important — usually the salary and hourly rate don't add up. I usually have to tell them to charge their clients MORE MONEY. Or figure out a way to deliver additional services to their clients so they make more money. Can you upsell? Can you sell them more stuff?
In any case — you need to charge enough to stay in business.
What are you charging? Do you need to charge MORE?