When we work in corporate life we are usually bold enough to ask for a pay rise. So, why are we hell bent on charging as little as possible when we start working for ourselves?
An employer is nothing more than a client. Employers buy your time and expertise for an annual fee usually paid in 12 equal instalments. When you no longer believe that your employer values you enough, you find another one that does.
So why do early-stage, particularly service based businesses, believe they can only compete on price, setting their prices unrealistically low or that they can charge the earth?
New solopreneurs and start-ups, especially consultants go one of two ways.
It's a particularly common problem for ex-corporates who go it alone. They set their fee rates on what they assume clients will be prepared pay. But most chicken out and only charge for their time – ignoring the value of their expertise.
Both are guesswork and bear no relationship to the value you give your client. Once you fix the price low it’s a tough job to raise prices, better to start higher.
Let me explain by using a coaching discussion I had with a client. It all comes down to confidence and perception.
A quick dip test is to ask yourself, if my business was a car what would it be or what do I want it to be? My client decided his business was a Fiat Panda. When we asked one his customers, they said a Volvo XC 90.
My client delivers Volvo XC 90 value but charges Fiat Panda rates even though the client expects to pay Volvo prices – no wonder he has a very happy customer. One car is double the price of the other.
He has 26 years’ experience and expertise; all of the top qualifications, an industry black book to die for, the ability to save clients £000’s and keep them legal and compliant, you would expect a high fee, yet he charges very little.
If you're reading this and thinking this is me, then stop.
Sit down and think about the value you give to your clients. Don't reduce prices, charge a fair rate, don't give your expertise away cheaply or for free, start raising prices now. Cutting prices is just a race to the bottom from which there is little chance you’ll be able to return.
And if you're worried about upsetting an existing client, don't be.
Start by raising your prices for all new quotes and customers now, not tomorrow, NOW. Then start converting your existing clients onto your new charging structure.
Good luck, and in the words of L’Oreal ‘Because, you’re worth it’!
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