Are You Charging Enough?
November 1st, 2009
Are you charging enough for your services and products?
You may think that you are. But your low fees could be one of biggest obstacles facing your business.
If your prices are too low you will end up in a vicious cycle, because you can’t afford to advertise or invest in your business. Sadly, many potentially successful businesses fall by the wayside simply because they’re not charging enough.
Don’t let this happen to you.
The topic of fees is an emotional one for many people. I learned this a few years ago when I brought out a teleseminar/e-book package called “How to Charge What You’re Worth and Get the Fees You Deserve.”
After I launched the package, I got a lot of emails from people. They said things like, “I don’t charge a lot, but I live in a low-income area, so this is why I have to do it this way.” Or, “I don’t think it’s right that you charge a lot of money.”
What I found really interesting was that people felt the need to justify their low fees. And that by daring to suggest that they put their prices up, I was venturing into dangerous territory. Now at the other extreme, there are people who say, “I’m charging a great fee. I charge £1,500 a day,” – or £2,500 or even £5,000 a day. Well that’s great.
Or is it? Because people can have a high daily rate, yet still be receiving a low hourly pay.
For most solo businesses, if you take the amount that you’re earning, then factor in all the hours that you work before and after getting the client – that is your true income.
Consider everything that goes into landing a client: all the time spent in preparation, meetings, delivering the service and follow-up. Now take out all the costs of running the business. How much are you really earning per hour?
Most of us have what I call a financial set point. This is the amount that we feel comfortable earning, the number that we gravitate toward.
I’ve observed this in myself. When I was getting established as a freelance trainer, I charged £500 a day for cold calling training for a company. Then a sales trainer hired me to work on a special project. But he wasn’t charging £500 a day for my services. He was charging £1,500 a day.
That experience really opened my eyes. Clearly what I was delivering had not changed at all, but the perception of its value had shifted an awful lot.
That sales trainer saw that what I was offering was worth that higher amount. He had the courage to ask for that well before I did. And the client was willing to pay it. This experience proved to me that people were willing to pay this amount to have me as a trainer. I realized that I was undercharging. And I now had more confidence to charge more.
So I did. I raised my prices. But for a couple of months afterwards, even though on the surface, it appeared that I was earning £1,500 per day, I found a way to turn that one day’s work into three days’ work on almost every project.
I would do all sorts of extra preparation I had not been asked for. I would volunteer to do extra follow-ups that had not been requested without any pay. My fees had changed. But my financial set point, my internal measure for what I deserve to be earning, had not shifted.
It’s important that you are aware of this set point right from the outset. Because if you’re not, you may raise your income but also raise your workload accordingly.
Once you recognize your financial set point and free yourself from limiting your income, you will make more money by working less.
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This has been a big topic among my friends in different businesses. We are all learning, thanks for sharing.
I always have conversations about this and I just keep in mind the idea of Picasso’s Napkin. When a man asked Picasso to draw something on a napkin, Picasso then asked for a large sum of money once it was over with. The guy got angry and asked why – it only took him 5 minutes to do.
Picasso pointed out that what took him 5 minutes to do, took him a lifetime to learn. I love that story every time I hear it and that’s why I’m learning to value myself way more than I have been.
A wonderful article that makes excellent points. I spend a great deal of time coaching clients through their own self-worth issues and setting prices. Regardless of the reason for a financial setpoint, clearing it is essential.
Thanks for posting this – very helpful info! I think for me the harder thing to do is when someone turns down my quote for a particular project becuase of cost. I then want to lower
my price to win the job, but as you mentioned there is always “stuff” that you do afterwards that you rarely get paid for.
This is insightful. I agree, people do have issues around money, and here’s the kicker, charging low fees does NOT guarantee you get the job. Also, people are bothered by businesses that don’t charge market rates. They wonder what is wrong with your service. Plus, if your fees are too low, you will not be in business for long.
I really like your blog and i respect your work. I’ll be a frequent visitor.
i agree with this posting. You MUST know your value. You MUST know your worth. And, if someone is not willing to pay, then I say move on. I don’t write for free, and often I have to struggle to get friends and family to understand that.
Bernadette, great post. i was talking to an allied partner about this today and your post surfaced, which adds a great reference to the discussion. another thing to point out in terms of the responses you received is that who is to say that any figure is too much money? who is to say that there is a limit on the abundance in the universe or that it is wrong to charge a certain price? we all operate from a place of choice, and if a service is too much, then a person will choose not to invest, and if it is right for them, then they will. well-said–you attract clients that respond to your financial set-point, because it’s your own view of your worth, and this will never change unless you change it from within first.