Copyright 2006 Sandra P. Martini
One of the worst moments in a business owner’s life is that silent moment between when you quote your rate to a potential client and his response. True, that hardly a second goes by, but it can feel like an eternity.
Will he
hire me?
Did I go too high?
And when he says YOU’RE HIRED!, a new set of doubts creep over you:
Should I have gone higher?
Did I lowball the price just to get a client?
You know the feeling. You’ve got the job, the project, the new client and it almost always turns out to be more work than you thought when you signed up for the task. Be sure that you know your worth an.communicate it to the client up front.
1. Know your worth.
If you charge your clients hourly, how do you know what to charge them? Did you pick a number out of the air? What was your rationale?
For those who choose to bill hourly, I recommend the following approach to determining what you charge:
a) Determine what you want your salary to be. How much will you take out of th.company?
b) Add to that any subcontractor expense that you may have. This is your labor total.
c) List out and then add all your expenses: advertising, promotion, rent, self-employment tax, supplies, etc. This is your non-labor expense total.
d) Add your labor total to your non-labor expense total.
e) Add in any profit goal you may have for
Your business.
f) Bullets (d) plus (e) equal your Total Required Revenue.
g) Divide your Total Required Revenue by the number of BILLABLE hours for the year. Remember that you will not be billing 40 hours/week. The result will be the amount you need to charge per hour to make your salary goal.
If you bill hourly, take the time t.complete the above exercise and, if necessary, increase your rates accordingly.
2. No haggling.
It can be hard when you have few clients or need more money, but whatever you do, do not haggle with your clients/prospective clients over your pricing.
You can haggle at a flea market. You can haggle for the price of a house. You can negotiate (a.k.a. haggle) for a corporate job salary. As a self-employed individual, you must not haggle over your pricing. To do so immediately lowers your perceived worth with that person and will set you up for a relationship of nitpicking over every nickel and dime.
3. Provide a solution" and not a service.
Insure your clients understand the benefits they will receive from hiring you. You are not providing them a service, you are providing them a solution.
The difference being that people value solutions more than they do services. Whenever discussing price with a potential client, focus on the benefits, the solutions that she will receive as a result of hiring you.
Will she have more free time? Will her business see an increase in profits or clients? Know the benefits and speak to them!
4. Be prepared to say Goodbye.
Not everyone is going to accept your terms. Deal with it. They weren’t meant to be your clients anyway and would have just taken up the time that you could use for a better qualified client. Save your time and energy for those who recognize your worth you’ll both be happier and more productive.
Pricing your services is one of the most emotional things you’ll do as a business owner. Be sure to take the time to review the project at hand before just blurting out a price doing so will save you a lot of time and frustration down the road.
Online Business Manager & Entrepreneur, Sandra Martini, publishes the 'Effective Entrepreneur' weekly e-zine. She also coaches small business owners to more efficiently manage their businesses while increasing profits and having fun. Sandra's coaching programs are available via teleconferencing, emails and telephone calls. For more information or to sign-up for ‘Effective Entrepreneur’, visit
thebostonvirtualsolution.com/ today.
This article is free for republishing
