Want to Make More Money? Fish in a Bigger Pond!Written by Kimberly Stevens
Setting prices is a dilemma most service business owners encounter at one time or another. This week, it was Susan’s turn. “When I first started my business, I felt uncomfortable charging for my services. Since I was doing it to make a living, I finally just picked a price I thought wouldn't scare too many people away. Now, based on my available work hours, I can't really take on more clients but at rate I'm charging them, I'm not going to make enough money to keep business alive. How do I raise my prices without losing my clients?” she wanted to know.
For whatever reason, it is uncomfortable for many of us to look a person in face and state our hourly rate or cost of a project they want us to complete for them. This is usually rooted in our fear of rejection. We think, ‘What if prospect gasps and falls out of his chair convulsing on floor?’ or ‘What if he snorts with disdain or launches into uncontrollable laughter?’ At beginning, we really need work and generally decide we'd rather start getting some clients to build our reputation and skills, thinking we'll charge a rate we know they'll accept. Besides, we can always raise our prices later. Well, now is "later", so it’s time to bite bullet.
First, understand you aren't asking for their firstborn child -- you are asking for money in exchange for service you are offering. Shakti Gawain, author of "Creating True Prosperity", introduced me to concept of thinking about money as just another form of energy. Just as you put energy into service you provide, client puts energy into their field of interest in order to make money to pay you for your service.
On business-to-business side of things, client's business has clearly made decision to outsource service they are discussing with you. They have decided to use their internal staff's energy to focus on their core business while outsourcing those things they don't have skills or time to do. The same is true of individuals - they could paint their house, but they're calling you. Clearly, they don't want to do it and know it's going to cost money to get someone else to do it. Either way, they are going to hire someone to do it, so why not you?
That said, it's time to raise your prices. You've got two sets of people to deal with here -- your current clients and your future clients. Future clients are easy - simply start quoting higher hourly rate or basing your flat rate proposals on new hourly rate with no mention of a recent price increase. Your fear that you will lose out on some bids WILL come true. You've been fishing in pond that attracts lower-end clients, so you will probably have to start marketing to and networking with prospects on next higher rung. But, so what? It's still your choice – you can stick with low-end guys and struggle to make your business profitable or you can start charging a respectable rate for skills and professionalism you bring to table to create a prosperous business. It's up to you.
Want More Money & Less Stress? Set Some Boundaries!Written by Kimberly Stevens
At 2pm last Wednesday, I got a call from one of my clients. Before I could barely utter my "hello," she launched headlong into her story - "I am so frustrated! I have this client who has been dragging her feet at every stage of our project. I'm working on a branding campaign for her company and expected to be finished nine months ago, but every time we get to a stage in project where ball is in her court, I have to follow-up umpteen times and push and prod just to get her to move forward. In almost every case, it takes her about two months to do something that could have been done in a week. Then, two months later when she's finally finished with her part, she cheerily announces that she's ready for me to start next phase and wonders how quickly I can do it. Every time this happens I have to completely reacquaint myself with her project. All in all, I've spent almost twice as many hours as I budgeted. How can I get her to wrap up this project so I can move on?,” she finished.
I cannot think of one service business owner that hasn't faced this issue at one time or another. We all started our businesses concerned about providing great customer service and a quality service delivered on time. We thought that was key to having happy clients. But, at some point, we find out that great customer service means that we're not allowing one client's delays to impact another client's project, profitability of our business, or our own personal satisfaction. This is when we have to recognize that we are responsible for this situation. If you've allowed a client to run amuck dragging a project on forever, changing project parameters numerous times, delaying payment of final bill, why shouldn't they continue to behave this way? It's up to you to put into place policies and procedures that communicate this to your clients and prospects from very beginning.
One format I've seen used very effectively is a one-pager called "How We Work Together." It's a very basic document that outlines responsibilities of both you and client. It makes clear who is responsible for what and when so there are no questions later. It also outlines consequences if either of you misses target. Not only does this put client on straight-and-narrow, it shows them that you are willing to be held to high standards as well.