Charging What You're Worth

Taken from an article by Paul & Sarah Edwards

One of the main reasons so many small businesses struggle is because they chronically undercharge. Here’s a list of do’s and don’ts:

Don’t discount your prices for fear of not getting enough business, and don’t feel embarrassed to openly charge a fair fee for what you offer. Establish yourself in a specialty where you can excel at what you offer and charge accordingly.

Most importantly, do not apologize for charging - period. We mustn’t apologize for earning a living. Until we don’t apologize, we will never charge enough for our services and will remain chronic under-earners.

Don’t forget to cover your out-of-pocket expenses and your indirect costs for overhead and benefits in the fee you quote. Take advertising costs, office expenses, travel, health insurance, vacation and sick leave, and retirement benefits into consideration when setting your fees. Create a plan of circulation for you personally and then for your business.

Don’t forget you need to add on a reasonable profit so you can expand and grow your business. If you don’t make a profit, you won’t be in business too much longer.

Do quote fees openly and clearly upfront and get agreement, preferably in writing, before starting to work. Always talk about money with clarity. If you bring vagueness to the conversation of money the job or project will be fraught with problems. Talk about money early and often.

Do explain the way you work so the customer understands why doing the job in a “cheaper” way would actually be more expensive and will not achieve what he or she wants. Be upfront abut the experience you are “selling” and don’t take it personally if someone wants more clarity. That’s your opening to discuss money honestly.

Do calculate all costs and profit in any fixed fee you quote. Or, if you will be charging a fixed hourly fee plus costs, make that clear upfront as well. Be very clear about your hourly fee and how you work with that and when you will let them know where you are; i.e. after every hour or two hours? People want to know how the hourly billing works and they don’t want any guessing around this issue.

Do let a prospective client know beforehand if you will be charging a fee for your sales call, initial consultation or proposal development. Don’t surprise clients with a bill. Again, clarity is key and essential for having clear, open and honest communication thereby developing a relationship build on trust.

Do discuss any possible additional cost increases that you foresee arising with your clients, and obtain their authorization before proceeding with the project. Don’t be concerned that they will be upset, they may. What they’ll be more upset about is a surprise bill for an unforeseen expense that could easily have been discussed when it came up.

Never sell yourself short. Value what you provide. But remember: The only surprise your clients should have when they get the bill is what an outstanding project or service they got for the agreed-upon price. DO NOT apologize for making a profit or earning what you deserve to make a good life for yourself and your business.

Reva Kussmaul
CVO – MoneyVisions
http://www.moneyvisions.net