Income Generation

You Charge an Awful Lot.

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You Charge an Awful LotAfter giving a prospective client a proposal for my services, and she said “If I look at your pricing, and the actual hours of your time I get, well, it seems like you get paid an awful lot per hour!”

Without missing a beat, we dove into her concerns and she agreed on the spot to sign on as a client. My biggest client to date.

As I hung up the phone, I thought, “WOW. A few years ago, her comment about my pricing would have totally freaked me out.”

What did I say to close the deal? Well, first of all, let’s travel back in time to how I would have responded earlier in my career. I would have started to justify or stammer or lower my prices (or all three) and it would have sounded something like this:

“Well uh, you see you have to understand that I, uh, work from home and, um have to pay for my own insurance and computer and taxes and I, you know, live in California where the cost of living is really high and, you know, I charge less than my competition, so you’re really getting a deal actually but well, I guess, if you want me to give you my best deal, why don’t we take another $1,500 off…”

Groan…

Now, compare that hot mess to how I responded this time:

“It’s so interesting that you bring that up and there are two things going on here that are opportunities for us. The first has to do with us working together and the second has to do directly with your business.

First, I’m glad you brought this up so I can clarify everything you’re getting in this program, and it goes way beyond the hours we spend directly working together. You will also get email access to review any documents or promotional materials you’d like feedback on. Your staff can also have access to me and be included in any of our coaching calls. In between formal calls, if you need support through a specific challenge, you have access. What you get is a dedicated coach so you can meet your goals faster, because you don’t have to figure it all out yourself.

Which brings us to the second opportunity. Why aren’t you charging more? If my prices seem high, I’m betting there is an opportunity in our work together to increase what you’re charging. You’re a 25-year expert running a million-dollar company – why aren’t you charging more? That’s one of the first things we should work on.”

Feel free to use this as a model the next time a prospective client hints that you’re charging too much for your expertise!

Raise Your Rates (how & why)

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275HAt a recent speaking engagement, I was interacting with the audience (and enjoying the hell out of myself) when I was asked, “Why do you constantly talk about raising your rates?”

I replied, “So you can have the freedom to be truly generous with your clients.”

The questioner looked confused, so I went on to explain, “You know how you’ll sometimes give someone a break in pricing, like a friends and family discount, and then you end up resenting the time you take with them? Because you know that you could be charging someone else more for that time, or doing something else to grow your business, right? Yeah, I don’t recommend you do that.”

It’s true that you can be generous no matter what you charge, but when you’re charging bargain basement prices, can you be truly generous? As in, “staying out of resentment and giving from the heart without fear that you’re going broke” kind of generous?

Not so much. So how do you resolve the seemingly conflicting ideas of charging more money and being more generous?

Stop confusing giving cheap rates with being generous.

Cheap is solely about money. When you charge cheap rates, you will feel like giving less. This is where you find yourself thinking thoughts like, “Well, they only paid me this, so I’m only going to give them that. I’ll charge them extra if they ask for that.” This is a tightfisted, no-fun way to do business. And it’s exhausting.

Generous is about value and abundance. When you charge a premium for your services, you feel free to give more of yourself. And what happens for your clients?

One, they are more committed to their own success because they are literally more invested. Two, they receive more from you. When you add those two things together, your clients are more successful and you experience more freedom.

The usual follow up question I get to this is, “If that’s the case, then why don’t more business owners raise their rates?”

Well… a million mindset issues plague entrepreneurs when asking for money, like childhood programming, self-worth issues, etc. But instead of going down that road, here’s a different approach.

Below is a list of red-flag resentment (RFR) phrases that, when you hear yourself thinking or saying them, will let you know to stop complaining and instead recognize you’re falling into the trap of trying to be cheap to win business… and it’s going to come back to bite you.

RFR: “Don’t they know what a great deal I gave them?”
First of all, if you do give someone special pricing, you should definitely let them know. Otherwise, if they’re getting a deal and don’t know it, you’re adding a layer of martyrdom to your resentment. Not a great idea.

Assuming they do know they are getting a deal, their excitement over the bargain only lasts through the sales process. Once they hire you, they just expect great service like everyone else.

Tip: While it’s fine to have friends and family pricing, make sure those fees are high enough to allow you to be dedicated to your client. To do this, prepare a list of services and pricing with regular and preferred (aka, friends and family discount) pricing. Use this when quoting your rates, and do not give further discounts

RFR: “Don’t they know how long it took me to get here and learn all this?”
Ouch. Ok, this is a tough one. Maybe this isn’t the exact phrase that runs through your head, so another way to know you’re in this bad space is that you feel like you’re trying to convince your client of your value at every turn.

Tip: Have a structured sales process with a format that walks people through the discovery process to understand exactly the problem they need solved, and the value you bring in solving that problem. When you have this structured sales conversation with a prospect, they will feel confident you understand their needs, and it sets the stage for a profitable, successful, respectful client relationship.

RFR: “Don’t they know how much time this is taking me?”
This often shows up in business as the hope that your client will suddenly be able to read your mind, recognize how hard you’re working for them (probably outside of the scope of your agreement) and offer to pay you more out of the goodness of their heart.

Nope. Never going to happen.

Tip: Create detailed agreements. Agreements should include a clear scope of work, payment agreement, and (maybe most importantly) how work outside the scope of the original agreement will be handled. This is particularly important for creative work like graphic or interior or web design. I highly recommend that in addition to getting a signed agreement, you go through your agreements verbally with your client. Scope creep is happens all the time in creative work, so making sure there is clear communication around the subject is critical.

Imagine what it would be like to charge rates that are high enough to free you to give generously. All of your work with clients is joyful, and you’re not worrying about what else you could be doing to generate income. You establish your value from the beginning so your clients respect and appreciate your work. And you set clear boundaries up front, so they work collaboratively with you to reach their goals.

What would that make possible for you? What stresses would it alleviate?

What does generosity allow me to do? I take clients out to dinner. Add free sessions. Send them books. Brainstorm ideas for them outside of our appointment times. Work with their teams. All of these things create stronger relationships, higher levels of commitment and, ultimately, more successes for my clients.

Charge more. It’s good for the world.