In my small business incubator group, how much do you charge is a question we debate often. And that’s good. Because the last thing you want to do when someone asks you this is to fluff it.
Eventually, you won’t fluff it. Initially, you might. Unless you are prepared.
Here’s how to get prepared.
- Have some underlying sense of what you are worth, something you can peg your prices to. I am going to talk more in a moment about value, not price. But work out your rack rate for starters. Work out how many hours you want to work a week, how many weeks you want to work a year and divide that number of hours into what you want to earn in a year from your biz. Approximate will do for now, we can tighten this up later.
- Note your visceral response to that number. Does it feel too much or too little? I’m betting you will probably feel it’s too much. Ask yourself this question then “who says?” and explore what comes up for you.
- Next, we want to get you out of quoting using hourly rates, because that’s exchanging time for money. That’s what freelancers do and you are becoming a business owner.
- So consider instead the value you deliver when you take on this project, and how grateful your client is going to be that you are solving their problem and releasing their precious time for something more important to them. A weight off their mind has a commercial value to them and to you, you don’t have to justify how you came to that sum.
- Quote in their financial reality, not yours. Look for clues as to how they use money in their lives, what they charge for their services, how they live, how they dress, what they drive, what they spend their money on and how easily they do that. If you are feeling skint and scarce right now, don’t quote in your own financial reality, just be aware how many people in the world are not living in that same reality too. Your financial reality right now is not relevant to this business negotiation.
- If in doubt, ask “do you have a budget for this?” and then say “OK, let me see what I can do for that”. This buys you some breathing time and stops you saying a stupidly small amount in a kneejerk reaction, or out of desperation or embarrassment. It also opens the negotiation ‘cos you can get back to your potential client within an agreed timeframe and put forward your proposal in a considered way. That gives your potential client the opportunity to consider whether their budget is big enough for what they want, or if they need to find more money to get the job done properly, by you, an expert.
- You must be fully aligned with the quote you eventually produce. If you are not, your scarcity will leak and your client will catch on and start bartering you down. They may try that anyway, just for the craic, because that’s what some people do, but you don’t have to give into it. You can just enjoy the negotiation for what it is, a negotiation.
- No matter your answer to the rack rate question, I already know you will come back to me later in our relationship and tell me it isn’t enough. I know this because self-employed people eventually get to the place where they are working too hard for the money they make and the only way to address that is by charging more.
- Funnily enough, charging more makes it easier to attract your ideal client, who is one who can easily afford you and who already considers you “a gift”, as my client Susan expressed it recently. And your business runs more smoothly too when you start charging properly.
- Know that eventually this question is so easy to answer because it is no skin off your nose whether or not your client buys at any price. In fact, you will get to a matter-of-fact place of quoting your price and thinking mainly (though sometimes saying too) “do you want it, or what?”
A client who has worked with me for several years shared this recently. I was so happy for her to have reached this place. She was too, and her words exactly illustrate my point:
Been quoting for a possible job over the last couple of days. Batting figures back and forth. I love that I know what I’m worth and that I’m not prepared to go any lower than the fee I’ve stated. It makes me realise how far I’ve come over the last few years and how confident I now feel about my experience, my value. What a great feeling!