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Notes on Setting and Raising Prices
Lifestyle and Marketing
If you think you need to live large to attract business,
think again. What attracts business is a valuable offer delivered to the
right prospect with confidence, integrity, and consistency. On the other
hand, it is almost impossible to attract business when you are desperate
for work.
Your lifestyle choices can underscore your commitment
to an authentic and connected life, one lived in awareness and respect
of the well-being of others and of the planet. Living these choices and
letting them inform how you show up in the world can be a compelling aspect
of your personal marketing formula. They can distinguish the offer you
are in your chosen niche.
Insurance, Taxes, Retirement, and More
Other considerations for the self-employed are medical,
dental, life, and disability insurance. In addition, you may need professional
liability insurance, insurance on your equipment and records, and insurance
to protect you in the event of accidents on your premises.
Self-employment taxes can take the unwary by surprise.
Check with your accountant (you do have one, don't you?) and find out
what your tax liabilities are likely to be.
How do you plan to fund your retirement? There may be
tax-advantaged plans available to you as a small business owner. Again,
check with your accountant. (Have you noticed that one of the expenses
you will need to plan for is accounting?)
It is easy to overlook hidden costs such as depreciation.
Think about the furnishings and equipment you use and how often you will
need to repair or replace them. Where will you get the money for these
expenses? How will you pay for software upgrades or for a technician to
debug your computer?
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The following outline from a talk I gave on Setting
and Getting the Right Fees for the Right Work can help you understand
how to set your own rates and why there is no "one size fits
all" formula.
How Much Do You Want to Take Home?
Net Income Versus Gross Income
Here's a partial list of expenses you may incur in your business.
- Taxes
- Benefits
- Medical insurance
- Disability insurance
- Dental insurance
- Retirement
- Overhead
- Depreciation (it's not theoretical!)
- Replacing furnishings
- Replacing equipment
- Upgrading software
- Administrative overhead
- Clerical help
- Bookkeeping
- 25-50% of your time to manage and market your business
- Vacation, Holiday, and Sick Pay
Where Does the Time Go?
Hint: Keep a running list of everything you do for thirty days.
Not a "to do" list, but an "I did" list. This will
help you to understand where your time goes.
- Sales and marketing
- Service (email, phone, troubleshooting)
- Email
- Proposals, Prospects
- Phone Calls
- Meetings
- Administration (bookkeeping, correspondence, contracts, reports)
- Training
Variables Affecting Prices
- Geography
- Demography
- Niche
- Experience
- Perceived value
- Skills
- Client capacity to pay/realize value from your work
- Cost of delivering services
- Competitors' fees
Is It Time to Raise Your Fees?
- Full calendar
- Reputation as leader or expert
- Turning away work
- Recognized author or speaker
- Prestigious affiliations or awards
- Advanced training/certification
- Improved services
- Increased costs
Strategies for Raising Prices
- Annual incremental increases
- Business cycle increases
- "Going rate" increases
- Be sure the going rate is set by going concerns!
- Do going rates reflect your costs and services?
- More work to justify rate increases of more than 10%
- Keep clients informed of how great you are
- Training and skill development
- Concern for their well-being
- Improvements in service and capacity
- How you saved them time or money
- How you made them money
- How you solved problems for them or for others
- How much you are in demand
- Create a mood that supports your declaration of value
- The body of confidence
What Clients Want to Know When You Raise Prices
- What are the new rates?
- When do they go into effect?
- Give reasonable notice
- Consider giving current clients a grace period to adjust
- Why are they going up?
- What value will the client receive for the higher fees?
Adjust Prices to Manage Work Type and Work Flow
- Projects you don't really want
- Rush work
- Difficult clients
- Profit is commensurate with risk (and distaste!)
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* * *
 Learn
more about Authentic Promotion - a comprehensive small
business marketing resource that turns marketing and self promotion into
a path of increasing self-awareness, authenticity, and right livelihood.
In particular, the pricing strategies you learn to apply will build the
solid foundation for your authentic prosperity as an entrepreneur.
* * *
Contact an acknowledged expert
on small business marketing Molly Gordon at:
Shaboom Inc. Life could be a dream…
PO Box 195
Suquamish, WA 98392-0195
mgordon@authenticpromotion.com
As a business coach and small
business marketing consultant, Molly Gordon, MCC, is available in Greater
Seattle Area and internationally |
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