By now everyone has heard (and probably seen) the new "Price Is Right" with new host Drew Carey. I'm still amazed this program has lasted so long, but that's not the real topic of this post.
After only a short time with my blog I have been fortunate to already come across some amazing people, with amazing talent. Talent is one thing, running your business is another, and that's where I hope my years of being a successful business owner might be of some use to someone.
I feel strongly that one of the biggest traps a self-employed service business owner (i.e. copywriter, graphic design artist, web developer, financial adviser, interior designer, etc.) falls into is to not set their fees high enough.
Sure it sounds logical. Price low and you will make up for it on volume, plus you'll blow your competition away and get all of their business as well. This seems to make perfect sense, and quite honestly I'm amazed how it absolutely does not. The logic seems to fit, but trust me it won't work.
I own a mortgage company and have for the past eight years. When I first started in the mortgage business I really thought it would be super easy to get all of the business...I'd just charge less. Big mistake. Due to the high amount of distrust of professionals (hmmhh...wonder why, see sub-prime mess?) in my industry, when offering what "I told" my prospects was a better rate or lower fees, it actually had the opposite effect in they trusted me less than they did before.
Once I changed my approach to "this is what I charge, and I don't negotiate my fees" I never had to deal with this problem again.
Did I say never? Well, there are always going to be clients who are only interested in one thing...price. These are also the most difficult to please clients, so you really do not want them. If they are not focusing on the value you are bringing them, they will not be happy even if you do it for free. Let them go be your competition's nightmare and talk bad about them.
I ABSOLUTELY agree with you on that last point about charging higher rates.
Like many people who first start out in business, I started by targeting the low paying customer. These are the WORST customers to work with as they will suck the life out of you and do not understand quality and value. If you want to make profit, you must have clients that understand the value you are bringing them.
Christine brings up the absolutely most important point..."quality and value".
These two items FAR outweigh the price you charge. If I hire a copywriter to write my website, do you think I really care if it costs me $2000 or $3000? To some of you, I can hear you saying Hell yes it matters, but to me (your potential client) it doesn't, and that's where the confusion comes in.
I don't want a $1000 coupon. I want a website that makes me money (or perfectly captures my company's culture, or communicates my business crystal clear to my prospects). I want this WAY, WAY, WAY more than a crappy website that I pay $2000 for. I actually want this so much that I am going to assume when I look at two different proposals that I have a better chance of getting what I want if I go with the copywriter who charges me $3000.
I want quality. I want value.
So here's what you need to do. Today.
Raise your prices. Find out what your competitors charge, and charge more, or at least charge what the top-end people you compete with charge.
Now give me quality, and give me value. You charge the same but you make sure you give me even more. Throw in a couple of press releases, maybe some bumper-stickers, a mini launch marketing plan...a bunch of stuff that wasn't in your proposal so I go WOW...I am so glad I picked you.
If you are sitting there thinking, "well, I just started out...I really don't think I can charge that much until I get more experience", I already know that. By pricing so low, you are screaming this at me.
I want quality. I want value. (see, this really isn't a post about pricing)