A few years back, I had an eye-opening experience around money. I had an interview to be hired by a small social-profit corporation to to marketing and PR for them for a summer. I got the interview via my network, so these people didn’t know me at all. I did some research around what I should charge, and when they asked me what my rate was, I said, without hesitation, and with some confidence, “$30 to $50 an hour,” which seemed like a huge sum of money to me at the time. And you know what, they didn’t even blink. I got the job, and it paid for a trip to Europe that fall.
A week ago, I put up a post about how people perceive our value, and more importantly, about how we perceive our own value. I was starting to feel out of my depth, but handily, I have a money coach in my network, so I turned to her.
Ladies and Gentlemen, Shell Tain:
RC: If I’m just getting started, how do I know how much to charge for my work?
ST: Well, if I’m just starting out, how much to charge is partially a math question, but it’s never solely a math question. There is some research to be done about what other people charge who are doing what I want to do, and what is the range of charges for this in my geographic community. That’s the math part. Even more important, whether new to the game or an old hand, is creating enough commitment with the charge that someone really shows up. What is the amount that has the client have something at stake, but not freaked out? I once had a couple of very wealthy clients. My normal fee just wasn’t even the cost of lunch for them. They didn’t show up. Where is that tipping point? You always have to experiment to find it, but it’s worth finding.
On the emotional side, money isn’t just about money, it’s about self worth. Yep, self worth. So, somehow I get tangled in that the client is buying me, and putting a value on me, and gosh what does that bring up? So there we are, tangled up when we are asked how much we charge. Here’s an alternative perspective: they actually aren’t buying you, or even what you do, they are buying the results. They are buying how something will be different, better, or complete once you have done what you do. So that’s worth something to them. And it’s something they can’t easily do themselves, or they would have.
So, here’s the technique.
Once you have figured out what the charge is, get your brain firmly around it so it’s easy to say. Then, when the potential customer asks for the fee, state it, clearly, without back tracking and then, (this is the most important part) SHUT UP! Stop talking. Let the silence be there, awkward as it may be. See what they say. Don’t anticipate; don’t make up objections for them. See what they say. They might actually say something like “fine”. They might say “Gee that’s expensive” to which you could say “yes, and it’s worth it”. They might say “I can’t afford that” to which you say “I understand, and what would it be like for you to have the work done?” What you do not do is discount your fees, collude with them about finding the money to pay for it, or add things on. You want them to understand the value. Pushing back on the fee can mean they don’t see the value. It can also mean they just like to bargain.
RC: But what if I loose the customer entirely, because I wasn’t willing to negotiate the fees?
ST: Let me answer an even more important question than “what if you lose the potential customer”, that is “what if I get the customer by lowering my fees?” What’s the cost of that? Well that hard teacher, Experience, has shown me and many of my clients that the costs of discounting fees are many. One really challenging one is that it diminishes your credibility with the customer. That shows up by them criticizing your choices and micro managing you. Another cost is that by dealing with this customer for less money, you aren’t available to the customer who would pay your full fee. And yet another is that if other potential customers find out you discounted they will either want a discount too, of feel foolish for having paid your full fee. What a tangled web this can be. If the idea of standing firm on your price still just drives you crazy I suggest that you create a “one time” special package for some multiple units of whatever you sell. You can offer this to everyone, and limit how long it goes on.
RC: Last words of advice?
ST: You deserve to be paid well, and if you are underpaid, or worse yet, give away your time and expertise, you will resent it. And if you resent it, you are likely to not do as good a job. All that just creates a never ending cycle. Remember, you do well what they can’t, don’t want to, or find harder to do than you. What a gift you bring.