Charging What You’re Worth
- February 24, 2014
- Posted by: Rochelle
- Category: Brand + Design, Niching
“I think you value things based on what they cost you…” Kelly Clark, Olympic snow boarder
Don’t we all value what costs us most dear?
Take the time (Malcolm Gladwell would say it’s a minimum of 10,000 hours) you’ve invested in becoming an expert. Some of it—if you’re exceptionally lucky—passed in a nanosecond because you were deeply in the flow. Other parts of your learning were hard-won and remain emblazoned on your psyche forever.
And there’s your monetary commitment. School loans, internships, apprentice time.
You have paid your dues. You have made significant investments. You have built value. Shouldn’t you be charging for it?
Clients—like people everywhere—don’t value what they don’t pay for.
I used to do pro bono work for non-profits and was continually frustrated. Clients would cancel meetings without notice or an entire Board would show up for a retreat, not having done their prep work. I figured it must be that I was just not cut out for that work—since it didn’t happen with my other clients.
And then I tried a last-ditch experiment—a “social good” rate. It was steeply discounted, but the client had to pay something. I shared the undiscounted amount so they could see the value of the discount. My results changed overnight. The clients made swifter progress and we BOTH felt good about the work.
Of course, worth is subjective.
So you’ll have the best relationships if you link your rates to what the client values most—saying yes is easier when clients feel you have some skin in their game.
You’ve heard of value billing? This is the territory of those who have carved out a rarified niche AND are not delusional about their worth. It’s the consulting equivalent of the pediatric neurosurgeon. You are able—through your wealth of experience—to diagnose and/or fix an issue with lightening speed. Your rates may look obscene by comparison to your competitors, but you are worth every single penny.
Charging what you’re worth is about deeply knowing your value. And having the confidence to say so.
I know you can do it.
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A thought provoking blog Rochelle. I was not smart enough to figure out why meetings were cancelled, delayed or postponed. But now it is clear. My fee of $0.00 showed them they could do anything with my time because I did not show them I valued it. That will never happen again. If I don’t value me; neither will others.
Rochelle – I love this. Years ago when I was managing veterinary hospitals we used to take in stray kittens. We would examine them, de-worm and de-flea, and give the first and perhaps even the second series of pediatric vaccinations. Then we would give them away. What we noticed is that the new owners would never follow through on the rest of the vaccination series or even neuter the cat when it was time.
So we began to charge $50 as a adoption fee. Everything changed! The new owners had paid for the kitten (very discounted but still paid) and now it had value. The kittens were returned for the rest of their kitten care and were cared for the rest of their lives.
Great lesson!
Very important to properly value value your services and include a payment regimen that makes sense as well. What I find interesting is how people try to squeeze you for the freebee, even when you make clear what information or assistance they seek involves your professional work and knowledge. I recall an attorneys continuing education program this past December where much of the discussion turned on fees and how to avoid lowballing in the face of competition. My point then and now involves the need to distinguish your practice, offering and skills and focus on building a client base that values what you bring them. In my case, it involves a unique combination of message, political, policy and legal skill and knowledge. It does not mean I need to use each as part of an engagement but the four empower me to bring expertise no one else in my field can in fact deliver.
Rochelle, I’m glad you recirculated this post because charging properly is a critical decision for many businesses, no matter their industry or their size. The right fees or prices make the difference between enjoying a good living and barely making it.
I take exception though to your comment that value-based fees are only appropriate for the equivalent of pediatric neurosurgeons. All offerings that consist of knowledge work must be offered on the basis of value. The value is not a value to you (such as your costs), the offeror. It is the value the buyer enjoys from what you offer.
The two top reasons are that 1) if you charge by the hour, you create an unethical situation between you and your buyer: the longer you work, the more you earn, yet the buyer is entitled to get their results as soon as possible commensurate with value.2) You create a limit or ceiling to your revenue. After all, how many hours can you reasonably work?
“Do You Struggle with ‘What Should I Charge?'” is on my profile on LinkedIn. I invite you and your readers to take a look and let me know what new ideas about charging you come up with.
Thanks for bringing up this most important topic.
Hi Susan–thanks for adding such thoughtful comments! You make an excellent point–value billing shouldn’t be restricted to a rarified group (altho it is MUCH easier to value bill if you have made a clear case for why your expertise is better than your competitors who charge less). In any event, we all have an ethical duty to charge what our services are worth–and if we charge less than that to be very clear about what we’re doing (and why).