What’s the most important factor that determines your profitability in business?
The fee that you charge for your services.
The one concept that can and will change the game for your business is this: raise your fees.
But, before I share the secret formula, here’s why you don’t want to sell at a low fee (ever):
1. Price buyers will eat up all your time. They will go back and forth with you for as long as it takes to get the best price from you.
2. Price buyers complain the most. They are never happy because their expectations are they should be getting much more than they are paying for and when they aren’t paying very much it’s hard for you to put the time and labor into their project and remain profitable. It’s a lose-lose situation.
3. Price buyers seem to be the ones who don’t pay on time. They’ll delay payment for as long as possible to make sure they are squeezing as much out of your services as possible first.
4. They are loyal to price, not to you. The moment someone else swoops in with a lower price for the same service, they’ll move on from you anyway.
5. They’ll spread the word of how they ‘got a deal’ on pricing from you. They are so proud of getting their low price, that’s how they’ll explain it to those they may refer you to. This can kill your business.
Don’t play games you can’t win.
Different fee levels attract different types of clients. People willing to pay a premium fee for your services have a different set of expectations than someone who pays a much cheaper fee. So you have to be on your game, but it’s much easier to service 10 premium clients than 50 cheaper clients who are as described above.
Premium services are always worth the investment if your clients feel they received good value for their money.
What if I gave you a secret formula for how to figure out what you should charge your clients? How valuable would that be?
Here it is: The secret formula for what you should charge is based entirely on your ability to sell it.
The more skill you have in sales and marketing, the more you can charge for whatever you want to sell. Your fee depends on your selling and marketing skills. Keep in mind, you don’t want to raise prices just to make more money, but to be able to provide more value to your client. You need to think in terms of why you should charge more, how to charge more and why it might actually make sense.
If you want to sell to high-end clients and charge premium fees, you’ll need to improve your level of service and make more money so you can deliver more and better for the client. But that’s easier to do when the client is paying you more and you have room for delivery and for profit.
If you’re resisting this formula then you have a mental block to get past. Take personal responsibility for getting better at the selling and marketing of your own services.
What steps can you take now to raise your fees and value you are providing to your clients?