How Do You Value Your Services?

Article by Joan FriedlanderDo you choke on your words when it’s time to tell a prospect your fees? Do you find that you’re doing more than you contracted for without being paid for your efforts? Do you notice that your clients don’t do their part to make the most of your work together? You might be devaluing your services. How do you know what’s too much, too little, or just right?

Value: An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return.

What the market will bear…

You might think that negative news about the economy indicates you have to lower your rates. After all, people have to be willing — and able — to purchase what you sell. Interestingly enough, if you price your services too low, your prospects may very well question the quality of your services. This is not what you want.

Verne Harnish, a contributing writer to Fortune Small Business, said that he raised his prices by 25% during the recession in 2001 and nobody blinked. Hmm. (“How Should I Set my Prices” by Gary Peters, FSB, June 2008, p. 54)

Before you talk to your prospective clients about what it costs to work with you, you must create value with them. You must take the time to understand their situation, and then to explain how you can help them, exactly and specifically. You can certainly offer several ways to work with you so that they may pick that which makes the most sense to them. I caution you, though. Don’t offer an option you’ll resent when it comes to service time, or that you know will not produce good results. You’ll most certainly wish you hadn’t.

Remove yourself from the equation.

You might wonder how this is possible when you are integral to delivering the service. Without a doubt there’s a “you” component to it. Your prospective clients have to feel they can trust you to deliver what you say you can, that you’re professional, and they enjoy being around you.

However, they are investing in what your services can do to improve their lives. This is where you measure the value. How much happier, wealthier, or healthier will they be as a result of hiring you or someone in your company to work with them? How much time, money, or headache will you save them? What’s the value of that to them? Those are the questions to ask.

So if you’re having a difficult time speaking about your rates, it’s time to subtract “little ole you” from the equation and get down to business!

Dollars per hour vs. results — another way you might confuse the issue

Many consultants price their services based on what they can mentally handle earning in their dollars-per-hour thinking. Where does that come from? It comes from jobs. “Well, at my last job I made $35/hour. $100/hour is so much more.” True, but wrong-way thinking. Here’s why this way of thinking gets you in trouble. If you believe that you, personally, are barely worth $100 an hour, you may underprice your services!

Since most of us come from the corporate time-for-money model, your prospects may also think in these terms, especially if you deliver your services via scheduled appointments, or specify the hours needed for a project in your proposal. This is why it’s especially important to help them — and you — stay focused on the bigger picture, on the value to them in their businesses and their lives.

Let’s take your Information Technology person, who keeps your systems running smoothly 99% of the time. What does it cost you in time, money, and stress when you’re down for just half a day? Are his or her skills and services worth $75/hour, or are they worth more? What’s the cost of 4-8 hours lost if you don’t bring your IT person in regularly to clean your systems, update your software and such? Hundreds or thousands of dollars?

Take action!

  1. Take an honest look at how you’re valuing your services. Are you thinking in dollars-per-hour or value-to-customer?
  2. Think of your top 5-10 clients this year. What gives them that ranking in your eyes? How do you think they measure the value of your services to them?
  3. Dare to raise your rates. If you’re not charging enough you may not be taken seriously by the people you most want to work with.

Stop undervaluing your services and start charging your clients what you’re really worth.

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