Archive for January, 2019

Dear Danielle: Is There a Formula for Raising My Rates?

Dear Danielle,

Happy New Year!  I hope all your dreams will be actualized in 2019! My question relates to raising rates with current clients and if there a formula to follow. In the past I have used the script you provided in your blog post Raising Your Rates, and I must say it has worked like a charm. I love all the advice you provide on the blog in this category, especially about not letting fear get the best of you when you offer high quality service. Over the last couple of years, I have restructured my administrative consulting business. I offer a core service in two niche markets. During this time, I have retained five clients and have had great success. With each new client,I have incrementally raised my rates. This gets me to my question: The first client I retained almost two years ago is THRILLED with my service. Not only did I meet the contractual obligations, but went above and beyond. I really hit the ball out of the park with this client. They are often singing the praises about my administrative consulting firm. Since their two-year anniversary is approaching, I was planning on raising their rates. Is there standard protocol to follow (like tipping a server at a restaurant)? I thought I would raise my rates (REMOVED)%. This is a number I picked because when I see a vendor, utility, or dental plan increase by this amount, I think, “that’s fair,” but any higher, I feel like I am being taken advantage of. Next, I looked up the cost of living increase on Google. It is 3% each year for 2017 and 2018. That makes me wonder, would I be undercutting myself with a (REMOVED)% raise and should I increase to (REMOVED) %? Vacillating to the other end of the spectrum, I am obsessed with client satisfaction. I don’t want to raise the rate so high they feel taken advantage of. We have a dynamic relationship. Would seeing the numbers help? The client’s current retainer is $(REMOVED)/month. As I solicit new clients, they will pay $(REMOVED)/month for this service. However, I am not ready to lose this client. I truly value your guidance in this situation. Thanks again for all you do for our community!Name Withheld for Privacy

Thank you, and happy new year to you as well! And thanks for the great question which I’ve been chomping at the bit to answer for you.

First, congratulations on your well-earned growth and success. That is absolutely wonderful to hear!

I also want to let you know that I am keeping your name anonymous and removed certain info from your question for reasons I will explain below.

The short, quick answer is that there is no formula for raising your fees. I know people love to be given formulas, but it’s not that simple.

It’s also highly illegal for members of a profession/industry to discuss rates or setting standards or minimums or formulas when it comes to pricing as these things violate antitrust laws. Those kind of conversations constitute what is termed “collusion.”

The state and federal agencies that oversee these laws take violations very seriously so we never want to run afoul of them.

It doesn’t matter how big or small a business is, whether they are sole proprietors or big corporations, or how much money they make, we are all subject to these laws.

As they will tell you: ignorance is not a defense. This means you can be prosecuted for violations whether you were aware or not.

This is why I am always trying to educate our industry on this topic. Read this post for a bit more in-depth info: Dear Danielle: Why Can’t You Just Give Us a Ballpark Figure When It Comes to Pricing?

So for all the other colleagues out there, the bottom-line is this: STOP asking others what you should charge!

Not only are you putting yourself in danger, you are putting others as well as our entire industry in jeopardy. Your pricing is for you and you alone to determine.

The good news is that we don’t have to discuss specific numbers to help each other learn and grow in our business smarts and profitability.

Here are the things I would want you to give some thought to:

1.

Don’t compare what you do to a utility. You are not a commodity; you are a professional service provider.

Your value is relative to how you improve the life and business of each of your clients, not how much they pay for a box of cereal on a shelf.

Here are a couple of posts to help people better understand and remember what their real value is to clients (hint: it’s not how much/little clients pay or how much money you save them):

How has your work helped them advance, grow and improve in their business? What goals has it helped them achieve or get closer to? How much more time and freedom do they have since working with you?

When it’s time to raise your rates, be thinking along these lines and taking note of them, not just how much your workload may have increased, although that is certainly relevant as well.

People know that when they get more, they pay more. The benefit of connecting what they have gained by working with you, however, is that it helps keep them in a positive mindset toward fee increases, particularly when they are increased for more abstract reasons (such as cost of living) and not necessarily increased workload.

How you determine your fee increases and how much to increase them by is entirely up to you. There is no right or wrong way to do it.

2.

I’m concerned that you have one-price-for-all.

If you are providing administrative support, you are providing a variety of tasks, functions, and roles for each client, each of whom is unique and whose support areas, needs, levels, and objectives are all going to be different from the next client.

When you are providing a value-based service, there shouldn’t be anything cookie-cutter about your pricing. Each client’s needs and support plan should be evaluated and determined on an individual basis. This is something I show people how to do in my Value-Based Pricing Guide.

It doesn’t tell you what to charge or give you a formula. It will show you what factors to take into account, how to identify/categorize support plan areas and set parameters and boundaries, and give you as systematic an approach as you can get for determining your pricing around your support plans that is fair and profitable for both you and your clients.

3.

Capture their “before” picture at the start of every new client relationship.

When you consult with potential clients and onboard new ones, be sure to include a step where you obtain as complete a picture as you can of their current challenges, difficulties, pain points, and obstacles, as well as their desired objectives and outcomes BEFORE you start working together.

(If anyone reading this doesn’t have a consultation process in place, you NEED one now! Get my Consultation Guide for an easy, step-by-step plan that shows you exactly what to do before, during and after.)

Not only does this help you create case studies/stories for your website, it’s also incredibly useful insight to have when it’s time to raise your fees.

By better identifying what each client actually values and what they’re trying to accomplish through your work together, you can use that information to set benchmarks and emphasize those accomplishments.

They also inspire clients by helping them remember what life was like before they had your support and how far they have come and what a smart decision they made in choosing you.

4.

Survey clients for their feedback and suggestions on a regular, consistent basis.

This is something else that is useful when presenting fee increases as it can help you connect the dots from your work directly to what the client’s values, goals and objectives are.

I recommend getting client feedback at least every year for established clients, and more frequently (e.g., every three to six months) for new clients.

One caution, though: Don’t raise fees at the same time of year that you survey clients for their feedback and suggestions. Do these two things at different times of the year.

5.

Similarly, if you have my Value-Based Pricing Guide, you know that I also recommend reviewing every client’s support plan at regular intervals.

For new clients, you are going to do this more frequently because there is a lot of ramping up and getting to know the work and each other and fine-tuning of things in that first year of working together.

For them, I suggest reviewing their support plan internally every two to three months initially in that first year.

You want to make sure you are honoring the parameters you both agreed to and identifying any scope creep that you have not have taken in account and then adjusting accordingly at the next fee increase.

With established clients, you may decide that an annual support plan review is sufficient for your purposes.

6.

Keep clients informed upfront all along the way with plenty of notice.

Let new clients know that there may be a period of adjustment in the first months/year of working together and that you will be reviewing their support plan every so many weeks or months.

If there are areas that have been or need to be added on or increased (or been eliminated or significantly decreased, for that matter), let them know that the fee they pay may be affected.

And let established clients know that their support plans are reviewed regularly as well (e.g., annually or every six months).

The key is to inform all clients upfront that their support plans are reviewed at specific intervals and that there will be periodic fee increases as you deem necessary or appropriate

You want them to understand that what they pay is relative to the support areas and parameters you have agreed to, and as those change and evolve or increase, you will be examining them and adjusting pricing accordingly.

At a very basic level, all I can say is this: You know your clients. You know what you do for them. You know when you feel like you are doing more than what you are charging for. You know how they are benefiting from your work. And you know when it’s time for raise fees for the profitability of your business and in keeping with the value you are providing.

When you start to feel those nigglings, that is always the correct time to review and adjust.

Always be reviewing and evaluating internally, and then on whatever regular schedule that you determine, implement your fee increases.

For Example

Let’s say you like to go through your annual feedback process with clients around May or June when business generally tends to slow down somewhat for everyone and they have more time to reflect.

You could then time your annual fee increases for January.

Whenever you time these events, I suggest you always give clients 30-60 days’ notice of any support plan adjustments/fee increases.

This gets them used to the idea, gives them time to ask any questions they have, and ensures no one is surprised or caught off guard. That’s the only thing that would really create ill will.

By giving courteous notice, it’s only going to help you adjust things in the best way possible for both you and each of your clients.

The bottom-line: Never surprise clients with things coming out of left field.

Everyone appreciates a heads-up so they can plan and budget accordingly, and your fee increases will be far more well-received.

Dear Danielle: Are We Management Consultants?

Dear Danielle:

Thank you so much for the information you make available. I have purchased a couple of your products so far. I am just starting out and I won’t be calling myself a VA. Instead I refer to myself as Virtual Consultant. After getting a better understanding of what an Administrative Consultant is from your website, it seems we are like management consultants. Do you agree or disagree with this? Kind regards. —SC

Hi SC and welcome to the ACA.

In answer to your direct question, I would disagree. There’s a reason the name of this organization is Administrative Consultants Association. 😉

I am not an advocate of the word “virtual.” It’s a silly, idiotic word that doesn’t belong in the vocabulary of a proper business.

If you are going into business to provide the service of administrative support, then you are an Administrative Consultant, not a management consultant or “virtual” consultant (What even is that? Could be anything and does nothing to clearly and immediately tell your marketplace and would-be clients what your focus is and what you do.)

Administrative is the key word here. If you leave it out, you are not conveying the specific skill and service you are in business to provide.

A management consultant is something entirely different. If that’s what you want to go into business for, that’s up to you, of course. But to be clear, that’s not what we do here at the ACA or as Administrative Consultants.

An Administrative Consultant is someone who provides administrative support and works with clients directly in ongoing, long-term, one-on-one relationship.

Here are a few blog posts that elaborate a bit more on these points:

Dear Danielle: We Loathe the Virtual Assistant Term
What Makes Someone an Administrative Consultant?
Dear Danielle: Should I Use the Word Virtual in My Biz Name?

It seems you have an aversion to the word “administrative” for some reason. Why is that?

Is it because administrative support is not the service you want to provide? If so, there is nothing wrong with that; however, that’s not what this organization is here to help with.

The Administrative Consultants Association is exclusively for Administrative Consultants: people who are in the business specifically of providing ongoing, collaborative administrative support and working directly one-on-one with their clients.

If all someone does is “manage” and they don’t actually provide administrative support themselves, that person is not Administrative Consultant.

Hope that helps shed a bit more understanding. Let me know if you have more questions.

Dear Danielle: Does This Business Allow for Expansion?

Dear Danielle: Does This Business Allow for Expansion?

Dear Danielle:

I’m a student who has been assigned to research a startup business. As a business administration major, this is something that interests me, so it is more than assignment. Does a company such as this allow for expansion from being one person to expanding with several employees? Thank you for your time. —RT

Hi RT,

Thanks for the question.

A person can create any kind of business they wish. That should go without saying. However, Administrative Consulting is a solopreneur business model, not a “team” or “staffing” one. That’s because the primary value being imparted is the personal one-on-one relationship.

People running this kind of business are not interested in managing employees and all the attendant problems and responsibilities that come with that much less creating a company the size of which inherently requires employees.

Administrative Consulting is a deeply personal and collaborative one-to-one relationship with clients. It’s ideal for people who are interested in a boutique-sized solo business working directly in one-on-one relationships with just a handful of (ideally, well-paying) clients.

You don’t need employees to do that and it would actually make things more unnecessarily complicated, disjointed, and expensive while reducing profit margins.

This is not the kind of business for people who want to turn the work into an assembly line. That is completely opposite to the value that is created when working together in a long-term, ongoing, one-on-relationship with clients.

That said, I have always advocated the idea that being solo doesn’t mean you do literally everything yourself. It simply means that YOU are the product; it’s your unique combination of skills, talent, experience, insights, and know-how that your clients are “buying,” so to speak.

However, in the same way that clients partner with us for administrative support, an Administrative Consultant can and should have her own Administrative Consultant to support her behind the scenes as well, along with having relationships with her own accountant, bookkeeper, business attorney, web designer/programmer, etc.

Most of us also belong to networks of colleagues we can refer to on those occasions when we may need or want to bring in an extra hand or two. But those are incidental instances and provided by people who run their own independent businesses and are not employees.

This kind of business and relationship doesn’t need a lot of chefs dipping their fingers in and ruining the stew, if you understand my analogy. It just needs the leverage of a few key relationships to be successful.

I always say this as well: Anyone who can make it as a solopreneur is better poised to succeed in any larger future business incarnation. Because if you can’t do it as a solopreneur, being bigger is not going to help anything.

Welp, It’s 2019, People…

Welp, It's 2019, People

In the countdown to the Seattle Space Needle midnight fireworks, I spent NYE Lime-Biking for miles, dancing ’round a beach bonfire, and whipping up JetBoiled hot chocolates and beef stroganoff (a la Mountain House freeze-dried, lol) out of the tailgate.

That might sound all happy-go-lucky—and it was fun—but I am not sorry to see 2018 go in the least.

Not gonna lie. It’s been a really sucky, unproductive year with all my best-laid plans stymied and thwarted at every turn.

Caring for my dad really caught up with me the past year.

Then dealing with a horrible landlord became untenable and I needed to move.

Then I got sidetracked for nearly three months getting my dad’s house and property back in shape.

And then the holiday season hit and I gave up trying to get anything done in my own life and business. I just could not maintain any of the necessary momentum and concentration.

I fully recognize that there are others with a far more difficult path and that my dad’s diseases (Parkinson’s and dementia) are not going to get any easier so I had better brace myself for the road ahead.

Still, it’s been rough because pretty much all the hard, time-consuming stuff fell squarely on my shoulders alone.

I have had no one to help me, and it has cost me a lot in both my personal life and business.

Not boo-hooing (well, maybe a little). Rather, I am in awe of myself and how I have risen to meet every challenge.

That’s not to say it’s been a piece of cake. Far from it!

But I wrangled every single obstacle with aplomb, and I am damn proud of myself.

Yes, the last 4-5 years have kicked my ass, but I keep standing back up.

I found my dad an absolutely fantastic adult care situation and got him moved in there in November.

That worry and upheaval has been a huge block and mental drain.

I am so thankful that, at least, has been take care of, and I rest easy knowing I have given (and continue to give) my all in making my dad’s life better and easier and that he has the best medical and assisted care possible.

The focus moving forward for this year is on reclaiming my life and shedding things that no longer serve me.

As they say, you can’t pour from an empty cup, and I am in desperate need of some serious self-care right now.

Going into my 22nd year of business, I still love serving my administrative support clients as that work still excites and challenges me every day.

I’ll also continue working one-on-one with a few select mentoring clients as working with determined colleagues who are driven to up their business game continues to be very gratifying.

I am ready for a new beginning big time. Here’s to a better year ahead for us all!