Archive for the ‘Pricing’ Category

It’s Not Enough to Love What You Do to Do Great Work

It's Not Enough to Love What You Do to Do Great Work

This is unquestionably sage advice.

If you don’t love what you do, you aren’t going to do great work.

And you’re going to hate doing it.

You can’t do right by your clients or live your best life that way.

But there are two important important ideas missing here:

  1. You can’t take great care of others unless you first take great care of yourself.
  2. You can’t do great work if you don’t set the standards and create the environment that allow you to do that.

Without setting the foundations for these things, it’s inevitable that you will come to dread your work.

In taking care of yourself first, that means pricing profitably, making sure you are charging enough so that you are earning comfortably and your business is sustainable.

You can’t take great care of your clients if you are stressed out about money or constantly preoccupied with needing to make more (because you haven’t priced properly in the first place).

Pricing profitably allows you to do your best work for clients and give them your best attention.

You also need to set the stage to do great work.

That means setting standards and having boundaries, and establishing policies, procedures and protocols that create the conditions to support these things.

What level of quality is important to you as well as your clients?

Breakneck speed is not a sustainable pace. You’ll need to set expectations around turn-around times that give you plenty of breathing room.

What do you need from clients to feel valued and appreciated?

Are those the kind of clients you are choosing to work with?

Are you loving what you do right now? Are you loving the way you are doing it?

What do you want to leave behind in 2016? What do you want more of this year? What do you want do differently moving forward?

Why Should I Pay that When I Can Get a Temp or Offshore VA for $5 Bucks an Hour?

Ever hear a client utter these words?

It’s probably the most grating sentence in our industry today.

But what if you knew exactly how to respond?

What if you offered your services in a way that didn’t focus whatsoever on hourly rates?

Wouldn’t that be a total game changer?

It’s not so annoying when you actually begin to love responding to that question (or when you no longer get it in the first place). ;)

…If you frequently encounter price resistance with clients and want to know what to do about it;

…If you have trouble getting clients to commit;

…If you struggle with articulating your value to clients, talking about your fees, and feeling confident about them;

…If you find the whole topic of pricing difficult, I have the solution!

It’s my value-priced packaging and pricing guide, How to Price and Package Your Support Based on Hours & Expertise — NOT Selling Hours

Value-Based Pricing & Packaging Guide: How to Price and Package Your Support Based on Value and Expertise—NOT Selling Hours (GDE39)

This guide will show you how to:

  • Attract more clients, more easily;
  • Make more money;
  • Create an easier business to run;
  • And toss out those time sheets forever!

…all without discounting, bargaining, or justifying your fees whatsoever!

The Heartbreaking Reality for Most Businesses in Our Industry

I came across something utterly heartbreaking a few weeks ago.

I’ve been sitting on it for awhile, going back and forth about whether or not to have a conversation around it.

I never want to discourage anyone from this business or have anyone take things the wrong way. Because if you set things up right, it is an AMAZING business and lifestyle.

However, it’s a cold, hard truth that no one ever talks about in our industry.

And the problem with not talking about things that are uncomfortable, that aren’t all “rah, rah, kumbaya” all the time, is that you can’t fix what you don’t acknowledge.

What was this thing I came across? An ad for a “Virtual Assistant Business For Sale.”

And what is this cold, hard truth I speak of? It’s that most people in our industry are not profitable and not making the kind of money they can actually live on.

You see, the sad thing about this ad is that it isn’t an exception. It’s actually a very accurate example reflective of what most of the businesses in our industry look like.

Now, before I dissect this for you, I first want to make it absolutely clear: It is not that people can’t make more money in our kind of business; they absolutely can! YOU absolutely can!

It’s simply that they are being taught by the industry at large in all the worst possible ways to price, operate and market themselves (like calling yourself a “virtual assistant”). And it’s keeping them poor, overworked and overwhelmed.

The fortunate thing is that YOU always have the possibility to learn better so that your business can do better for you.

And that always benefits your clients because you can’t take good care of others if your needs aren’t taken care of first.

Here is the ad:

The Heartbreaking Reality for Most Businesses in Our Industry

Let’s examine the problematic issues here:

  1. We see that the business has been around for 11 years. Great! After that amount of time, you’d expect them to be earning really well.
  2. Yet in the first bullet we see they are only making £1900/mo (British Pound) which is $2363.98/mo USD. After that many (11) years, why are they still making that little money? Those are poverty-level wages. Did they mean perhaps that this is the average value per client?
  3. Unfortunately, no, we see in the next bullets that after 11 years they have only 1 retainer client at only £350 GBP/$435.39 USD per month. The rest of their revenues come from 15 regular (but uncommitted/non-retainer) clients and 20 ad hoc clients, which I’m interpreting to mean an average of 20 project clients each month. The problem is that at this number of clients they should be making several thousands of dollars per month! I can’t even imagine (well, actually, I can) how overwhelmed and overworked they are… and for such a paltry sum on money! To give some context/frame of reference, I make more with just one of my retainer clients than they make in an entire month from 36 clients.
  4. They also mention having relationships with two typists. This business owner is barely making ends meet at these figures, where on earth is there any margin to pay anyone else? (Answer: there isn’t.) It means that they are doing all this work at a loss! Especially at gross figures that don’t even account for expenses, operating costs, taxes, etc.
  5. This is not a profitable business in any way, shape or form. What has most likely happened is that burnout caught up to them (no wonder!) and they are now trying to unload the sinking ship. But there are no assets of any value to sell here. The clients it has are being charged such an ungodly little amount, there is almost no way in hell to ever reset those kind of expectations. They’ve branded and positioned this business as “cheap” and there is just nowhere you can go with that. It would be faster, easier and less costly for you to create a business from scratch and establish the brand based on properly set foundations and expectations and charging higher, more profitable professional fees.

Don’t misunderstand me. This examination is in no way a denigration of the business’s owner.

Rather, it’s utterly heartbreaking to me that they have made so little money working with too many clients with basically no commitment and constant churn. I wish I’d had the opportunity to help them early on.

When we talk about these things, there are always a certain number of people who don’t understand why it’s so important to have these conversations.

But bringing this consciousness to the fore is integral to being able to improve things so you can better earn in your own business.

It’s why I’m always talking about money, how you are marketing and positioning your business and brand, how not charging profitably sets you up for failure, about how the expectations and perceptions you create in clients directly affect your ability to charge properly and earn well.

These are the topics that will make or break your business.

It’s this fundamental business education — and not the latest, greatest software or tools — that is key to creating a profitable, sustainable business where you can get, work with and keep great clients (clients worth having who value you, not cheapos looking for a free handout), make great money and that works around and enriches your life and what’s important to you (instead of the business running you).

What could this person have done differently?

  1. Business planning. Going through the exercise of business planning forces you to think through and get clear and conscious about all the important details of your business such as your needs, goals and intentions around money, what kind of clients you want to work with and are worth working with, and what business standards, policies and procedures to establish accordingly.
  2. Getting off the project work merry-go-round. A business based on project work needs a shit-ton of clients and work in order to stay alive. It’s a constant, never-ending hamster wheel of marketing, even while you already have clients and work to take care of in front of you, and you never know where your next meal is coming from. Nothing wrong with project work, but think of it as secondary income, the gravy to the meat and potatoes where you make your “real” money.
  3. Expecting a commitment. Retainer clients (clients who pay a monthly fee upfront for a plan of support) are where the real money is at. A commitment of working together each month allows you to do your best work and gives you something to actually work with to achieve a tangible, demonstrable value and results for clients. But of course, if you don’t ever expect a commitment, you’ll never get one. That’s why it’s so important to set standards in your business around what’s important to you. An expectation that clients must make a minimum commitment to be given a place on your client roster is a standard that will serve you (and your clients) well, even if some of them might not understand that at first. (You’ll have a far easier time getting commitments if you learn how to set up and navigate the whole consultation process and pricing conversation.)
  4. Get clear and conscious about the money. Charging fees based on what you see others charging (who are more often than not just as lost as everyone else) is the worst way to set your fees. It’s not about what everyone else is charging (stop looking at them!). It’s about knowing what your target market values, how you can improve their circumstances with your support and what they gain from working with you, and learning how to articulate that value to them in the context of their business and goals.
  5. Choosing a target market. This business is all over the map when it comes to who their clients are and the work they’re doing. And that is a huge part of the problem. Very simply, a target market is an industry/field/profession that you focus your administrative support on. This specialization is key to making the big bucks. That’s because when you know who it is you are focusing on, you can determine very quickly and clearly what they do in their business and what their common needs, goals, challenges, values and interests are and then develop your support solutions around those things. Your offerings will be much more interesting and compelling that way, and you’ll be able to charge more (because there will be more relevant, specific, higher perceived value) and get clients more quickly and easily.
  6. CHARGING MORE! At the poor fees this business would have to charging to account for so little monthly/annual revenue, it’s a clue that the business owner is not understanding the economics of business. You simply can’t charge rates that amount to employee wages and expect to earn well. Business is a completely different ballgame. It’s why I’m constantly reminding people, you are NOT an employee, you’re a business. There’s also this crazy, but nonetheless immutable law of business:  The more you charge, the better clients you get. And what do we mean by better clients? Client who value you and what you offer. Clients who are invested and make the commitment to working together. Clients who aren’t looking for the free buffet. Clients who are loyal to you and the good work and results you provide them with, not how little they can pay. When you have better clients who make a monthly financial commitment to working together toward established goals, you can make more money working with fewer clients and have more time for your own life in the process.
  7. Stop calling yourself an “assistant.” One of the reasons people have a hard time charging more or seeing their value in a different light (and gaining some business self-esteem and confidence) is because so many of them insist on calling themselves “virtual assistants.” This keeps them thinking of themselves as employees and seeing things through that lens instead of from an entrepreneurial/business mindset. Here’s what you need to understand: Assistant is a term of employment, not business. Terminology (just like pricing) is a part of marketing. How you price and the words and terms you use to describe yourself have a direct influence on how clients perceive you and the expectations, perceptions and understandings they come to the table with. When you call yourself an “assistant,” they don’t look at you as a business owner and advisor. You are teaching them to view you as a type of subservient employee, and what they expect to pay is based on that wrong, harmful perception. When you call yourself an “assistant,” you are predisposing them to value you less, not more.  If you want to be able to charge higher, more appropriately profitable fees, you have to create the proper context. The verbiage and terminology you use directly impacts that context.

I have a couple of complimentary (as in free) business-building tools that shed a ton more light on all of this and will help you course-correct in your own business. If you don’t have them yet, be sure to go get them now.

***

How about you? Why did you go into this business? I’m assuming a large part of it is that you love putting your administrative talents to use and helping clients and truly making a difference in their businesses and lives.

I can’t imagine that it gives anyone joy to be broke and working too hard for too little money. So over and above that, how do you want your own life enriched and improved by owning and running your own business? What are your money aspirations? What does “profitable” and “financially successful” mean to you?

Save

Dear Danielle: Do You Ever Feel Pricing Remorse?

Dear Danielle: Do You Ever Feel Pricing Remorse?

Hi Danielle:

I wanted to know if you had ever felt what I call “pricing remorse” when you were starting out? Let me explain. A colleague recently contacted me to help with a project. After receiving all the information and discussing the details, I initially felt the project was too small and not really worth my time. Instead, I decided to help. I sent the colleague my pricing (using your pricing guide, I calculated what I felt was reasonable for my time & effort) and project requirements. Shortly after, the colleague graciously thanked me and declined. This left me feeling a bit shocked, but also kind of guilty. I started to doubt myself and the questions began to flow. Was I asking too much? Should I have asked for more information? Did I not do my job to convey my skills properly? During our conversation, did I come off as an apprentice? Was this the unideal or cheap client Danielle spoke about? So on and so on. I heard you talking in my head saying, “Don’t devalue yourself” but I’m still left with a bit of guilt. Any thoughts/suggestions, as always, are greatly appreciated. —Name withheld by request

Thanks for your question.

It’s been so long ago, I don’t remember if I had “pricing remorse” per se. But I of course had my own learning curve when I first started out, definitely.

When I was new, I was charging waaaaay too little. What I eventually realized is that instead of second-guessing what I was charging when I got rejections, I was talking to the wrong prospects in the first place. My fees weren’t the problem.

Once I started charging more, and got clear about who I was specifically looking to work with (i.e., my target market), I got better clients. This is practically an immutable law of business.

And I quit wasting time and energy on the wrong audience.

But let me tell ya, there were a whole lotta learning experiences in there before I figured all that out, lol.

So, first thing is I want you to know is these are perfectly normal growing pains in a new business. You’re figuring out where your footing is so there’s naturally going to be some feelings of being unsure of yourself.

Knowing that, I hope it will be easier for you to just embrace the unsureness, knowing that with each conversation and interaction you have with each potential client is going to help you get your business bearings and build your confidence. It’s all part of the journey.

I am a little unclear about what you’re really feeling. You mention “guilt,” but guilt over what? What do you have to feel guilty about? I’m not sure I’m understanding what you mean by guilt.

There’s nothing to feel guilty about in determing your fee and asking for it. There’s no wrongdoing in that.

Maybe what you mean is you feel rejection, that in reality you were hoping to get the project, and it hurt when they declined, and now you’re thinking should have asked for less. Is that more the case?

Either way, I do have some thoughts to help you explore all angles here.

First, before you let a rejection bring you down, we need to remember the situation were talking about. This was for a project, not a retained relationship of ongoing support.

And it was for a colleague, not an ideal client in your target market.

Always remember who you’re target market is. Colleagues are not your clients.

One of the reasons colleagues are not your clients is because we’ve got a whole lotta people in this industry who think they should be paying bake sale prices. These are not serious prospects. You can’t set your fees according to what non serious prospects want to pay.

So don’t fret over a situation that wasn’t even with someone in your target market for ongoing support in the first place.

My feeling is that our first instincts usually end up being the best. You gave her a price that you felt was right. All you’re doing now is second-guessing yourself. There’s no reason to do that over something that wasn’t even a real piece of business in the first place.

All of this does lead me to wonder, given that your initial reaction was that the project wasn’t of interest, why did you bother wasting your time then?

I mean, you are always free to do whatever you want in your business. Of course. At the same time, you always want to remember the standards you have set for yourself and your business. When we start stepping over our standards, trying to make a fit out of that which isn’t a fit, that’s when we create problems for ourselves.

Lastly, when it comes to pricing, and conducting consultations, and then having the pricing conversation with clients in a way that gets you more yeses, there are some tips I could give you, but they wouldn’t help you because you haven’t yet purchased my client consultation guide (GDE-03)  or my pricing and packaging guide.

You wouldn’t have the right context and these are topics that are more involved than I can help you with here in this format.

You really need to invest in that learning if you want to grow from this situation and my guides are going to help you immensely with that. I’m really hoping you do that, for your benefit. Because when you get the knowledge and learning to navigate these conversations, you’re going to have a lot better results and more successes—in any kind of client scenario.

Dear Danielle: Can You Just Give Us a Ballpark Figure When It Comes to Pricing?

Dear Danielle: Can't You Give Us Just a Ballpark Figure When It Comes to Pricing?

Dear Danielle:

I recently purchased your Value-Based Pricing & Packaging guide which I LOVE! I love where your head is at! I was tired of reading about, seeing, experiencing and potentially lining myself up for selling hours in my business. Your Value-Based Pricing model has given me a fresh and positive outlook for amazing client relationships to come. I understand that you can’t single-handedly put a finger on exact prices for everyone, but perhaps a ballpark figure in examples would help? Kind of where I’m at now. I totally get the Value-Based Pricing model now after reading, listening and watching your guide. I’ve organized my service line and am ready to price each offering and…I’m stuck! How is one to know how much each service block should cost?! I understand that expertise is a major factor, as well as determining what you need to make annually to survive based on your AWESOME Income & Pricing Calculator, but a bit of guidance surrounding actual ballpark figures would be a MASSIVE help, just to kick start the process.  —NH

Thanks so much for your feedback. It is MUCH appreciated and I’m so glad my guide is helping you. 🙂

Regarding the ballpark figures, it is HIGHLY against U.S. antitrust laws to provide even ballpark figures.

We just aren’t allowed to do that in the U.S. Having any kind of conversations about setting fees within an industry (which constitutes price-fixing), it’s a very serious, prosecutable offense.

I know it sounds crazy because it seems like such an innocuous thing, and I know that we do see pricing conversations going on in the industry occasionally; however, that’s only because those people engaging in those conversations are ignorant of antitrust laws and the serious consequences involved.

When I first heard about antitrust and price-fixing in relation to our industry back in 2004 or so, I didn’t want to take anyone’s word for anything so I investigated myself.

I’m a firm believer in going straight to the source to get the facts, not hearsay and opinion from those who don’t know, so I spoke with our state attorney general office, as well as two federal attorneys with the U.S. Dept. of Justice Antitrust Division.

They assured me that talking about fees within one’s industry with colleagues was no small matter (e.g., how much to charge, starting prices, coming up with standardized fees), and those offenses are taken very seriously.

In fact, after explaining how new people in our industry didn’t know what to charge and that it was common to see conversations where colleagues were talking about how much to charge, etc., they started trying to get me to give them specifics, asking for names and where these discussions were taking place. They were not amused. It was very scary!

The bottom line is that we absolutely cannot have pricing conversations as it goes against our entire system of free and open competition and carries very serious criminal penalties if found to be engaging in them.

The other thing I wanted to mention is there is no “should” when it comes to pricing. It’s whatever you deem appropriate and well worth what you offer and the results and benefits you achieve for clients.

Of course, there are considerations to take into account when setting your fees. Here’s a blog post that might be some additional help to you with that:

How Do You Price Your Service?

Beyond basic business economics and practical matters (i.e., profitability), pricing is largely a marketing effort.

And what is marketing but simply the communication process of educating and informing your audience of would-be clients and illuminating for them what you do, who you do it for, how it helps them and all that they can expect to gain by working with you (as well as what they stand to lose if they don’t).

When you get good at articulating that value to potential clients and helping them to see and understand that value in the context of their own business and life, the sky is the limit with regard to what you can charge.

But only YOU can decide what that will be. No else is allowed to tell you, not even a ballpark starting point.

Dear Danielle: How Do I Price This?

Dear Danielle: How Do I Price This?

Dear Danielle:

I’m just starting my administrative support business and have really appreciated all of your blog advice and toolkit information. I have run into a slight issue with my first prospective client that I’m not sure how best to handle. She has requested assistance for an annual event she’s planning in late November. We’ve done the initial consultation and I believe we could work well together and there’s a lot of room for growth with her. I had explained that I don’t do hourly billing, but she asked about how many hours per month I would dedicate to her project so I said I estimated around 30 hours per month. I made clear that since I don’t keep strict track of minutes/hours worked that if I end up going over 30 hours a bit that she wouldn’t be billed any extra. I sent her my contract to sign (which didn’t list specific hours, but instead listed the support plan we had determined) and she sent me her contract that states “scope of work will require a minimum of 30 hours up to 48 hours per month.” I absolutely can’t go up to 48 hours a month as then my pricing would be way too low. Do you have any advice on how I should handle this? —Shannon D.

First let me say, none of what I’m going to explain is intended to make you feel bad or that you’re doing things “wrong.”

We were all new business owners once and all started from the same place where we didn’t really know what we were doing. There’s just going to be a learning curve no matter what and it doesn’t make you a dummy or anything like that. And you’re going to have a lot of trials and errors throughout the life of your business.

That said, when people ask ME for my advice, my expertise and my opinions, that’s exactly what they get. They don’t get a bunch of wishy washy “you are free to do whatever you want in your own business…” crap. Um, duh. I don’t think anyone here needs me to state the obvious.

And these discussions are helpful because even though you will still have a learning curve, they raise your consciousness and help you better understand and increase your business knowledge and education moving forward.

Okay, let’s dive in here…

The initial thing that strikes me is that you aren’t yet really clear about what business you’re in.

You say you’re starting your administrative support business, but this really isn’t administrative support. This is more like event management and support which is really a whole other business and industry.

And the reason it’s important for you to get clear about your business is because, well, it affects just about everything moving forward. You have to get clear about what you truly intend to do and be in business if you’re ever going to get any traction.

If I’m a plumber and someone comes to me to fix their car, am I going to take on that work? Why would I do that? Just for the money? How does it serve my business to dillute my energies on work I’m not in business to do and may not have the expertise for? How does that serve the client if I’m really not in business to do that work? Is it ethical for me to take money for something I’m not really qualified to do?

So if you’re going to be a plumber, be a plumber. And direct clients who come to you for things you’re not in business to do to the right professionals. Otherwise, you’ll be spinning your wheels forever.

The other thing I get the feeling you’re not quite clear about is that this is project work, not administrative support.

Granted, it’s over the course of several months, but it’s a project nonetheless because there is a specific ending (the culmination of the event).

Administrative support on the other hand is the collection of tasks, functions and roles that require ongoing attention, management and maintenance throughout the life of the business. Administration isn’t an event, it’s an ongoing relationship. That relationship IS the “product” (so to speak) that you are offering when you are seeking retainer clients.

Now, there’s nothing wrong with taking on project work on the side if you so choose. But it’s very important that you do so consciously, not blindly.

That’s important because here is what tends to happen otherwise:

People in our industry want to have a retainer-based practice with clients who pay a monthly fee in advance every month. However, they end up focusing on and distracting themselves with project-based work instead which is a never-ending hamster wheel that keeps them from ever building the business they really intend.

On top of that, by allowing clients to never commit, they never get the real kind of business they want and dream of.

As the adage goes, you will never get what you don’t ask for and expect.

So if you want a retainer-based practice, that’s really what you need to focus on. You’ll never get there picking pennies up on the ground from non-commital clients and their nickel and dime projects.

If you want retained clients providing administrative support, that’s what you have to expect and make it a standard around who qualifies for working with you. That should also added be on your Ideal Client Profile as an ideal characteristic:

“A client who is ready to commit to working together every month in an ongoing relationship of administrative support.”

Now, we come to the whole hours thing. And as our readers here won’t automatically know, your question initially related to my Value-Based Pricing & Packaging methodology.

So the thing you’re not seeing is that you’re still trying to sell hours.

However, with value-based pricing, there shouldn’t be any talk about hours.

Value-based pricing is about offering a solution and providing results. It’s also about certain values (or morals, for lack of a better synonym) around providing those things.

Let me try to explain:

You say you can only provide X hours per month, but the client wants you to commit to more than that.

Forgetting the fact that hours shouldn’t be what you’re selling, what kind of whole, complete solution can you provide if you are only willing to commit to doing the half the work that’s needed?

Because it’s not any kind of solution if you’re only going to provide something that’s half-baked.

I’m not sure why you would have priced at anything less than what you need to accomplish it. Why would you do that? (That’s probably a whole other great topic for conversation, lol).

I’m not saying you should overextend yourself. But value-based pricing and packaging is contingent upon (among other things) providing a REAL, WHOLE solution and result for clients. It doesn’t help them to sell them something that will only get them half there.

And you won’t create raving fans and testimonials that way either.

So, what needs to happen is that you need to have a REALLY thorough consultation so that you have a very clear idea of what work will be involved, what the client’s needs, expectations and goals are, what results and outcomes they’re looking for, and then price THAT at whatever it needs to be for you to accomplish those things, not the hours.

(And of course that sounds so simple. There is more to it than that, obviously, and my guide shows you exactly how to set parameters and determine what work falls into admin support and which things can be categorized  as project work that you can charge for separately, as well as how to talk about pricing and present that information on your website and in other conversations with prospects and clients. My guide also shows you what to talk about with clients INSTEAD of hours; when you do it the way I show you, they understand how much more beneficial and how much more they get from working together this way.)

But you have to be prepared to provide that solution. If you’re not, then it’s really not ethical to take that client on. A half solution is no solution at all.

As far as the whole contract thing, this is where your marketing and message, as well as what you call yourself, are so important because those are the things that are shaping client perceptions and expectations.

This client needs to be properly educated that it’s not her place to be changing your contract. Your contract is your contact. Clients either sign it or they go elsewhere. Obviously you would be more diplomatic, but that’s what it boils down to basically.

But the other thing is that if clients are consistently doing these kinds of things, it means you are not properly presenting yourself a business owner. Fixing that typically entails improving your content and marketing message on your website and framing yourself more like a business and independent professional.

That starts by not calling yourself an assistant, ever. 😉

Let me know if that helps and if you have more questions, feel free to post them in the comments.

How Do You Price Your Service?

How Do You Price Your Service?

This was a question posed on a listserv I recently joined. It’s naturally one of the first questions you have when you want to start working for yourself.

If you are new(er) in this business, looking to start a business in our industry, or maybe even not new, but wanting to improve your business, I hope my post will help you.

One thing people commonly default to when they’re new is they want other people to tell them what to charge.

They will frequently ask, “What should I charge/what do you charge?” or “What is the going rate that I should be charging?”

So the first thing you need to understand is that kind of conversation is highly illegal.

It’s against U.S. Antitrust laws (e.g., pricefixing) for people in an industry to collude (which occurs simply by having the conversation) when it comes to setting standard rates. That’s because our entire system of commerce in the U.S. is based on fair and healthy competition.

This is why you won’t see actual rates bantied about and will get periodic messages from the forums and listservs you belong to reminding members they are not permitted to engage in that kind of discussion.

And this is to your great benefit, even if you don’t understand why at first, because it allows you to create value, connect with your right clients and be able to command healthy, professional fees you can actually thrive and profit from.

Bottom-line: It’s up to every business owner to set her own rates and others are not allowed to tell you (or even hint at) what you should charge. This is just a fact of business life.

However, I know you feel kind of lost on this at first, not knowing where to even begin to figure this out so here are some insights to help you:

Setting your fee involves a combination of things to look at:

  1. How much does the business need to earn to pay for overhead and expenses and be self-sustaining?
  2. What do you want/need to earn personally over and above that?
  3. Does the fee you charge allow you to be profitable? That is, not just sustainable, but bring in an excess with which you can save and have extra left over after business expenses and your salary? Because hand-to-mouth earning is just surviving, not thriving and being profitable. Profit is what allows you to create savings, take vacations, buy a home, a car, pay for education, invest in business growth and improvement, etc.
  4. Does the fee honor your worth? Is it in keeping with the value and expertise you bring to the table and everything clients gain and benefit from as a result of working with you?
  5. Does your pricing position you properly? I’ll bet you hadn’t even realized that your pricing is actually a part of an effective marketing strategy. If your fee is too low this sends a negative signal to prospects and clients that your quality and skill may be subpar and draws the wrong/unideal clients to you. Charging the same as everyone else can be just as detrimental as it says there’s nothing special or different about you. A great fee is one that not everyone can afford (which helps weed out the cheapskates, deadbeats and other unideal clients) and is just high enough that it sends the message that you are better and more skilled, expert and worthwhile than the average bear. Discerning clients aren’t looking for cheap; they’re looking for skill and competence and high quality and your fee is a clue that tells them whether you’re that kind of provider. 😉

Be sure you also download the free ACA Income & Pricing Calculator which will help you get clear and concious about your income needs and desires and find your pricing baseline.

If I may also get your thought juices going on this topic as well, hourly billing (i.e., selling hours) is actually keeping a lot of people from earning well.

It turns everything into a transaction, puts your interests and those of the client at odds with each other and takes the focus away from the relationship and the value.

Instead, I am a proponent of Value-Based Pricing, which is a methodology I adapted for those of us who are in the business of administrative support.

If this has you curious, I have a quick video that explains the problems with selling hours and how it may be hurting your business and the clients you serve: How Billing by the Hour Is KILLING Your Business

Pricing is one of the most important aspects of business and marketing, and something I write about frequently. In fact, I have a whole Pricing category on my blog devoted to it that will be of high interest to you and keep you informed and educated on the topic.

Hope that helps!

How Billing by the Hour Is Killing Your Business (and What You Can Do About It)

Here’s a video I made a few years ago to help people understand how billing by hour (selling hours) is keeping them broke and killing their business.

This can be a difficult concept to understand at first. For many folks, it’s not until they’ve been in business for a bit that they realize the dilemma. It’s usually then that things finally “click” and they get it.

Then, there are people who understand the problem immediately and want to avoid it altogether in their practice.

Whatever camp you’re in, my Value-Based Pricing and Packaging Toolkit will show you how to stop selling hours (and selling yourself short) and learn how to price and package your value and expertise instead.

I’ve been practicing and studying this methodology since the 90s and been teaching it to our industry since 2004. I introduced the concept and adapted the methodology for our industry and I’m really the only person in our industry uniquely qualified to show you how to implement in your practice.

Dear Danielle: How Do I Price My Services?

Dear Danielle:

I am an established contracting company but shifting my business into administrative consulting geared for building contractors. I am unsure how to price my services as this is a new approach to business for me. Any guidance you can offer would be appreciated. —LS

That’s wonderful that you already have your target market figured out. And oh, we have LOTS of resources for you!

The first place to start is to download the free ACA Income & Pricing Calculator. Once you complete the fields, it will automatically calculate a baseline for what you and your business need to earn. This is often quite eye-opening for those who go through the exercises.

Pricing is also a frequent topic of conversation here on my blog for obvious reasons—it’s integral to the financial health, well-being and sustainable of our businesses, not to mention part of our marketing. How you price is a vital part of your positioning statement. That is, what your pricing is telling potential clients and what kind of clients it attracts.

Be sure and read the back posts on these blog categories:

Pricing
Posting Prices
Positioning

I also teach people how to implement value-based pricing in their businesses to get off the billable hour trap and be able to serve clients better. You can learn more about my value-based pricing training and why billing by the hour (selling hours) is killing your business here. (Be sure to watch the video, too!).

Hope that helps!

Dear Danielle: I Have No Confidence in Charging What I Need to Charge

Dear Danielle:

I have found your information on how to be an Administrative Consultant helpful and informative. I have a question for you regarding rates for my support. I have been trying to see what others are charging, just to see if I’m in the same range and not charging too much. I did the calculation from your Income & Pricing Calculator and my baseline is $50/hour. The challenge I’m having is feeling comfortable with my per hour rate. Is there any way to overcome this? —RD

I know everyone does this when they’re new, but the last place you need to be looking when it comes to determining your pricing is your colleagues’ sites.

Hear me loud and clear on this:  It does not matter what anyone else in the industry is charging. (In fact, most are earning poorly because they aren’t charging enough whatsoever).

The only two important ingredients in determining your pricing are:

  1. you and what you have to offer in relation to
  2. your target market and their needs, goals and challenges.

When you deeply know and understand those things, you’ll find it much easier to command your fees without flinching.

Charging poorly can have detrimental, even devastating, effects on a young business.

Your goal in business is to provide value (not cheapness) to your clients and earn very well for yourself so that you can stay in business. You can’t take great care of clients unless you take great care of yourself first and that means charging profitably.

Looking at what (little) others may be charging as your guide will keep you in the poor house, potentially put you out of business, and contribute nothing toward increasing your confidence and savvy as a business owner.

The other thing I would want to tell you is not to charge by the hour.

Billing by the hour is an archaic, UNbeneficial way to bill that cheats both you and the client.

In fact, you actually make less money billing by the hour.

Instead, learn how to price and package your support by value.

It’s a WHOLE lot easier for you, it’s more convenient for clients and makes it vastly easier for them to say yes to working with you (all of which are outlined in the guide).

Lastly, confidence is a journey.

Your confidence will absolutely affect how you valuate your fees.

What you feel comfortable charging at the start of your business will be much different a couple years down the road. That’s because when most of us start out in business, we tend to be stuck in employee mindset to one degree or another.

Many new business owners aren’t aware that when they were an employee still working a job, their employers actually paid far more than what they saw on their paycheck.

They don’t realize all the other costs involved. They don’t understand that business and employment are two completely different animals, and that in business, it’s a whole other dynamic with entirely different standards, protocols and mechanisms involved in pricing.

And because they aren’t sure of themselves or how clients will respond, and still think of themselves as an employee rather than an expert, they are timid about pricing confidently and boldly.

Eventually, though, they begin to develop certain realizations. Their view of themselves changes. Their professional self-esteem increases. They get an inkling that they aren’t charging enough when they are slaving away ‘round the clock and still not making enough money. They think taking on more clients is the answer—until they see that they end up making even less than before!

Some people are confident right out of the gate while others take a bit longer to get there. The good news is that the longer you’re in business, the more your confidence will increase. As you work with clients, the more you begin to recognize the value of the work you do when you see how it improves their businesses and helps them move forward, overcome challenges and achieve their dreams. Your confidence in charging more professionally will grow from there.

Whatever your confidence level is right now when it comes to pricing, it’s perfectly normal.

At the same time, I encourage you to step outside your comfort zone. Experiment. Take a risk in your pricing and see what happens. Most people find that clients don’t bat an eye and wish they’d stepped up in their business a lot sooner.

Oh, and one more thought: the idea that you need to charge less just because you are new in business is complete and utter rubbish!

You might have a learning curve when it comes to successfully running and managing a business, but that doesn’t make your administrative skills and years of experience any less valuable. And a business simply requires that it be solvent and sustainable.

So while my goal for you is to price boldly and profitably, I realize that sometimes there is a bit of a journey involved in getting there.

That’s okay.

I’m gonna keep educating, coaching, encouraging, urging and reminding you, keep you thinking on your toes, and sometimes even chiding you and giving you a little kick in the pants now and then. 😉

You’ll get there!