I’m not quite satisfied with my pricing strategy. I determined my hourly rate based on industry reports and looking at the rates others were charging for similar services. However, a potential client who I’ve worked with in the past, and who knows the quality of my work, suggested that I need to charge more. So I did that, but I wasn’t confident and reverted back to my original pricing. But now I’m having second thoughts. What’s your advice and do you ever change your pricing for clients? –JD
My first recommendation is that you download and complete our free Income & Pricing Calculator. This is a very eye-opening exercise that will help give you a more realistic understanding of what it really costs to be in business and what you need to be charging to be sustainable and profitable and earn a healthy living.
This worksheet gets you to think about overhead, capital outlay and all the other kinds of expenses it takes to run your business. It then gets you to define how many hours you want to work IN the business (billable hours), how many are needed to worked ON the business (nonbillable administrative hours), your profit margin, and what kind of salary you expect to earn.
When you start crunching all the numbers, it’s very illuminating to see whether the rate you came up with off the top of your head will actually sustain your business profitably as well as pay you what you need and want to earn.
On top of pricing intelligently and profitably, the biggest hurdle new VAs have is their own mental attitude and getting over the employee mindset.
They have got to place a value on themselves and the services they provide, and really internalize that understanding and believe it themselves if they are going to effectively convey that information to clients.
I wouldn’t get caught up too much in worrying about whether your rates are too high if you’ve set them with intention and deliberation. I’d be more worried about them being too low, which is usually the case in our industry.
Instead, focus on the value and the convenience the service gives to clients, how it gives them back more time; how it instills efficiency; how it allows them to operate more professionally; and how these things improve their business and their life.
As far as changing pricing, keep in mind you are the business owner, and you don’t owe clients any explanation or justification when increasing rates.
That said, it is extremely difficult to wean clients from a very low rate to a more appropriately priced rate once you’ve started them there. If your practice isn’t completely filled with ideal clients or long-term ones, be prepared to lose a few whenever you up prices. But don’t think of it as losing clients; what you are actually doing is creating space for better ones.
Also, when you raise prices (which most of us do periodically every year or couple years), I recommend giving clients at least 30-60 days notice.