Archive for the ‘Raising Your Rates’ Category

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

By Danielle Keister | January 30th, 2019

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:

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.

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.

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.

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.

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.

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.

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

By Danielle Keister | December 1st, 2016

3 Comments

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

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

By Danielle Keister | November 16th, 2016

0 Comments

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:

Let’s examine the problematic issues here:

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.
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?
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.
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.
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?

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.
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.
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.)
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.
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.
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.
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?

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The “Frugal” Mindset Will Always Defeat You

By Danielle Keister | December 30th, 2009

10 Comments

I’ve been having an ongoing conversation with a business owner over the past few months.

He had emailed me awhile back outlining ongoing issues he’s had with people in our industry who call themselves virtual assistants.

He stated that he’s hired and fired many and nothing ever seems to work out for him.

Normally, I don’t spend my time and energy trying to convince those who will never get it.

But this was a very nice, genuine fellow, not a crank or someone just emailing to complain.

He was sincerely reaching out for some help and even though he’d had many unsatisfactory experiences, he wasn’t ready to completely abandon all hope of ever finding a competent, reliable administrator to work with.

Plus, I’m always interested in better understanding how business owners think in these cases because it helps me identify areas where those in our industry are giving them inadequate or confusing messages and allowing them to form expectations that will prevent the kind of desired outcomes and mutually beneficial relationships from happening.

So that you have a little bit of context, here are a few excerpts of what he shared with me:

“It’s my opinion there are more virtual assistants who promise the moon and then grossly under-deliver, which disappoints. It’s easy to say I’m patient, but I also run a business. If a VA will charge the kind of rates they want, they should come prepared (and many do not) and also be able to say “I don’t do that part” of the business or task you need accomplished.”

“I have worked with various VAs for five years. Spent a lot of money, didn’t really get too far. I’ve had enough experience where I can say that many VAs do not have the skills they advertise, do not have the expertise with products and resources they say they do; rarely complete work on time; have a difficult time estimating how much will be involved in a project, which slows everything down; suffer from the loneliness factor so when they get someone on the phone, it becomes a gabfest… and I’m paying! They are in constant education mode meaning they spend all weekend getting up to speed on a tool you need them to use (which they professed they had working knowledge of) and so you become their guinea pig. I’ve also found that if you are somewhat flexible in deadlines, a nice guy or easy going, the other clients of the VA will soon take (re-allocate) much of your VA’s prime working time.”

“I had a wonderful VA who was (literally) dirt cheap and fantastic. I’m pretty certain I found her on Guru.com. She charged $10/hour. She was amazing and very trustworthy. Out of the blue one day she called, said she is going to have to drop me because she found someone else who was willing to pay more and give her significantly more work. I would have paid her more, but she then said she would need $30/hr… triple!”

“About a year ago, I interviewed a VA who lived outside Chicago. I swear to God, I would have picked up and moved my entire business to Illinois, she was THAT impressive. She then told me her rate was $75/hr. That ended the entire discussion. She could have been sliced bread (and probably is), but for $75/hr?”

This business owner ended up advertising piecework and projects on Craigslist for $8 and $9/hr, but admitted he has to wade through a lot of wacky replies and still has a boatload of work he puts off daily.

I pointed out that while he was finding some help this way, this obviously wasn’t an ideal alternative since he still wasn’t getting his needs met and unproductively wasting enormous amounts of time and energy on this stuff, which he conceded was the case.

We talked at some length about all of this, with some very clear themes emerging and getting in his own way with this “cheap” mentality.

Besides advising him to hire for support, not piecemeal transactions, and giving him some tools and information for helping him make better choices and weed out those calling themselves VAs who really don’t have the skills and qualifications, part of what I suggested to him was this:

You had a wonderful administrative partner who (in your words) was “dirt cheap and fantastic.” This “‘dirt cheap” thinking will always defeat you. Unfortunately, it’s a personal problem that only you can choose to change or not. All I can tell you is that you simply are not going to get anything worthwhile for “‘dirt-cheap.”

It’s a flawed concept doomed to fail because no business owner can afford to stay in business being “dirt cheap.” Business cannot happen unless both the client and the provider have their needs met. In this case, nobody running a business (including those of us in the administrative support business) can be dirt cheap and have her profitability and income needs met. It forces her to take on more clients in order to make ends meet, which in turn, causes her to become overwhelmed in work. Yet what she’s earning in piling on more clients and more work still doesn’t adequately cover all the time and energy required for her to keep up and provide any reliably consistent level of professional support to anyone. In fact, the more work and clients she piles on, the LESS money she makes exponentially and the less effective and productive she becomes. Ultimately, something simply has to give. It’s inevitable. So what happens is, once she realizes she simply can’t be dirt-cheap AND fantastic, and begins to recognize her true value, she necessarily MUST increase her fees and move on to clients who recognize the value and are happy to pay her more appropriate professional-level fees — exactly as you experienced with the “amazing and trustworthy” person you lost.

My advice is to stop begrudging this great administrator her fees. If you found these two people who were fantastic and impressive, they are worth every penny for the time, headaches and work they save you from, the ability they give you to get more done and move forward more quickly than you could otherwise, not to mention the ease, convenience and peace of mind you’d have working with someone you feel is competent and trustworthy.

This guy was being cheap, but part of the reason for this was because these women were calling themselves “virtual assistants.”

“Assistant” is a term of employment, not business. When you are in business, you are not anyone’s assistant.

People only understand the word “assistant” one way: employee. That’s because “assistant” is a term of employment, not business. When you are in business, you aren’t anyone’s assistant.

This is why this fellow (and thousands of other clients) come to the table expecting to pay peanuts: they don’t understand the correct nature of the relationship; they think they are hiring some kind of subservient worker instead of a service-based business. This wrong perception — due to the very term “virtual assistant” — predisposed them to the cheapskate mentality.

All of this goes for people in our industry as well.

If you are constantly expecting everyone and everything else to be free or cheap, business is going to be that much harder for you.

If you want to attract clients who value you and happily pay what you are worth, you have to value and respect others in the same manner when it is you who is in the client/customer position.

It’s a laws-of-attraction type thing, if that helps you understand this better.

If you are in the habit of devaluing others, you will continue to be devalued by would-be clients as well. If you can’t operate with a value mindset yourself, you aren’t going to be able to attract value-minded clients, must less be able to articulate your value in any meaningful way to them.

You also do yourself no favors calling yourself a “virtual assistant.” That term negatively shapes clients’ understanding about the nature of the relationship and predisposes them to the cheapskate mentality (i.e., when they think you are some kind of employee/worker, they expect to be paying employee-level peanut wages). Changing your terminology will powerfully change these perceptions for the better.

Adding to that Thought

By Danielle Keister | September 7th, 2009

0 Comments

In our group last week, I shared a fun story from the blog of one of my favorite marketing guys — Mark Merenda — about the cost that do-it-yourselfers and micromanagers incur in their businesses.

A sign his auto mechanic keeps in his shop illustrates the light-hearted point perfectly:

Labor — $95 per hour
If you watch — $125
If you offer advice — $150
If you worked on it already — $175

How many clients have we all known who need a little sign like this from us?

I took this idea a step further and added my own twist:

If you want me to show you how to do it yourself — $5,000 tuition and $500/hr after that.

This is sort of related to my post last Friday (That Is Not Your Client’s Burden) where I was talking about the real reasons your fee is your fee and why what it costs you to be in business shouldn’t be part of your conversation with clients.

You can’t put a price tag on all your years of unique talent, experience, training, continuing education, etc., that went into (and continues to go into) you being great and smart and expert at what you do.

And, for me at least, I’m not in the business of training.

If that’s what I wanted to be doing, that’s what I’d be offering in the first place.

That Is Not Your Client’s Burden

By Danielle Keister | September 3rd, 2009

5 Comments

You’ve seen them, those charts and cost comparisons on many, many (did I say “many”) colleagues’ websites trying to bribe clients into working with them because they are cheaper than employees.

Back in my early days, I even had a similar cost comparison. Egads! (Thank gawd we get smarter the longer we’re in business, lol)

The problem is that it’s not necessarily true that we are cheaper than employees.

Those of us who are accomplished and successful, who know our value to our clients, and who are running profitable businesses very often do cost more than an employee or at least the same.

But this is comparing apples to oranges.

And think this through…

If this is how you are enticing people to work with you, what kind of platform are you creating right from the get-go?

How difficult might you be making it for yourself when you realize you need or want to raise your fees?

How many clients might you lose because the relationship was based on you being cheap?

Are those the clients you really want and deserve?

I’ve said it a million times on here and it bears repeating:

Take all those cheap bridges and employee comparison charts completely out of the conversation. Remove them from your website and marketing.

Unless, of course, the solution you provide IS being “cheap” and “affordable.”

Then by all means, keep it on there.

The reason that we very often do cost more than employees is related to how the results of our work creates value for clients.

When clients are able to move forward and in turn grow their business, make more money, have more time for life — that is the value.

Don’t make the argument to clients that your fees are $X because of all it costs you to run your business.

That’s not their burden to bear. It’s not their role or their obligation to worry about what it costs us to be in business.

Focus clients on your value to them: the problems you help solve, the obstacles and challenges you help them overcome, what your work helps them achieve in their business, and what that might equate to in turn (e.g., more money, free time, ease…).

Isn’t that the solution you’re really in business to provide?

Dear Danielle: How Much Can I Expect to Earn in this Business?

By Danielle Keister | June 3rd, 2009

2 Comments

Dear Danielle:

I’m still in the market research phase of starting my administrative support practice. Recently, a colleague and I were discussing yearly salary and work hours with her practice, and I was wondering if your experience has been similar to what she’s explained, before you got into training and from what you know of others in this business. Here’s what she said:

“I consider myself well established now. Despite this, I work between 15-25 billable hours a week and another 20-40 non-billable hours each week (on marketing, accounting, non-billable matter, etc.).”

My research suggests that someone who’s been in business for five years could anticipate gross earnings of approximately $30,000 per year. However, very specialized people make far more (in the range of $40,000 to $55,000).” –RD

If after 5 years someone is still only making $30,000 a year, there is a something seriously wrong in their business. They haven’t done proper business planning, are not charging appropriately and most like are charging hourly rates (selling hours/time) instead of setting fees based on value and results.

If you base your income on how many hours you have to sell, you will always limit your earning potential. I teach people how to use value-based pricing methodologies instead. Once you increase your business knowledge around pricing and how to price, package and present your fees and support plans, your earning ability goes up dramatically. In fact, you can earn more working with fewer clients that way.

Before we talk about what you can expect to make, I want to first make sure we are on the same page about what this business is about. This is important because your understanding of this will directly impact the profitability of your practice.

You mention the word “specialize.” What this usually indicates is a fundamental lack of understanding about what administrative support is.

Administrative support is already a specialty in and of itself. An Administrative Consultant is someone who specializes in providing ongoing, right-hand, across-the-board style administrative support. That’s an important distinction to understand for a few reasons.

For one thing, it’s a completely different business model from, say, a secretarial service, which is in the business of providing individual, transactional, project-based secretarial services.

They’re the Kinko’s, so to speak, of the administrative world. And the reason it’s important to understand the difference in these business models is because the businesses earn money in very different ways, they operate very differently, they have very different labor and administration needs, expenses and operating costs, and they market very differently and attract a completely different kind of clientele.

However, the very most important reason to understand the distinction is that these two business models deliver completely different solutions.

Administrative support is a relationship, one where you’re providing a long-term, more impactful and integral solution that supports the client’s business as a whole and where the focus is the ongoing dynamic and evolving work relationship.

A secretarial service is more like a one-night stand, where what is provided is a quick transaction where the focus and sole purpose is the completion of a single project or task at hand.

As you can see, then, administration is a specialized function already. It’s also work that is inherently ongoing. So going back to what it means to specialize, we already have a specialty: ongoing administrative support for clients we work with in continuous, collaborative relationship.

If someone specializes in some other function, then they are something else completely. For example:

If someone specializes in marketing, they are a marketing professional.
If they specialize in web design/development, they are a web designer/developer.
If they specialize in bookkeeping or accounting, they are a bookkeeper or accountant.

Your colleague is confusing specialization with categories of business. What you specialize in IS the business. If you specialize in administrative support, you’re an Administrative Consultant.

People in our industry also commonly confuse specializing with the tasks involved.

When we talk about specialization, what that really refers to is not the work or tasks, but rather a target market.

Those who specialize in a target market (which is simply a field/industry/profession you cater your administrative support to) have a much easier, quicker time getting started and gaining clients. That’s because it provides them with greater focus and direction.

Now, that’s not to say that you can’t offer additional related services and support. The point I’m making is just because you offer something else doesn’t make it all administrative support. Web design is web design. Bookkeeping is bookkeeping. Marketing is marketing, and so on. These are each their own separate and distinct professions and categories of business.

There are lots of folks who offer creative and technical services in addition to their administrative support. But that doesn’t make those additional services or divisions or specialties in their practice the same things as administrative support.

They are still distinct from one another.

This is all very important because your understanding of these distinctions will directly impact how you structure and charge your fees to earn well.

Is this becoming clearer to you?

If so, you can begin to see that your ability to charge well doesn’t have to do with specializing in any one task.

As an Administrative Consultant, you already have a specialty (that of ongoing administrative support).

What earning well in this industry has to do with is your view and understanding of your value and the solution you are in business to provide, how you frame and portray yourself as a professional, how you effectively articulate your value to your desired clientele in the context of their needs, goals and challenges, and the pricing strategies you employ to focus them on the value and benefits rather than hours.

Earning well also doesn’t have to do with how long you’ve been in business or how many billable hours you have at their disposal.

(And if after five years someone is still only earning $30,000 a year, there is something seriously wrong and need to get the help of someone like me).

Those who intimately and more deeply understand the solution they provide and its value to their target market have much more confidence.

This understanding, in turn, allows them to have more effective, resonate, compelling conversations with clients and command professional fees.

Those fees can earn them well into six figures, but you only get there by doing things smartly and strategically. It will require some shifts in thinking about the pricing you offer clients. People who are still stuck selling hours in their retainers don’t commonly earn into six figures.

I really recommend you get my marketing guide. It will walk you through a systematic, step-by-step process of understanding more deeply and clearly the solution and value you provide to clients, choosing a target market, profiling your ideal client, and then putting it all together to come up with your own unique value proposition.

You can also get off the hourly rate merry-go-round (which drastically limits your earning potential) by learning how to implement value-based pricing and how to focus clients on value and results rather than selling hours.

Raising Your Rates

By Danielle Keister | May 5th, 2009

5 Comments

In my post last week on growing pains and strageties, my colleague Julia Lilly of 360 Admin asked a great question. I thought it was good information and decided to share it as a post in case anyone missed the comments.

JULIA LILLY:

This poses a great question… how do you present a raised rate to your customers without creating ill will? Do you give them six months notice or a gradual increase to the desired rate? I have only had my clients for 6-8 months, and I don’t want them to think it is part of my “strategy” to raise rates once I have them dependent on me. But, due to lack of experience, I did not set my rate properly in the beginning. Advice in that narrowed down area?

DANIELLE:

That’s a great question, Julia!

Here’s what I do… I always give current clients a couple month’s notice and at the same time bring any and all new clients in at the new rates/fees. I tend to do fee increases at the beginning of the year so letters would go out to clients in November letting them know ahead of time what to expect.

I don’t know how many clients you have, and even though I really, really vehemently discourage fear-based decision-making, if you only have one at the moment that you are very much dependent upon, you might decide to make just a modest increase if you’re really worried about losing them.

It will at least get them used to the idea that you are a business, and a professional, and fees are occasionally going to be raised for various reasons. On the other hand, you might want to sit tight with that client and work to bring new clients on board at the new higher fees/rates.

Once you aren’t so dependent on the first one, you can then bring them up to speed at the same rates as the rest so that you aren’t managing a bunch of different policies (too much administration will slow your practice down considerably–you don’t want that).

Here’s a rough template of what I use in my own practice as far as verbiage for your rate increase letter goes:

Dear [CLIENT],

The fee for your monthly support plan will increase to $X per month effective [DATE]. It is such a pleasure working with you, and I really love watching you grow and move forward in your business through our work together. [HERE, INCLUDE 2 OR 3 MAJOR ACCOMPLISHMENTS YOU’VE HELPED THE CLIENT ACHIEVE. USE FACTS AND FIGURES, ESPECIALLY DOLLAR AMOUNTS AND/OR PERCENTAGE INCREASES, WHENEVER POSSIBLE.] I look forward to continuing our wonderful relationship and helping you achieve your goals and dreams.

Signed,

YOU

Don’t be overly concerned with “ill will.” The clients who feel they are getting value are not going to be concerned with that. Truly, it’s usually ourselves who have the most problem raising rates due to self-confidence issues, not clients. You’d be surprised at how often they will say something to the effect of It’s about time. What took you so long? Honestly!

And the clients who don’t want to pay more, really don’t want to pay in the first place. In business, there has to be an equitable exchange of interests. You can’t work just to suit clients and their interests or otherwise operate fearing their “ill will.”

Anyone who asks you to not charge for your value is asking you to deprive yourself of the ability to make a living, keep yourself healthy and take care of your family. Would they ask themselves to do that? I think not. So you don’t need any client who has been taking advantage or otherwise doesn’t want to pay for your value. Let them exclude themselves. It will help clear your practice out of ill-fitting clients and pave the way for the ideal ones to come in.

And saying that, do be prepared whenever you raise rates to lose a few people. The ones you lose are mainly going to be the ones who were only there to get something for nothing in the first place.

Valuing Yourself and What You Have to Offer

By Danielle Keister | May 28th, 2008

1 Comment

Mikelann Valterra shared the best quote in her newsletter recently:

“If you place a small value on yourself, rest assured that the world will not raise the price.” —anonymous

She followed this quote with one of her very astute observations:

“The true key to earning your worth is to believe you have worth to begin with. Not only do you have worth, you are WORTHY of good money. We all want other people to value us. But how highly do we value ourselves? Value and worth come from the inside out. When we know in our gut that we are indeed worth a lot, it is far easier to ask for good money. Don’t expect the world to pay you top dollar if you place a small value on yourself!” —Mikelann Valterra

Mikelann is one of my favorite authorities when it comes to helping women value themselves in business.

She has such a knack for clearly and eloquently ideas and concepts that aren’t always the easiest things to relate.

I can’t recommend her stuff highly enough.

Go to her website. Sign up for her newsletter. Subscribe to her blog.

The Result of Our Industry’s Poor Marketing Message

By Danielle Keister | April 8th, 2008

2 Comments

Reason number 151 to ditch the virtual assistant term.

Came across a horrible press release about our industry (and of course, it’s written by some bozo who’s not even in our industry).

Here’s what the quote box said:

“Virtual assistants are the low-cost, low-commitment way to start getting some of that suffocating, time-sucking work off the desk, and into the hands of a professional who is trained to get it done correctly in the least amount of time.”

In the one breath, this guy says we’re “low-cost, low-commitment” while at the same time calling us professionals.

If someone is a professional who is “trained to get the job done correctly,” guess what? That’s going to cost something.

And working with clients who don’t make a commitment is one of the quickest ways to kill your business.

I don’t know about you, but I save my efforts for those who understand that a commitment is necessary for our work together. They are the most profitable clients to work with, and the most gratifying.

Sorry, Charlie. You got that completely backwards.

No way, no how, am I low-cost, low-commitment.

This industry has GOT to get off the pricing conversation.

Every single time you focus your marketing message on how “cheap” you are, on how much money clients will save over employees, you are focusing them on money.

Look how that message has educated this fellow.

And now he — an industry outsider — is in turn teaching your marketplace to expect you to be cheap and expect no commitment.

Is that really your message? Is that really all your solution has to offer? Is that the only value your work has for clients — a cheap way out? Is bribing people the only way you can get clients? Seriously?!

If you focus your message on “cheap” and “low-cost” and “low commitment,” guess what kind of clients you’re going to attract? You’ll get exactly what you asked for. 😉

You think you’re gonna grow a profitable, sustainable business and be able to make a real living that way? If you believe that, I’ve got oceanfront property for you in Sedona.

This industry really needs to change the conversation it has with our marketplace.

Here’s a shocking revelation for you: You don’t need to talk about cost whatsoever in your message.

Instead, start thinking about what your services do for clients:

What results does your working together bring to their business?
How might their business growth and profits be positively affected?
What do they gain from working with you?
What does all that positively affect their life?

That’s the conversation you want to focus on.