Continuing to look at the ideas contained in Dorie Clark’s book “Entrepreneurial You”
Building up the courage to charge for your services is challenging. What if no one wants your product? Or people complain that you are overpriced? Or call you a sell out for charging at all? Yes that may well happen. But you cannot help others with your advice or great product or outstanding service if you cannot keep yourself in business. It’s strange, people willpay $200 per hour for a psychiatrist but will look askance at paying the same rate to tap into your decades of experience. I “lose” many potential clients when I tell them my charges, for me this is often a cause for regret, not because I have lost a potential client but because I know I could deliver them many times more value than I charge. Should I reduce my rates? No! I charge what I am worth, as is borne out by my client history. My clients can terminate my services at any time, I do not insist on a notice period. Yet all my clients have stayed with me a minimum of two years and many much longer. Charging what you are worth is key to creating the long-term impact your desire.
How can you do this?
The first step is to understand the value you bring to others. Once you can do that you will feel comfortable charging appropriate or premium prices.
When you start out as a solopreneur you will probably undercharge rather than overcharge. You are anxious to get a few jobs under your belt. Dorie tells a great story in her book which I will paraphrase. After pitching a proposal to an early client, the client asked the obvious question, how much? Dorie was not prepared for this question and mumbled $60 per hour, which was a little less than her acupuncturist charged. The client instantly said yes, and Dori knew she had left money on the table. I made a similar mistake with my first client, although my rate was a little higher than Dori’s. It was also the first, and last time, I agreed to be paid by the hour. Full disclosure Dori now commands top end prices whereas my rate remains more modest.
Think about your pricing strategy before you make that first pitch to a potential client. And keep in mind that you will be spending time on business building activities and time upgrading your skills. And you need to get the balance right. Building your social media presence can seem to be highly productive, and in the long run it will build a foundation for your business, but it does not pay the bills. You need to earn a living, so you cannot quote sky high rates with impunity when you are starting out, but can raise your rates over time. A good time to start testing the deeper, more lucrative, waters is when you are covering your living cost with existing clients. In Dori’s book Michael Bungay Stanier the author of “The Coaching Habit” suggests your going rate should be fear +10%. If you feel the top rate you feel comfortable with is $1000 per hour, then ask for $1,100 per hour. If you are moving from a salaried role to a consulting role, figure out how much your previous employer was paying you per hour. Do not forget to adjust for vacation time, pension contributions, etc. That can give you a base line that you can feel confident, your employer paid you that rate, month after month, and felt they were getting value for their money. Why shouldn’t your clients pay you the same rate? Maybe not at first and maybe not all clients initially, you have your bona fides to establish, but that should be a minimum you are striving for.
Let’s explore the income streams you should look at and decides which ones are appropriate for you. Notice the plural which ones, we are seeking multiple and diversified sources income.
Become a Coach or a Consultant
Dorie explains why you should consider this route. “It may seem almost old fashioned to propose making money through hands on coaching and consulting. But if you want to eventually leverage your talents online, Dori argues, that to understand your audience’s needs and to know what really works, it’s important to begin with traditional consulting/coaching world.”
Interestingly Dori describes coaching consulting as the perfect Side Stream income because they are almost zero cost to launch and can bring in immediate revenue. Think of them as a laboratory to test your ideas and refine them before presenting them to a larger audience. You can cultivate a small cadre of passionate advocates who can help you spread your message. Maybe more importantly you will be able to directly see the impact you are having providing hands on help to people who need it.
The challenge is to stand out from the crowd. And it is a crowded field. I decided I would google how many coaches there were in the world. The answer 53,000; the source, an article that the same Dorie Clark wrote in 2019 entitled “3 Reasons New Coaches and Consultants Fail” If you want to read her article, which contains valuable insights on to improve your chance of success, Ctrl+Click here (Note HBR is a subscription based website but HBR does allow access to a number of articles for free so it may be available even if you are not a subscriber to HBR).
The field for consultants is even more crowded with Inc Magazine claiming there are 700,000 consulting firms globally. Although Inc does not say firms range from the global giants such as McKinsey, Accenture to the one person solopreneurs.
In the next post I will be sharing Dorie’s ideas on how you can develop your initial network and spread the word about your services, grow your network exponentially to expand your practice and generate revenue with premium offerings and eventually license your intellectual property. Breaking away for the tyranny of the clock and the limitations of being paid by the hour.
If you want to learn more about Dorie’s ideas please consider buyer her book using my Amazon Affiliate link below. There will be no added cost for you and I will earn a small commission that will help keep this blog going. Thanks