One of the greatest challenges when working for yourself is establishing your fee levels.
A hard lesson I learnt when I moved into freelance coaching and speaking is that having a booked up diary isn’t always the smart option. It is easy to be overworked and underpaid when you are selling time as your commodity. Tempting though it is to say yes to whatever comes your way, there are only so many hours in the week.
A common mistake made by rookie consultants and freelancers, grateful for the work, is to focus on input (billable hours, hourly rates, hours of work) rather than output (what is my contribution to the organization, how will they make money or save money from having me on board, what is my contribution to their business goals and strategy?)
This gets you off the fee issue and on to the VALUE of what you do.
It’s nothing to be embarrassed about. You are running a business now, not a not-for-profit!
You have to factor in all your costs of working. Driving a cab for Uber gives you an hourly rate but it isn’t until you factor in all your other costs (finance, insurance, administration) that you know how much profit you really make. There is a danger that you end up overworked and worse off financially than you were when you were a wage slave (with paid holidays, sickness and pension contributions).
Stop charging for your time. Flip your focus on to charging for your value. What is your time worth to you and worth to the person paying for it? It’s all about the buyer and achieving their outcomes. Not about turning up.
Be completely clear on what you deliver and have real pride in what you do.
If you don’t value yourself, you can never sell the value of what you do. Clients pay for perceived value, not time.
Nail down this value with your client before even discussing cost. Charge a flat fee/retainer rather than based on the hours you work. This way you can manage several retainers at once and increase your earnings. It’s obviously the results and benefits you create that make the difference; the value isn’t from you turning up and feeling under pressure to look busy.
People believe they get what they pay for, so position yourself as the McKinsey/Tesla of your sector. You want to create a vibe of ‘if you are serious about wanting to change or do this, talk to me, otherwise don’t waste my time’.
It takes guts to hold your nerves like this, but you want serious clients who are committed to the project you are going to do and will back you to do it. Committed also means establishing outputs and timeframes and getting buy-in from other people in the business. If you are too cheap then frankly it doesn’t really matter if you succeed or not. Charge appropriately and everyone will support you in making it work.
You aren’t going to fail, are you? Have the confidence to charge accordingly. Ask yourself ‘If I was at the top of my game, what would I do now?’
Something is not always better than nothing if the rate is too low. Doing work below your pay-grade stops you from marketing, building your pipeline, establishing relationships and necessary down time. It can be hard to let go of unprofitable relationships, particularly if those are some of your first clients, but refusing business can be good business sense.