Less than $75/hourI've met a whole bunch of Bizniks who are charging $75 or less for their services.
What are you, nuts?! (Trying to be a little provocative here.)
Inflation this month was +5.3% versus year ago. It's the biggest jump in 17 years! It's time to take pricing, people!
If someone can't afford you at $75/hour, they need to look for someone who didn't get this Wake Up Call.
And if you say, "but that's the going rate," then I reply, "then you're not marketing yourself correctly."
Now go out there and command what you're worth!
I agree with you, but up to a point. I have been offering video at an introduction rate. But after that regular charges apply. And if I do the DVD or VHS tape, that costs extra - except for the first time. I also limit the length of video I will shoot, allowing me to produce copies between one to two days
That's my moniker. Some offer as free session. Others do what I do.
David, no argument there.
Northwestern Marketing Professor Philip Kotler talks about the 4 P's: product, price, place, and promotion.
I'm talking about price. I think you're talking about promotion. They both have a place.
I'm inviting Bizniks not to confuse the two. Hey, I love a good free sample. Do it all the time. But if you want serious Joe Hage help, well, that's where the free promotion ends.
Yes?
Here in India too we are witnessing a inflation rate of 12.44%!!! which is a high in over a decade. I agree with Joe over the fact that one certainly needs to take into account inflation and host of other economic factors while pricing their services else your profit margin gets eroded substantially.
Moreover it is possible to pick only two things out of three at a time ie Quality, Speed and Cost. Quality services deserve good price and am glad that i have always marketed my services at a price in lieu of quality work which has allowed me to maintain a healthy profit margin at the end of a given month...
Joe,
I agree, but the other key is what people offer as a service and what the current going standards of that service. For example, Videographers doing Video Depos are part of the Court Reporters charges - usually charging the attorneys $50/hr for our services. Once we are in our car - it's a guaranteed $150, even if they decide to cancel (if they cancel before I leave, I get zilch).
I have reversed my VHS/DVD costs because if I prodiuce DVD copies, it's 5-8 minutes vs real time for all VHS copies. You can fast dupe a VHS copy, but you will be paying a small fortune for the service.
People who shoot events or office/home tours charge more toward the $100-!50/hr, but that's what the traffic will bear - so that's fair. A DVD for Bar/Bat Mitzvah runs about $650 to $800 and can get as high as $1100. So fees are a sliding scale.
I know some web designers have run up a huge fees, but did not perform the full service that the clients and web designer agreed to. Mistakes happen, but I don't believe a service should charge for mistakes or more accurately charge full fees no matter what you deliver.
Yes?
Errors aside I have to agree with Joe on this one. Once you get into your car and take the time out of your day, $75.00 is gone. A two or three hour minimum will also help out. Some one put a post up awhile ago about how they recommend charging a flat rate for services. In my mind that's the best idea. Once you start a job you know what you're going to get out of it and that kind of rate only motivates you to work more efficiently for the client. (FYI I don't work by the hour) Art T.
Funny you should post this...I just raised my rates recently, AND, I don't work hourly ;) I like it better this way too.
Finally remembering to charge for travel, admin and communications too. That can really nip you in the butt if you forget to charge for it. Gads!
Great post Joe. Thanks for watching out for us!
I agree with Joe- that most Bizniks seem to be falling under the assumption of $75 or less hourly and they are not counting the true cost of non-billable time.
You have travel, paperwork, customer service, billing, etc, etc.
If you are going to offer a discount rate for hourly (from my perspective) it begins to make sense at 10 and 40 hours of contract time... as you now have an economy of scale for saving effort on billing and sales in most situations.
The statement "you are not marketing yourself correctly" is spot on. I don't care what industry you are in (or what price point) - you can always find someone who charge 2x what you do and they difference is usually a little self-worth and a good marketing statement.
This would be a great topic to host an event around (hint, hint).
Actually, if you're not charging an adequate rate your company won't be taken seriously and you won't win the project anyway. Or if they do take you up on your low ball offer the client will treat you with little respect. Introductory rates may be effective as long as you make it perfectly clear that regular rates do apply afterward.
And yes, as a copywriter, who usually works on a project basis, I've stopped quoting an hourly rate. It's not a fair assessment of how I work and what I do.
I am finding all these comments extremely helpful as I got ready to launch a new business. There aren't many infertility consultants around, so it becomes difficult to gauge competition (in terms of what the market will bear) and I'm not sure if we are way high or way low.
Has anyone found they had a difficult time raising prices after they began? I just finished Duct Tape Marketing and he suggested the biggest mistake new businesses make is setting prices too low. Has that been true for you? Angie Best-Boss
Not to beat a dead horse, but hourly rates are DUMB DUMB DUMB anyway.
And as long as most Bizniks keep suffering from business self esteem issues, they're going to keep undercharging.
Fact of life.
I distinctly remember undercharging when I was starting out. I think I didn't have enough of a handle on the components that go into your rates. You certainly need to consider:
-labor -equipment -materials -overhead (rent, utilities, advertising, etc.)
When people look at your rates, they don't think of all these things. I think Joe's advice is well taken.
Chris, perhaps you (and Beth?) might be willing to do a re-run of your great event on this topic?
Marketing will raise visibility and get you to audition opportunites.
And if your skills can't satisfy your clients or your EI (emotional intelligence) affects your performance, your won't get the deal, have returning customers or referrals.
So, I think marketing is only part of game. It's important to spend your time/energy/money to sharpen your skills, do personal growth work and do marketing to win your clients and the rate you deserve!
Note - "self esteem" is part of the EI work and it takes time and intentional work to improve it.
When I first started out on my own, I charged a lower rate compared to others who were more established. I wanted to build my portfolio and establish some sort of track record.
After achieving that, I raised rates to be more in line with the market. My clients did not complain; they understood that costs go up - they are business people too.
This is a great topic, Joe. Thank you for initiating it.
I love the thoughtful comments.
As has been pointed out, I wonder if the question should be more about eliminated hourly fees altogether and working from the project-basis mindset. That way, the price is in terms of value as opposed to what you are accomplishing in a giving hour.
Pricing ourselves too low in the market has more to do than we care to admit with Brad's spot-on point regarding self-esteem.
I also ditto his comment about how no matter our price point or industry, there is always someone in the very same position charging more than we are.
As far as positioning statement, Joe, I'm STILL working on that one!
I had a feeling this thread would go in lots of directions.
Here's what I read above:
1. Validation that "some Bizniks undercharge."
2. "Charging more" is a good and sustainable concept. 2a. And low-priced promotions have a place. 2b. And low rates for startups building a portfolio or practice have a place.
3. It's easy to lose sight of your true expenses when you consider travel, admin, and miscellany.
4. Hourly pricing is fundamentally a bad idea.
5. Underpricing may be a symptom of low self-esteem.
Have I captured everything so far? Are we on the same page?
How do you propose that someone like me, who works on an hourly basis charges a client?
Hourly rates are not dumb, they are the nature of many businesses, like mine, where not every job can be packaged into a nice neat quoted price gig.
I get the message people are trying to make here but stop and think about those of us who do charge hourly and in many situations do charge less than $75/hour. How does it help to suggest that our business practices are a bad idea. Sometimes the flagrant remarks are just that...flagrant.
Not saying I agree entirely with #4, just capturing the thoughts so far.
Having hired you twice now, I think I know your business proposition pretty well. I think you can package your services. Karrie's teaching a class on it tomorrow, I think.
Everyone will make a choice that's right for them. If you are not comfortable with switching to packages, that's ok.
Liz, you gave me far more value than you charged. If you do stay hourly, I'd invite you to consider raising your rates. I don't think your customers or prospects would balk.
And if you were to lose a prospect who thinks you're overpriced? Well, think of that as an opportunity cost. Do a breakeven analysis to determine how many fewer hours/jobs you'll have to take to earn as much as you currently do.
And, worst case scenario, if you're wrong? If you do end up over charging, lower your rate to the "market clearing rate."
In any case, I think, a worthwhile experiment for you and other readers of this string.
:-)
Now about that #4: Hourly pricing is fundamentally a bad idea.
Chris' article on the subject influenced my own behavior. I agree with the concept.
I would make these caveats, though.
One: You have to do some heavy lifting to figure out your positioning statement. While all "five blanks" are important, your supporting claims are particularly relevant if you are pricing 'above the market.'
Chris, for example, positions himself (my interpretation) as "I'm the best damn copywriter you'll ever meet. I have major, highly satisfied clients with major results. I charge a lot. I'm worth it. If you think can't afford me, you probably don't quite 'get' how much money a well-executed direct marketing strategy can render, so go ahead and find a $200-a-letter person and keep on with what you're doing. Good luck elsewhere."
Powerful stuff. Now I feel stupid if I don't sit up and listen and lame if I don't pony up the money for the kinds of results he promises. Where do I sign?
Not to give you an "easy out," but I suspect some industries, however well marketed, don't lend themselves to that kind of bold positioning.
Doesn't mean you can't charge a package price for a completed job, but ...
Two. People can do the math and take your quote, kind of figure out how long they think "an expert like you” should take to deliver, and calculate an estimated hourly rate.
They can decide if they think that is a reasonable rate for someone of "that skill."
Here's where your positioning really comes into play: It's "what is THAT SKILL.” If you position “that skill” lamely as “something that just about anybody can do,” you are positioning yourself as the provider of a commodity service. Of course you can't charge "excess economic rents" (see! I *do* remember something from undergraduate economics!) in that case.
If, on the other hand, you promote how your service is not-like-those-other-services and THAT'S why you command higher rates, then, my friend, you are marketing!
Joe: Thank you for your kind words about the value of my services.
My concern is not raising my rates, I have done so for certain clients, what I am having troubles with is the suggestion that the hourly rate is wrong and that it is better to offer a client a flat fee/per project rate.
I had three clients this week. Of the three jobs that I did I can tell you that it was just not possible to project how many hours I would have spent on any of the jobs. That is not a reflection of me and my inability to manage the job at hand. Rather, in each situation, as more layers uncovered themselves the projects grew and the clients wanted me to spend more time.
Had I looked at the jobs and given the clients a flat rate I might have short changed myself.
Ah, but you're talking about a "scope creep."
When you scope a job, you make assumptions about what's involved.
You share these with your prospect.
You both agree to what's in- and out-of-scope.
When projects grow, great! Bigger project. More money!
And while not ideal, you can always go back and explain that this is a much bigger job than what you originally projected.
You, in particular, are very engaging. You have the charisma to ask and receive.
If, in the middle of the work you did for me, you said, "This is much bigger than I estimated. If it's ok with you, I'd like to adjust my pricing a bit," I would have said ok.
And I imagine most other clients will too.
Explain to me what is wrong with an hourly rate.
This week I hired a mover who charged me per hour, I hired a house cleaner who charged me per hour. Neither time did I ask them to give me a flat fee. I would not have expected either of them to have any idea how long it would take them to get their jobs done. I did however give them parameters that I expected them to work within.
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