Joe's comments

Judith, thank you for sharing your candid feelings. Yes, I can see how you might interpret my content as "lecturing."

Perhaps my motive will better explain my intent.

I began this conversation because of a working relationship I presently have with a fellow Biznik.

She charges me too little, I told her. I value her services much more than the rate she quotes. I subsequently referred at least three other customers to her and told them in advance what her rate was. Each said it was perfectly reasonable.

Here's the kicker. The rate I quoted to the three referrals is 67 percent higher than the rate she quoted me. As I marketed her with my endorsement, each prospect thought the rate was fair.

The experience inspired me to provoke other Bizniks to think about the rates they are charging. Did I come across a little "lecture-y"? Perhaps. Apologies.

I will say, however, that my temporary embarrassment here is worth it to me if even one person reading this has higher revenues this year on account of the dialogue.

(P.S. and for the record, I agree completely with your comment, "there is no reason to feel less than because of fee structure or to assume esteem issues." That's a 30-minute reply unto itself. In short and on a somewhat related note, I agree with Hsuan-Hua, EQ tests are powerful tools for businesspeople.)

Can't answer the hourly/not-hourly debate better than Chris did with his very-commented-upon article.

However, I will repeat the point I’m trying to make.

To whom? To Bizniks who charge less than $75 an hour.

Who and what? Joe Hage is the Biznik inviting you to raise your rates.

Benefit? So you can make more money.

Supporting claims / why should you believe? Because there is inflation in the market and because, with the proper marketing, you probably can command a higher wage than you presently do.

And you clean up after me. I like that about you!

Sorry, Love.

Can't answer it better than Chris did with his very commented-upon article.

I'll leave further why-hourly-why-not-hourly comments to others. I don't gots no more to say on it.

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.

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!

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!

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.

:-)

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?

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?

I wrote a letter to help mortgage brokers secure new business. Email me for a copy.

I like it, Rachel. We might go even deeper and define "therapists who ..." what?

We might also specify if the benefit is intended for the therapist (for him/herself) or if the benefit will somehow empower the therapist to be a better therapist for patients.

(I think it's the former. You might spell it out ~ remember, the positioning statement is for you, so it can be a bit of a run-on sentence.)

:-)