For many new small business owners, one of the hardest things to figure out is pricing. This is especially true for service-based businesses that charge by the hour. I know I’ve been kept up at night after sending off a proposal wondering whether I charged too little or too much. I say no more of this.
I declare 2010 the year to stop second-guessing your pricing plan.
Before taking my declaration and running with it, make sure you’ve first covered off the basics – industry research, deciding on your target market and a competitive analysis. Then ensure you’ve taken your background into consideration as well. That MBA, 10 years of corporate experience in your field or an extensive past clients list may give you the right to charge more than your peers. Be comfortable with that.
When it’s time to present an estimate to your potential client, do so with confidence. Whatever you do, don’t open the conversation with, “Well, if this is too much, perhaps we can work something out.” Your time is too valuable. If you are open to negotiating because you really want to work with the client or need to build your portfolio, go in knowing the lowest possible price you’re willing to take and be prepared to walk away. I remember being excited to speak to a potential client about writing grants for his non-profit organization. I presented my pricing estimate. He balked. I clearly explained how I arrived at that price, and he made a counteroffer of $100/grant. For those not familiar with the non-profit industry, some grant proposals can require over 20 pages of program descriptions and documentation. When I explained this to the potential client, his response was, “But don’t you need the money?” No! Ok, yes, I needed the money, but my time was worth more than the $5/hour or less he was willing to pay. I walked away and didn’t look back. You should be prepared to do the same.
Remember if you don’t value your time, who will?