Secrets to Getting Paid What You’re Worth
If you work in a service industry you will know just how difficult it can be to price a service compared to a tangible product.
So often it seems that you and the client are coming from completely the opposite direction when it comes to establishing the value in a service. So here are a few ideas to help you better communicate the value of your service and reduce price resistance.
5 Tips to communicate your value
- A great rule of thumb is to start with the service benefit to the client. Once you know what the client is after develop your offer around how you are going to deliver the benefits that come from solving their problem(s).
- Clients will often put you on the spot by asking for a ballpark estimates. It is important to avoid giving an estimate without adequate consideration to all the variables of the assignment. The danger is that the client will want to hold you to your estimate and if you have miscalculated for whatever reason you must decide whether to wear the cost or pass it on to the client.
- Avoid discounting. The practice of discounting is wide spread in selling products but should be avoided in selling services. In affect you are programming the client to expect discounts and you are undervaluing your service. If pressured for a discount look to work with the client and see what portion of the assignment can be removed or scaled back to reduce the overall project fee.
- Be prepared. You know that at some point you are going to come across a fee sensitive client so be prepared for the inevitable question, “so how did you arrive at that fee?” Your answers will be modelled around the duration, scope, value, complexity, resources required and risk involved in the project.
- Your Intellectual Property. Many clients will try and justify the fee by trying to establish what your hourly rate is. You need to change the focus and establish that your knowledge, experience, ideas, capabilities, contacts and resources are ultimately what will deliver the desired outcomes.
For those interested in how to price your service fee there are a couple of options:
- Hourly Rate – get paid for your time
- Project Fee – charge a fee for completion of a project
- Retainer Fee – charge a monthly fee to be available e.g. software support
- Contingency Fee – get paid when the client wins the business
Ideally look to charge on a project basis with staggered payments at agreed milestones. Just insure the bulk of the payment is not left to the project completion stage to avoid debtor problems. e.g. 50% upfront, 25% on completion and 25% at an agreed midpoint.
If you feel you are not getting paid what you’re worth, talk to a business consultant from Watts Price Accountants about strategies that can be immediately implemented.
Richard Kemp – Watts Price Accountants
The advice provided on this Article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.