Why don’t new consultants charge what they are worth? FEAR. Fear that they won’t get the work if they price too high. Fear that they are not worth it. Fear that if I say, “My rate is $150 an hour,” the client will laugh in my face.
STOP right now and repeat after me:
I earned it.
I deserve it.
I am worth it.
What Does It Take?
1. Preparation
Do your homework and understand the implications of your rates. How do they compare with the competition? A higher rate may lengthen the sales cycle. A lower rate may leave money on the table. Do some benchmarking.
How many hours a week do you think you can bill? In the early days, I thought I could bill at least 40 hours a week and maybe 50 or 60. After all, like you, I had been working upwards of 60 hours a week for several years in my corporate jobs. I mean, who works 40 hours a week? Once I did some research, I found that 30 hours a week is considered fully utilized in industries that live and die by the billable hour such as consulting, law and public accounting. Now I shoot to bill 30 hours a week on average. I spend 10-15-20 hours a week doing networking, marketing and business development. And like it or not, it takes an average of 5 hours a week for infrastructure and admin. That adds up to 50-55 hours a week which Is about right.
2. Set Your Rate
Be deliberate about setting your rate. If you have no idea where to start, 80% of the independent consultants out there charge $150/hour. Now you have a starting point. Be confident. Be deliberate. Don’t appear desperate (even when you feel desperate).
I know some of you are probably thinking, “Wait, I’m not charging by the hour.” But it doesn’t matter if you’re billing by the hour or the day or the month or the project, you are selling hours. Once an hour is gone, you can never sell it again. And like it or not, you can’t stock them in inventory.
3. Role Play Your Pricing Discussion
Prepare ahead for pricing discussions and questions about your rates. Role play answering these questions so you project confidence. Do it with your partner, your kids or even your dog. If nothing else, look at yourself in the rear-view mirror of your car before you go into the meeting.
ROLE PLAY YOUR PRICING DISCUSSION!
I can’t stress this enough. If you don’t practice it, you may not sound confident. And the first time you’re feeling desperate about landing a project you may find yourself spitting out a lower number and leaving money on the table. You’ll be kicking yourself for long time.
4. Keep in Mind
Don’t work for free. It doesn’t pay the mortgage or the health insurance or the college tuition. Smart people with good ideas will come out of the woodwork looking for your free expert help. Make a rule now that you will never work for free. That doesn’t mean you can’t skim a business plan for a buddy or bounce around ideas over a glass of wine. But never do real work for free. Make that a rule and stick to it. I promise you will thank me.
Don’t do volume discounts. If people want to monopolize your capacity, they should pay more not less.
If you want FedEx overnight, do you pay less? Of course not, you pay more.
Don’t short-change yourself when it comes to tracking billable time. If you’re doing something for the client, it is billable. That includes emails, phone calls and research. I capture my time in 15 minute increments. I encourage you to use a time tracking system.
5. And Finally
Since you’re the decision maker, you can offer different pricing packages to meet client needs. Value pricing and performance bonuses can offer a lucrative upside. Equity trade can also offer some upside but never work for all equity. Always require at least 2/3 cash payment for your services.
In the early days of my business, I didn’t charge enough. I was afraid that I wouldn’t win the business if my price was too high. Once I finally start charging what I was worth, my clients never batted an eye. Just think of all that money I left on the table.
STOP right now and write this on a sticky note:
I earned it.
I deserve it.
I am worth it.
Put it on your monitor or your bathroom mirror or your phone case and say it every day until you believe it. Confidence is more important than research.
Your only finite resource is your time. It’s precious, you can’t warehouse it and you can’t make more of it. Start charging what you are worth and do it now!
Are you ready to start charging what you are worth? if you’ve been thinking about getting into consulting, there is no better time than right now! The best way to get started as a consultant is to dive in. This free email course will walk you through three action steps to generate revenue now. If you start right away, you can be doing billable work as soon as next week. Following these three action steps gives you the best possible chance of landing a consulting project. It works for me and I see it work for others, over and over again. Take control and take the plunge!