How to Get Paid What You’re Worth
How to Get Paid What You’re Worth
How to Get Paid What You’re Worth
The age-old question when it comes to running your business: how to get paid what your worth. It’s also known as, how to set your rates. And it’s been confounding business owners since the beginning of time. Business owners blog about it. Podcasters dedicate entire episodes to it. Even Forbes has written about it. So, when it comes to running your own business, how do you get paid what you’re worth, and set rates that don’t send potential clients running for the hills?
RATES AND/OR SALARIES
Let it be said from the outset that these principles can be applied to anyone looking for an increase in revenue, whether you’re a business owner, an independent contractor, you’re self-employed, or you earn a salary. While the approaches may differ according to your situation, the underpinning principles are the same.
1. Believe In Your Value
Asking for a raise or a rate that is higher than the competitions’ isn’t easy. But think about the people who are earning more than you are. Think about the people who command high salaries and rates and ask yourself, ‘How are they able to do that?’ Sure, they have expertise and experience. But they also know the value they bring to the work that they do. They BELIEVE in that value. They don’t question it. Because they believe in it, they are able to communicate about it with confidence.
Tips to finding your value and believing in it:
· Write out the ROI you’ve created for previous clients
· Go back and look at feedback you’ve received from clients about the stellar work you’ve done for them
· Find all the written communication you can about how your skillset is valued because other people just CAN’T DO IT
2. Explore Your Money Narrative
We all have one, and they often stem from the stories we heard about money in childhood. When you identify those beliefs and interrogate why they existed and how they’ve influenced you, you can start to shift your beliefs about money. You can also detangle yourself emotionally when you think about setting your rates or asking for an increase or raise.
3. If Nothing Else, Charge for Your Time
There is absolutely nothing more valuable than your time. Your time is irreplaceable. Whether you’re sitting in a meeting, giving a workshop, drawing up a contract or writing a project proposal, that is time that 1) You can never get back; and 2) You could be spending doing something else like walking your dog, or hanging out with your kids. We love this article which talks about how not getting paid for time is an injustice that needs to stop.
4. Know Who You’re Serving
When you know who your clients/employers are (really know), then you know exactly how much they can afford to pay you. If your clients are only starting out in business themselves then it’s likely that they don’t have the capital to pay you a huge retainer. So, do some investigatng.
· How much do they charge for their services?
· What are their other business expenses?
· What are their other service providers charging?
You’ll be able to get a good idea of what they can afford from the answers to those questions.
5. Work Out Your Expenses
When you know how much it costs for you to live, then you know your baseline for charging. Factor in everything: rent, gas, food, what it costs to run your business, entertainment, all of it. When you know what it costs for you to live, divide that up into the amount of time you spend working.
Divide this number by 20 (the number of working days in a month).
Now, divide by hours.
If you work full-day, divide the amount by 8 hours. If you work half-day, divide the amount by 4 hours.
That’s your hourly rate:
You need $10 000 a month to cover your expenses, and have some money left over for savings.
10 000/20 = 500 per week
Full day: 500/8 = 62.50 per hour
Half day: 500/4 = 125 per hour
6. Compare Your Rates/Income with Others
The internet is full of articles and sites about what various service providers charge their clients. There’s also a lot of information around the salaries that people are earning when it comes to their level of experience. Payscale is a great site for looking at rates in different industries. There’s no reason why you can’t also look at different job sites, and see what the going rate is. You can also chat to other people in your field to find out what people are earning and what the current rates are.
7. Explore Different Pricing Models
There are different types of strategies that you can use to set your rates if you are a freelancer. Each of them come with pros and cons.
· Charge per hour (time-based pricing)
This is the easiest way to charge clients. This is where you set your rates purely according to the amount of time you spend on their work. Most people charge an hourly rate when they use this model. You could also quote a day rate, depending on the size of the project.
The problem with this method is that you only have a certain amount of hours in the day, so you will hit a pricing ceiling. The only way to earn more money is to work more hours.
· Charge per project
This is when you charge someone for the effort and the hours you spend on a project. You work out what it will take for you to achieve the result that your client wants and you give them a quote before you start the work. This requires you to know exactly what it will take for you to complete the
work. You’re essentially charging for the value you bring to the work, and not the time it’ll take to complete it, which means that you will probably end up earning a high day rate than usual.
· Charge for Value
This has nothing to do with how much time you spend on a project, and everything to do with the value you give to the client. For example, if you’re a copywriter and you can write a sales page in two days that will bring in your client $10 000, then you should charge a percentage of that.
To charge for value you have to be experienced and you have to have the stats to back up your fee. You’ll need a strong pitch, a good portfolio and a proven track record.
When you have all the facts in place and you can quantify the value you bring to the work that you do, you find yourself in a position of confidence and bargaining power. Whether you’re setting your rates for the first time, asking for a raise, or increasing your rates for an existing client, have all the research in place so that emotion can be taken out of the conversation. State your value, charge for your time, work out how much you need to spend to live, and explore what other people in your industry are charging. This will give you a good idea of where to start.
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