One of the things I have noticed while working with women entrepreneurs is that we tend to undervalue ourselves. We have a tendency to want to “help others”, and somehow equate “helping” with “giving away our services.” We have an inherent belief that if we charge what we are worth, then we will lose our clients or that we are somehow doing them a disservice. We worry about what others can afford when quoting our prices instead of challenging them to invest in themselves and in their businesses to reach their next level of potential. We devalue ourselves and then we wonder why we aren’t making enough money, or why others don’t value us more highly.
This leads to clients who come to me in frustration that they work all the time and aren’t making any money. So I help them to evaluate the situation objectively, taking into consideration what they really want their businesses to feel like and the financial success that they would like to experience, and help them put strategies and processes in place to support them in making the necessary shifts to reach their desired outcomes.
Today I wanted to share with you the 5 main strategies I use to help my clients make the shift from struggling to charging what they are worth.
1. You need to get clear about what you want and why you want it. I go into this topic in greater levels of depth in my blog post, entitled Are You Clear On Your Whys?
What do you want to accomplish with your business and why? Whom do you most enjoy serving? How much money do you want to make in a year? How do you most want to spend your time in your business? How do you want to give back?
Being strategic about what you want and why will help you to attract the types of customers that you most want to serve.
2. Evaluate your Current Revenue and Cost Structure. What are your current service offerings and/or products and how much to you charge for each?
What is your cost structure?
What are your current profit margins (difference between your revenues and your costs) overall and by product or service?
3. Track Your Time and Expenses. Do you know how much time you (and your team, if you have one) spend delivering each service offering? In a given day or week or month, do you really know how much time you spent working on each client’s projects? Do you know how much time you are spending on administrative tasks? On Business Development activities?
Do you know all of the time and material costs that go into each of your products or service offerings? Are your prices fully loaded to include all of your overhead costs (not just the direct costs for that product or service)?
Even if you think you know the answers to these questions, make sure you are actually tracking it! Use an app like Harvest or use an Excel spreadsheet or any other tool of your choice. But don’t just guess. Actually track it! You will likely be surprised by what you find.
On a daily basis take 15 minutes before you quit working and write down where you spent your time. On a weekly or bi-weekly basis review all of your businesses expenses for that week and make sure you allocate client, project or product specific expenses, as well as overhead expenses to each client, project or product.
4. Review Your Billing Rates or Pricing. Now that you are actually tracking your time consistently every day, and reviewing your expenses regularly, are you charging what your product or service is worth?
Are you covering your base costs (fully loaded with all of your overhead) for your products and/or services with your current pricing for those services? Are you giving too much of your time or energy away for free?
Where might you need to make some adjustments to your pricing structure?
In fact, you are doing just the opposite! You are harming yourself and those you are meant to serve if you are working yourself into the ground and not charging enough to make a sufficient living to pay your bills, and also have enough left over for your own savings, vacations, charitable interests, etc. That certainly doesn’t serve you. It causes you stress and anxiety, which in turn doesn’t put you in a great position to really help your clients without resenting them on some level.
Plus if your pricing is correct, you are not working “all the time” to make ends meet, which allows you more time to rest and stay more grounded and centered, which allows you to serve your customers better when you are focused on their projects or products.
Honor yourself enough to price your products and services at a price point that reflects the value of what you offer to your customers. Trust that while you may lose some price sensitive customers as a result, that it is ok to let go of people who you likely aren’t enjoying serving anyway and who may be draining your precious energy and keeping you from attracting customers who are willing to pay more for what you offer.
5. Develop Consistent Billing and Collections Processes. When you run a small business you may not yet have put consistent standard processes in place to bill your customers and ensure you collect the money in a timely fashion.
Take the time to instill the discipline to generate invoices to all of your customers on the first day of each month, or at the time an order ships if that is more relevant to your business. Calendar it, and make sure it happens like clockwork each time.
Determine standard payment terms that work for your business, and make sure those are clearly communicated to your clients. For instance, you may invoice your clients at the beginning of each month and expect payment within 7 or 14 days. You may invoice your clients when a product ships and expect payment within 30 days.
Make sure whatever terms you put in place, you also put in place a corresponding process to collect from your customers in a timely manner. If your customers need to pay within 7 days, make sure you or someone on your team has an action item to follow up with each customer who hasn’t paid by that 7th day.
If you aren’t able or willing to do this yourself, consider hiring someone to help you with this a few hours each month. The cost of not collecting promptly will outweigh the small amount you would pay someone else to help you out if you need it.
I am super passionate about helping women entrepreneurs become even more successful in business. You have amazing gifts, and if you are brave enough to be sharing them with the world through your own business, you deserve to charge enough to support yourself and those you love. If this isn’t your experience currently, reach out and let’s talk! I’d love to help you get things turned around.
If you liked this content, please leave a comment to let me know what resonated with you and where you have identified something in your own business that you need to tweak related to charging what you are worth.
Also, please feel free to share this post with others you think might also benefit from it.
Have a great week!