How do you put a price on your passion? How can you charge a fair-but-high price for your services?
You've got a fantastic prospect on the line. The conversation is engaging. The relationship develops instantly. Your hopefully-soon-to-be client is telling you about the goals they want to achieve and the obstacles they're confronting.
And you have all the answers. You've solved these problems and helped your clients achieve these goals before. You're a perfect fit!
What a dream project!
I'd love to work with this person!
If I get this contract, I know I'll produce rockstar results!
But as you feel more and more like you've made a new friend, an uncomfortable question nags at you:
What's going to happen to
this collegial conversation when
it's time to talk about money?
We're not spraying insecticide or delivering a newspaper and then moving on to the next customer. Some people are able to draw a distinct line between professional life and personal life, but many of us—coaches, therapists, attorneys, consultants, editors, etc.—get personally involved with our clients.
That's what the job involves.
We get “deep into your business.” Close relationships inevitably develop … and that makes it even harder to say, “Check please!”
How can you become comfortable with the money conversation? Here are some tips I've learned along the way:
- Your easy-going style and ability to establish rapport is part of your business value. Plenty of people do what you do, but nobody does it quite the way you do it. People do business with professionals they feel they know, like, and trust. They'll pay more for your personal touch and GSD work ethic to ensure the success of the journey ahead.
- Even if you're down to zero clients, don't approach prospects from a place of hunger. You wouldn't tell a date how lonely you are—at least not if you want a second date! Clients can buy what you do from any number of sources, but they won't find your unique package of skills, experience, and personality anywhere else. Don't price yourself to compete with “any number of sources.” You're better than that.
Scarcity mindset is a real problem. Back in my twenties when I was a boat bum in the Bahamas, I'd make a few dollars varnishing someone's cockpit or scraping the marine growth off their hull—and I'd live off that for months, supplementing my meager budget for flour, rice, and vegetables with fish and lobster I speared daily on the reefs. Getting down to my last dollar was a rite of passage—an ego trip. I never worried about money—some opportunity always blew my way—but later in life, that attitude held me back. I undervalued myself and my services, invested too much of my energy in the “kharma bank,” and struggled to survive in the land of clocks and calendars. On the day I figured out I'd helped my clients earn over $4 billion, I received an overdraft notice! - If you're like me, you love to help people and you love to do favors for friends. And we all know it can take time to nurture a lead to the point where they become a client. As with any healthy relationship, set boundaries. Be absolutely clear about what you're willing to give to the relationship before the meter starts running—a certain amount of time or a certain type of help. “That's an important question but it will take some time to answer it. We'll get into that when we move forward together.”
- Remind your prospect (and yourself) that no matter how much you love what you do, you do it for a living. “I've really enjoyed our meeting and it's hard to believe we've spent a whole hour together! Does it make sense to talk about how we might collaborate?” Why should this feel awkward? They didn't call you looking for friendship! They didn't call your business looking for free help! They had a problem they wanted solved or a goal they wanted to accomplish. If you've just spoken for an hour and they're still on with you, they know you're capable of helping them. And aren't they just as invested in the relationship as you are?
- Your fee is your fee is your fee! Not every prospect will be able to afford you but that doesn't mean you have to afford them. So many professionals—especially creative or hungry ones (and they're too often the same)—are willing to drop their prices without complaint. But think about what this implies: Someone quotes you $10,000 for a job and you tell them you can only afford $3,000. If they immediately meet your offer or even cut their fee in half, won't you wonder whether or not they were trying to gouge you in the first place?
- Let the cheap clients work with the cheap contractors. There will always be a market for “cheap,” but competing in that market is a race to the bottom. Instead of charging for hours or pages or words or pixels, charge for results! If you can produce value in excess of your fee, price becomes irrelevant. How can a speaker charge $35,000 to talk for 45 minutes? If she speaks about employee retention and it costs a tech company $15,000 to on-board and train a new employee whenever a competitor poaches an existing one, the lines on the price vs. value graph cross pretty fast. Whether the talk is 20 minutes or 90 minutes long has nothing to do with the value she produces.
- Negotiation is an inevitable part of doing business. Your fee is your fee is your fee but … money is not the only currency you have to accept. Can you break a project into phases and charge for one at a time as the project progresses from milestone to milestone? Or reduce the scope of the project? Maybe the client's budget won't accommodate your full speaking fee but they can offer you a three-camera video shoot on a beautiful keynote stage. Or maybe they have a separate education budget with which they can purchase your books or license your video content? Negotiation is not a competition; the goal is to find a win-win scenario—and figuring out how to get there can further build your relationship with that client.
- Avoid clients who want to pay you in installments unless you know them well or they come from a trusted referral source. You are not a bank! Professional people (and most regular folks) have access to lines of credit. Why would they come to you for an interest-free loan unless they were broke and unable to procure funds from institutions that are in the business of loaning money?
- High-level clients are accustomed to paying high-level fees to get high-level results. If you price yourself too low, they won't take you seriously enough to even talk to you. And consider that with corporate clients, none of the people within the organization are paying you out of their pockets; nobody is choosing between you and groceries. If you can solve an important problem for them, they most likely have a budget for the solution based not on the number of your hours involved but on the cost of not solving it.
- Avoid hourly billing. It may feel like a fair and democratic way to simplify the money conversation but it's usually a flawed approach. If the traditional market value for a service is $25/hour, the experienced practitioner might be three times faster than someone new to the profession—and three times more able to solve technical problems and avoid production mistakes. But if they charge the $75 they're worth, nobody will hire them. Most hourly billing is done through an honor system, anyway. And if you go to a mechanic to get your car fixed, they look up the “number of hours” a particular job is worth in a book, multiply that number by their “hourly rate,” and charge you an amount that has nothing to do with actual time.Though therapists and coaches who really do work by the hour may make exceptions, better conversations and higher fees are realized from conversations about the cost of the problem versus the cost of the solution.
If you love what you do and you're generous of spirit, how can you put a price on your passion? That can feel disingenuous or uncomfortable. Successful professionals know how to build rapport, engage on a personal level, and enjoy their work without feeling that asking for money will ruin the relationship. Demonstrate your value, negotiate a win-win, settle on fair terms, do excellent work, and then enjoy being friends with your clients.