Back during my real estate days, a friend I'll call Becky (seems the right thing to do since that is her name) and I met for coffee. We had similar businesses. She performed business valuations and consulting and I appraised property and consulted on real estate. We were frustrated. Both of our incomes had stagnated. And since all our working hours were filled, we saw no way to make more money.
Analyzing the issue we concluded there were only two ways to increase our incomes: work more hours or charge a higher hourly fee. Since we couldn't do the former we discussed the latter.
Pricing for our services varied widely. So it was impossible to pinpoint what we should charge. We agreed to an experiment: Raise our hourly rates by 50% and see what happens.
Within a couple of months several we found:
- Clients paid the higher rate
- The number of hours I worked did not drop
- I got more challenging projects
- I traveled more
In short, I made more money doing better work. The same thing happened for Becky.
About a year later we tried the experiment again with similar results. By then I had learned to have greater confidence in my professional ability. Also, I learned about the concept of:
If something is more expensive people think it must be higher quality.
Raising Your Rates = Better Service
Equally important, my clients benefitted by:
- The quality of my work improving.
- Having someone who reliably tackled tough projects without sacrificing quality.
- Having greater focus on their specific needs because I didn't have to work on multiple projects or constantly pursue other work.
Of all the decisions I made in my business career, this one scared me the most. This includes dealing with a gangster though in fairness I didn't know he was a crook when I refused to be intimidated. I had worked so hard to build my company I didn't want to see it fail because I was too greedy.
But the risked paid off for my clients and me because I met the challenge of producing superior, more complex work to justify higher fees.
As you plan and start your business it's easy to be myopic. Don't be afraid about raising your rates. Reach outside yourself to make sure your growth continues and is being rewarded properly.
Is it greedy to leave behind clients who can no longer afford your services?
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