I had a good conversation yesterday with someone who was new to self-employment and was really baffled by the process of setting an hourly rate for his services.
I went over a framework for understanding value that I learned from a prior client, Skip Miller, who wrote ProActive Selling.
When calculating the value your services provide, consider the following elements:
Return on Investment.
Otherwise known as “I give you money, and I want it back. Many times over.”
When people invest in your product or service, how does it help them make money or save money? If they coach with you, do they negotiate a better salary? Get healthier and save money that they would have spent at the doctor’s office? If you consult with them about marketing strategy, do they increase the conversion rate of new clients, resulting in $100k in new revenue for the year?
The more you can understand the many ways people will make or save money as a result of working with you, the more confident you will feel about your value.
How is your product or service reducing risk for your customers? Does your automated computer backup service ensure your customer will not lose all her work files and family photos when her hard drive fails? Are you a totally reliable web designer who will not run off into the Siberian tundra halfway through a web design? Is your advice so trustworthy that new entrepreneurs will avoid costly and embarrassing mistakes?
If you have ever purchased an extended warranty for an appliance or piece of technology, you made a buying decision based on risk.
How does your product or service save time, speed time to market, maximize the value of time? Even if your customers know how to do what you sell (create a website, clean their house, walk their dog, take pictures, transcribe audios), they will pay you a premium to do it for them if it will save them time.
Value really comes into play when your customers use the time you free up for them on high-return activities like finding new customers, creating new products or spending time with their family. This is a major selling point of VA services like Marta Costa’s (my wonderful VA).
There is a reason we pay more for shirts with a little alligator on the pocket. As well as spent 12 hours in the blazing sun waiting in line for the new iPhone. The reason is brand. We like to be associated with products and services that say something about who we are. “Chris Brogan is consulting with my company about our social media strategy” means something cool in certain business circles, And it is worth paying more for.
Who you are or what your company represents does translate into value for your customers.
The field of Neuro-Linguistic Programming (NLP) says we are wired to buy something for one of two “motivational directions” — toward pleasure (“These shoes are so cute! I have to have them!” “This program would be so invigorating!”) or away from pain (“These shoes are getting old, I better get some new ones.” “If I don’t attend this program, my business will be left behind”).
The more you understand the primary motivational direction of your customers, you can tailor your language to stimulate their buying appetite.
Your value is SO much more than the time you sit in a chair working for a client. Explore the many ways you create value, and feel your backbone straighten when you name your rates. You are worth it.