Confused about how to value your services? You’re not alone. It’s one of the most stressful decisions you can make.
But hey, nobody said running a service business was easy on the nerves. You want calm and peaceful? Open a lemonade stand on a quiet street.
No doubt about it, delivering services in exchange for money can be nerve-wracking.
Especially the money part. Stop me if you’ve ever said something like this:
- I wish I knew how much money was coming in next month.
- Actually, I’d be happy knowing that any money was coming in at all.
- How am I working so hard—yet making so little?
Funny thing is, when I work with companies that want to grow, it’s that last one that I hear most often.
Because, frankly, almost nobody I talk to knows how to value their services.
Good news: everybody gets this wrong
Now if you don’t either, don’t feel bad. After all, it’s not like you were born knowing how to put a value on what you do.
Something tangible, like a TV? That’s easy. Look at the price of other TVs and price yours accordingly. (I’m oversimplifying, obviously, but you get the idea.)
But what about something intangible, like the service you provide to your clients?
Please don’t say “Charge X an hour.”
The problem with hourly rates
Hey. You. Hourly rates suck. (Can I get a witness?)
Here’s why. First, saying “I charge $100 an hour” is too focused on “you,” not your client. And your clients care mostly about themselves—not about you and your hourly.
Second, any hourly rate is going to sound expensive when you take it out of context. Tell someone you charge $100 and they’ll think, “Well I only pay my babysitter $10… Are you really worth ten times as much?” Sounds dumb, yet it happens. So. Often.
But the worst part about hourly rates is they make it too easy to compare you to others. Have you ever had someone say “Well, the last person we worked with billed 25% less than you did”?
How to value your services: believe in yourself!
You’re a superstar, right? You’ve got years of experience. Qualifications out the wazoo. (Hopefully not literally.)
You’ve got a proven process and you consistently deliver fabulous results for an impressive roster of clients.
And you’ve got a sparkling personality to match—the kind that makes your best clients feel like they’re the only person on earth.
So, tell me again why you’re only charging the going rate in your industry?
6 different ways to set your rates—none of which are based on “everybody else”
Here’s your new creed. Repeat after me—“I hereby solemnly swear to stop undervaluing myself… And I promise I’ll price my services based one of these factors”:
- The value of the results you deliver. If you’re helping someone double their business, charge like you are.
- How hard it is to provide your services. Let’s say you’re a conference planner, and you end up working 80 “week before” hours every time. Isn’t it fair to get paid extra for that?
- How much the client can pay. Please promise me you won’t bill peanuts when you’re working for someone who has a seven-figure net worth.
- The amount of experience you have. Been writing for 20 years? Congratulations—that more than earns you the right to charge orders of magnitude more than a new freelancer.
- The cost of the other ways of achieving the same outcome. If your client can attend your one-day seminar or spend four weeks trying to learn on their own, your rates should reflect that fact.
- The savings your client will realize by avoiding failure. $200 an hour marriage counseling seems like a deal when you compare it to a $50,000 divorce.
I’ve known incredible people who worked their metaphorical fingers to the bone and still went bankrupt. And yet, every day, people still try to bring their “thing” to the world while charging bargain-basement prices.
Don’t do that. Break free of the hourly rate trap—and learn how to value your services in a way that rewards your hard work.