Asking clients for cash can be a bit awkward, even when you are delivering value many times what you are paid. Here's how to calculate what you are worth - and make sure you get it every time.
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When it comes to businesses which offer services and therefore sell their time for money, charging what you’re worth is definitely not an exact science. Overheads have to be taken into account, who your target market is as well as other financial considerations.
However, there is another aspect which is far more complicated as it depends on the business owner’s beliefs, thoughts and feelings around his or her value. The idea of True Worth was born out of personal experience at a time when I was also not charging what I’m worth.
I was so motivated to help businesses overcome their hurdles and gained enormous pleasure from my work, that I hadn’t really considered my value; in fact, I was not sufficiently confident in myself to be able to charge my true worth.
This impacted on everything - my work/life balance, my finances and my self-worth! It was a vicious circle.
"Understanding your value is the first step in being able to charge what you’re worth"
Coincidentally, I came across an intensive marketing programme for coaches and, with trepidation, signed up. In one of the early workshops, they explained the need for a niche and the concept of worth or value almost immediately came to the fore, as if it had been quietly waiting in the wings.
At the time, I didn’t appreciate just how commonplace this problem was. However, when I re-visited past clients, I noticed that many of them struggled with charging what they were worth too.
In the process of creating this niche, in the early hours of one morning, when half asleep, an equation materialised in my mind.
The formula is UV + CV + CD = CWTM (Understanding your value, plus communicating that value plus comfortable discussing fees equals charging what you’re worth. I spent a lot of time reflecting on the subject and talking to business owners and professional services about it.
I began my own process of understanding my value, being able to communicate it effectively to clients and became more comfortable discussing fees. I finally understood that I could still genuinely help people and charge what I’m really worth.
1) Understand your value
Understanding your value is the first step in being able to charge what you’re worth. However, in order to do this, you need to deeply reflect on your expertise. This is not something you can do quickly and it’s not easy.
Your expertise consists of your professional qualifications, your continual professional development and the experience you have putting it all into practice.
It's very difficult for you to see how valuable this is because you take it for granted – to you, it's easy – you've been doing it for a long time. In fact, you have become unconsciously competent. What that means is that you do things automatically very often without having to think that much and therefore you don’t place much or even any value on it.
An example of unconscious competence is driving a car. If you've been driving for years, you don't have to think how to drive the car – you just do it – and it's very similar with your expertise. So understanding your value not only takes time but you also need to be objective about it and probably involve others.
May I also suggest that it is something which you need to review on a regular basis because, as you continue to develop your skills, you become even better at what you do? This is particularly relevant to businesses which charge on an hourly basis.
The better you get at doing the work, the less time it takes you and therefore you are charging less. That is definitely not logical is it?
2) Understand the client’s pain
Of course I’m not referring to physical pain; it’s more of an emotional one. In other words, find out what the client’s problem is. To do this, it’s essential to ask the client quality, open questions.
That is questions which can’t be answered with a simple one-word answer and begin with words like ‘what’, ‘where’, ‘when’, ‘how’, ‘who’ or ‘why’. When you ask these questions, allow the client to answer without interrupting, prompting or leading.
The purpose of this is to establish what “pain” the client is experiencing and how extreme that pain is. The greater the pain, the more likely they are to need your services which means that they will also more likely pay you what you’re worth.
Of course the reverse is also true. People use service professionals because they have a problem that they need solving. If you can find out what solving the problem will be worth to them and what will the problem cost them if it’s not resolved, then you’re on to a winner.
3) Increase your self-worth
Self-worth is at the heart of everything we do and it directs our behaviour. Most people whether in business or not are operating based on their programming and conditioning, not on their own rational thinking, particularly when it comes to emotive subjects, such as charging. Worse still, they don’t even realise it!
In addition, as human beings we are motivated by pleasure or by pain. So we’re either moving towards pleasure or moving away from pain. To put this into a business context, if you don’t feel 100% worthy, how can you possibly charge what you’re really worth because your perception of what you’re worth is too low?
Feeling happy about yourself will help you charge the right amount for your skills
If someone merely tells you to raise your fees, it makes you feel uncomfortable. When you feel uncomfortable, what do you do? You move away from whatever is causing that discomfort. You stick with the fees that you’re currently charging even if that means not getting paid what you deserve for the work you do. So self-worth is paramount.
4) Focus on value not on price
Many businesses make the mistake of focusing on their prices. When they do this, so do their clients and in fact, they will have a tendency to attract clients who are price-focussed.
Furthermore, if you don’t first demonstrate the value of what you do, prospective clients will tend to regard the quote you give as high, no matter what price you offer. You have to get them to shift from looking at the price of your service to seeing the value of it. Once they understand the value, the price you quote will actually seem relatively low by comparison.
If a prospective client asks me what I charge, I explain that I only work with people who I’m pretty sure I can help. Providing they meet certain criteria, I offer them a complimentary True Worth Strategy Session to determine what their challenges are and how much revenue they are potentially losing by not charging what they’re worth.
This enables me to demonstrate the value of my service quite easily as before I quote them a price, I can discover whether the return on investment in being coached is worthwhile so there is absolutely nothing to lose and everything to gain. So if they understand the value and potential return on investment and are ready to make the change, they will go for it.
5) Communicate your value to clients
I have a sneaky feeling that this is often omitted for a number of reasons. Firstly, because the business owner just doesn’t understand how important it is, or because he/she makes assumptions about the client’s understanding of the value or quite simply because he’s just not comfortable doing it.
By ensuring that the client understands the value of your service and what they’ll be getting for their money means they’re much more likely to do business with you and pay you what you’re worth.
So it’s not just important to discover your clients’ problems and how extreme they are, as mentioned in tip 2, it’s also vital to make sure that the client understands just how badly they want to have the problem resolved. To do this, you need to reflect their pain back to them and communicate your value in being able to solve that ‘pain.’
6) Get comfortable discussing money
Most of us grew up hearing some or all of the following statements:
Money is the root of all evil
Money doesn’t grow on trees
A fool and his money are soon parted
Whether you’re aware of it or not, they have probably become embedded in your subconscious mind, have become beliefs and are therefore determining your thoughts, feelings and actions around money. So it’s imperative that you change your beliefs about money, otherwise, it will be impossible to charge what you’re worth.
So when was the last time you reflected on whether you’re charging what you’re worth?
If it’s a long time or you’ve never done it, take the first step in charging what you’re worth by ordering a complimentary copy of True Worth at: www.thetrueworthexpert.com