How much should I charge?

Most self-employed service providers struggle at some point with the issue of setting their fees. Set your fees too high, and you could price yourself out of the market. Set your fees too low, and you'll put yourself under pressure as profit margins get squeezed. This is a story of how I helped a complementary therapist to establish her fees at a level which worked for her AND her client.

Recently I've been receiving regular reflexology treatment. At my last session the reflexologist told me she'd been invited to submit a proposal to provide training at a dance school. 'I have no idea how to structure the proposal, or even what to charge' she told me. 'They've asked me to run 12 two hour sessions'

'How many people will be receiving the training?' I asked. '10' she replied. 'And overall they'll be getting 24 hours of training. What would it cost if they individually went and bought 24 hours of reflexology training on the open market?' 'At least 600 euros per person', she replied.

'Great. Well 10 times 600 euros is 6,000. So immediately we've established the value of this training at 6,000 euros'.

Her eyes widened, 'That's 3 times what I was thinking of charging, '

'Well I'm not saying you should charge that, but I would definitely include that piece of information somewhere in your proposal. You see, perception of value is a very subjective thing. If the decision makers have an idea that your time is worth 40 euros an hour, and they see you providing 24 hours of training, then the figure they may have in THEIR heads is 960. On that basis, it will be difficult to persuade them to part with 2,000. You're going to encounter price resistance and have a lot of objections to overcome.

Even if you can convince them to pay 2,000, they're going to have a feeling that they were overcharged. Even though their expectations were unrealistic and didn't take into account your preparation time. It will be an uphill struggle.

In contrast, if you take the time to establish that this training would cost them 6,000 if they were to source it elsewhere, you could charge 3,000 and they will still feel like they're getting value.'

It's your responsibility to establish the value of the service you provide. Before this conversation, my reflexologist was going to set her prices by calculating how many hours were involved, and then multiplying that by her hourly rate.

Yet her hourly rate as a reflexology practitioner is IRRELEVANT to the proposal she had been asked to submit. She is providing training to 10 people NOT a reflexology treatment to one. It's a completely different service.

If a customer has a certain figure in their head, even if that figure is unrealistic, it's YOUR job to educate them.

You don't want customers agreeing to your fees, but feeling that they were overcharged. And they will if there is a big gap between their expectation and your fee.

So well before you reveal your fee, make sure you have reset their expectations and demonstrated convincingly what your solution would cost were they to source it elsewhere. Please note, you need to do this BEFORE you reveal your fee. If you wait until afterwards you will simply come across as defensive and trying to justify your fees. It's not a pretty picture.

Making the effort to establish value and educate your clients up front can pay off in many ways.

You can eliminate price objections before they come up, and notice that in this case the reflexologist could submit a proposal that was 50% higher than she had planned AND it was able to present her price in such a way that the client knew they were getting good value. That's a real win-win. Had she NOT taken the time to establish the value up front, she could have had a real struggle convincing the client to part with her original figure of 2,000.

The net result? When I followed up with her to see how she got on, she had successfully submitted a proposal where she charged 3,000 euros - 50% more than the fee she had originally planned. She was happy and the client was happy. A true win-win.

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About The Author:

Bernadette Doyle publishes her weekly Client Magnets newsletter for trainers, coaches, consultants, complementary therapists and solo professionals. If you want to get clients calling you instead of you calling them, then get your free tips now at http://www.clientmagnets.com.

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