You're worth what you say you're worth
How To Increase the Price of Your Services, and Still Have Customers
By: Ajdin Imsirovic 11 January 2019
What is the right price to charge your clients?
Every freelancer gets to ask themselves this question at one point, especially if they feel undervalued or overworked.
In this article, we will look at why, when, and how to increase your prices, and still keep your customers.
A Price is Not A Physical Constant
It is common knowledge that the speed of light is always the same.
So is the speed of sound.
So is the gravitational pull on Earth.
All of these are known as physical constants.
That does not have to be the case with your prices.
For example, most online freelance markets work on the basis of you having to set your hourly rate.
This is not the way to go, because it means that increased productivity will not lead to you making more money from your clients.
Rather then setting a fixed amount on an hour of your work, it would be much better for you to set a price on your services.
Before you learn how to do that, you should first ask yourself: Am I making enough money, or am I underpricing my services?
Am I Underpricing My Services?
Regardless of how much you charge your clients, some of them will say you are charging too much.
Others will be glad for the rate they get from you, because they will think that you are charging too little.
Price is in the eye of the beholder.
Different people expect different things.
Thus, it might seem counterintuitive, but you cannot overprice your services.
After a certain price, your clients will only pay for the prestige, not for the quality.
So, if you feel like you should be making more money, ask yourself:
- Are there enough potential clients for me out there, who will be happy to pay more than I usually charge?
- If there are, why am I not already charging that price?
The answer to that second question is usually one of these two things:
- You do not have enough experience - i.e you have a “confidence problem”
- Your market is oversaturated
How to Increase the Price of Your Services if You Do Not Have Enough Experience
This is really a tough one.
Sometimes, because of the lack of experience, you have to do your side hustle for a very low price.
If it’s your first client, sometimes it would make sense even to work for free, just to get the experience. Such situations are very rare, but they are possible.
The more experience you get, the more expertise you get. The more “confident” you become.
In the words of Dan Lok, “competence is confidence”.
How do you get competent? By doing something for a thousand times.
That’s why this kind of situation is difficult: You haven’t done your service a thousand times, so how can you charge a premium price without a track record? Without a list of clients? It’s almost impossible, but it’s still doable.
Let me give you an example: Let’s say that I hire you to teach me how to fly fish. And you say to me, yes, I’ll do that, I’ll teach you how to fly fish.
However, there is a tiny problem: You never went fly fishing yourself. So how can I expect you to teach me?
It would be ridiculous.
However, even in this situation, you could do something to provide that service.
For example, you could:
- Organize the transport to the river
- Organize lunch, bed and breakfast
- Prepare snacks
- Prepare some interesting stories about the river, the area, and it’s history
- Rent equipment
- Hire a professional fisherman
What I’m saying is, when you’re not the expert, you could still charge a higher price, if you add additional services, solve a chore that I as your client can’t be bothered with, and nicely package all of it. Then you might demand a greater price, because I feel that you have put in work to deliver a valuable experience for me.
How to Increase Your Price When Your market is Oversaturated
If there are too many players in your market, and you are just starting out, it would probably be easier to just choose a different niche.
However, even if you decide to stay in your niche, you can still do something.
You can stand out by somehow making your service unique (by adding more features, or doing it from a new angle).
Or you could offer a free sample of your services. With the agreement that if the client is happy with the sample services, you will charge them a premium price after the trial period.
The price you agree on can easily be above your current price, and if you and your client click, they might be more than happy to pay the premium price for your service.
Just don’t make it obvious that you’ve never before charged anyone that much. Doing so is a sure way to leave your client dissatisfied.
It is Much Better to Productivize Your Services Than Sell Your Time
If you are charging your clients by the hour, you are essentially selling your time.
Which is great, except for one fact of life: there are only 24 hours in one day. So, no matter how hard you work, you can only charge so many hours from your clients.
A way to solve this problem is simple: You productivize your services.
For example, if you are setting up websites for clients, you might be framing your services like this: 1 hour of work, $30 dollars.
Or, you could turn your activities into three packages:
- basic (a simple website, $99),
- medium (a more advanced website, $149),
- premium (a website with all the bells and whistles, $399)
There is another huge benefit to productivizing your services, and that is: you are essentially moving away from being a one-man show, to being a business owner.
In other words, you start framing your unique business proposition differently:
- before, it was: “pay me, and I will sell my time for your money”
- now, it is: “pay me, and I will sell you this product”
It is a tiny shift in how you frame things, but it makes all the difference. Essentially, it is buy me, versus buy this product.
Unfortunately, your time cannot be made in a factory. The sooner you realize that you can sell only a limited amount of your time, but you can sell unlimited amount of “products”, you will start to look for ways to productivize everything.
Finally, productivizing your services is a very efficient way of increasing your rates without proportionally increasing your effort.
If there is one thing to take away from this article, it is this:
Once you get the experience thing out of the way, you are worth what you say you are worth.
It’s a very empowering idea, make sure to remember it.