Honor Your Work with Values-Based Pricing
Meet Lisa Alexander, soulsister and collborative divorce and conflict resolution specialist. Lisa is full of practical, straight-forward advice that is rooted in true soulfulness, which a rock solid combination. At our Soulsisters retreat she set me straight on pricing, and I’ve been carrying her in back pocket for reinforcement ever since. Now you get to tap into her financial smarts in this guest post on honouring your work through values-based pricing.
Value Based Pricing with Lisa Alexander
Being your own boss is one of the best things in the world, in my humble opinion. You’ve got the freedom to choose when you’ll work and what sort of work you’ll do. Yeah, it’s no fun to pilfer from the stationary supply cupboard when you’re the one who has to stock and pay for the supplies, but that’s a small price to pay for the joy that comes with being your own boss.
If you’re selling widgets, it’s relatively easy to figure out what to charge. You look at what other widget sellers are charging, you sharpen your pencil and figure out what the cost of widget production is and you can relatively easily come to a bottom line.
But what do you do when your commodity is your time? Some of us sell the work of our hands — paintings, material crafts, our words — and we carefully note the cost of our materials, but then have to figure out what value we’ve added by transforming those basic materials. Others of us sell our ideas, skills and wisdom. It’s even harder to figure out what to charge when your product is intangible — it’s your words, your way of listening, the specialized knowledge you have carefully learned, your way of leading someone into an encounter with themselves in this new reality you’ve helped them create. How on earth do you put a value on that?
I’ve done a lot of thinking about how to charge for my time, as I’ve been a lawyer for ten years now, and self-employed for almost seven of those years. When I started off, the firm I worked with set my hourly rate, so I didn’t have to grapple with setting an initial threshold charge. Thank goodness for that, as up until that time, I’d never earned more than about $15 per hour, and that was for an incredibly fancy dishwashing job at a unionized hospital. The idea of asking someone to pay me in the triple digit numbers was incredibly scary; I figured that if I was going to ask for money, I’d better damn well be able to deliver, plus do cartwheels, wash their car and prove that I could walk on the moon.
It is the rare person amongst us that is confident that she or he is worth every penny of what they are charging. The rest of us usually grapple with impostor syndrome at some point in our money earning lives. Almost every woman I’ve ever talked to has experienced this phenomenon. Impostor syndrome can be paralyzing to those of us charging for an intangible service.
As much as I’d love to wave my magic wand and give clarity to each of you who is struggling to figure out how to charge what you’re worth for the service or goods that you’re providing, that’s not reality. But perhaps you might find some clarity (and a big can of impostor-syndrome-be-gone) in the following hard learned lessons:
- Do your homework. What are people of your experience, education and training charging for the same type of service/goods? Make sure you are looking within your own community, as rates fluctuate from community to community.
- Set your rates/price on the lower end of the scale, when you are starting out. You’ll be working out all sorts of kinks and feeling under pressure to perform for top dollar will hold you back from taking the sort of risks you need to take when you’re starting out.
- Don’t stay at the low end of the scale. Within at least one year, bump up your rates/price. Do this even if no one has purchased a single thing from you. (Be honest – if no one has purchased from you and if, after a scathingly honest critique of why not you find the reason is you’ve over priced yourself, you’ll know this tip is not for you).
- Bump your rates up at regular intervals, provided that your industry is one in which there is a range of rates, and after you’ve been established two years.,
- Remind yourself that it normally takes three to six months to be comfortable with your new price. Say it out loud. Write it down. When people ask the cost, tell it to them straight with no apologies. No apologies, I said. None. Not even a squeak of an apology. And definitely no excuses.
- Honour the work you do. If you don’t honour it, no one else will either.
- Fake it until you make it. This tip got me through the first part of my career and was invaluable when I became my own boss. I was concerned that everyone but me knew what was going on. It turns out that they didn’t always know what was going on. They’re all faking it until they make it too. And one day, you’ll find out you’re making it, not faking it.
- Think big and believe in yourself. That is something my dad always told us growing up and it’s deep in my bones now.
- Don’t back away from your asking price. You are worth it. You do know what you’re talking about. You’ve worked hard to get to this place.
- Make value-based deals. Don’t make deals unless what you’re getting in return is equal to the value of what you’re offering.
- Plan ahead. Always save the right amount to pay your taxes and for a rainy day.
Lisa Alexander is a collaborative lawyer and mediator practicing in Vancouver, British Columbia. You can say ‘thank you’ for her guest post at Magpie Girl today in the comments below. And don’t forget to give us your tips and thoughts about charging for your work by adding them to the Giant Pool of Wisdom, now forming. Thanks for being here!
10 comments
Excellent advice. Was having this conversation last week in London with a photographer who isn’t charging enough for his work. Also, I organised a photography trip to an exotic locale and someone questioned me about the price, saying there were lots of trips to that place that were cheaper. I said, yes, there are. If cheap is what you want, you should take one of those trips that has you rushing from place to place with a group of tourists. But you won’t get my expertise and insider’s knowledge of the area or have the benefit of my contacts. (She signed up for my trip).
MG – Thank you for the rec on Enola Holmes – I will have to check it out!
Lisa – Great post. As a calligrapher, I sometimes resort to the analogy of hiring live musicians vs. playing recorded music (say, at a wedding), which I first came up with when someone was looking at my cards at a fair and said, “You know, I could do stuff like this on my computer.” “Well, yes. And that’s sometimes appropriate as well as less pricey – but you would agree that there’s a difference between a live band and a boom box? Well, your computer’s the boom box, and I’m the violinist.”
What a timely post! I’ve been struggling with how much to charge for the things I make, wondering how much value I add to the stuff I’ve put together. Thank you so much for this post!
Very interesting. Good stuff in there. I think the money and business side can be so hard for creative types.
An excellent point.
We grapple regularly with charging for time versus value. Charging for time encourages you to be inefficient – the slower you are the more you charge. In reality if you can solve a problem in ten minutes that saves or makes a client $10000 they wouldn’t expect to pay $50 for it – they would be more than happy to pay $500 or even $1000.
Also remember they are paying for all your experience and knowledge. The key is to understand the value you bring (like Paris does) from the customer’s perspective and keep increasing your prices. If no one complains you are still undercharging.
Margaret – I recently raised my fees $50, which was a pretty big jump. It was scary to do, but it put me in line with everyone else. I am a specialist and have to remind myself that my skills help clients save thousands and thousands of dollars and that is a huge value. You are spot on.
I remember having a conversation with my dad years ago (he’s also a lawyer) – he was charging what I thought was a HUGE fee for what seemed like a relatively small amount of time spent on the problem. He reminded me that he gave his client access to 36 years worth of knowledge and contacts – knowledge and contacts that simply weren’t available to the client (and not available through other lawyers in the city). He saved the client a vast amount of money by solving it so fast. The client happily paid the fee.
Warner Brother’s Records bought the small kids music record label I was consulting for. The label had no salespeople: I was it, so my title was “National Sales Manager”. Warner didn’t know that, so they offered me a six figure consulting deal to train their 7 sales managers and 150 salespeople.
I told my best friend: I can’t do that job: it’s way over my head. He said the same thing you did: “fake it till you make it”.
I did, and a year later they asked me to do Europe.
Then Asia.
They never did figure out I had no clue, because wherever I went sales increased. After a year or two, I realized it was me that was clueless: I had gotten good at it.
Good post.
Wow! What a great post…something i have struggled with. Feeling like an imposter! :(
Ok, the ‘imposter syndrome’ — that is totally me. As my expertise has grown, so has my fear of being inadequate. It makes no sense! Yet it’s a very real battle going on in my heart and mind. I have even thought of ditching everything and going off in an entirely new direction – for a few weeks a manager job at Pier 1 was looking rather tempting… But I am trying to keep the faith that if I push through and keep believing that this is the work I am meant to do, that I will find a way to know it in my bones.
I understand the ‘fake it til you make it’ concept, but that’s so hard for me. I keep thinking my courage will come after I’ve read more books or attended more trainings. As if there’s some magical level of knowledge that I must meet in order to ‘feel’ knowledgeable. But the ‘feeling’ isn’t going to come from books or seminars… it’s got to come from within me. Because I agree with you, that if I don’t believe it, no one else will either.
I adore this post and will come back to it again, I’m sure. Thank you Lisa, and I feel immensely blessed to know you as a Soulsister. (You to Rachelle!)
I take comfort in knowing that all the really competent and brilliant people in this world suffer from the impostor syndrome :-) It hasn’t helped me get over it yet, but I’m learning how to better deal with it.
I’ve gotten in touch with my “Quiet Competence” spot knowing that no matter what happens, I can deal with it. I may fall on my face, but I know I can pick myself up again. Not always with a smile.
I hope this post goes viral as more people need to read and to understand that it’s OK to feel overwhelmed and lost. Just keep practicing and the skills will come. Thanks for putting it so perfectly.
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