212 – July 31
“The ideal income is a thousand dollars a day—and expenses.”—Pierre Lorillard
“I got a raise!” Most people are familiar with the joy that comes with that good news, but every employee knows the nervous anxiety that goes along with asking for a raise. It is no different for self-employed people, except for the added difficulty that they must ask many different “employers” (clients) for that raise. Knowing the best times to raise your fees (salary) will help ease your discomfort and you will encounter the least resistance. Raise your fees when:
- You have too much work and not enough time. Success is yours! Everyone admires and appreciates you. You are in demand. Now you find yourself working until the wee hours night after night trying to get all the work done. This is the perfect time to get a raise—you are obviously worth it! If extra work is not worth extra money, it is not worth being done by you. If you are self-employed, you may lose a few clients when you increase your rates, but you will make up for that by making more money working fewer hours for the clients you retain.
- A market survey shows your pricing is lower than average. If you are on salary, you should always be aware of the going rate of pay for your job position with your skill set and experience. The Small Business Administration has stated that the number one reason small businesses go under is that they don’t charge enough for their product or service. If you are under-priced, you will attract customers who are only interested in getting the most for the cheapest price; you will burn out working long hours for survival wages.
- Your boss or client is doing great financially and you helped. You don’t ask for a raise when the company has just posted a big loss, is downsizing, or is in the middle of a change in direction or management. Timing is everything. You want to ask for a raise when you have just helped your boss or client increase profits through your new advertising campaign, when you’ve made the deal to get the new computers at a discount. When they are happy with you and your work, when they need you for the next project—that is the time to ask for more money.
- You just received special recognition or publicity. Whenever you win an award, get a prestigious appointment to a board, get profiled in a newspaper or magazine article, or appear on television make sure to let all of your clients know about it. Everyone needs to “toot his own horn” and share success with friends and valued customers—if not overdone, it’s not bragging. When your clients regularly see you achieving success and notice, they will recognize that you have moved up the world and are worth more money. They won’t be surprised when you ask for a raise, and they will gladly pay it.
Ready? Then fill up the hold with cargo, batten the hatches, and go sailing for a bigger sale.
“I have perfect timing for getting perfect pay!”
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My article on “Give Yourself a Raise” always gets a lot of responses. It’s because it addresses everyone’s fear about money. Most people believe the number one factor in buying decisions is price. That’s true for some things, but not all things.
A woman named Connie wrote me to say: “What do you do when there are tons of people wanting to undercut the industry? Her husband quoted a certain amount for a construction job but then talked to someone in his industry “who gets top dollar for his work” and “upgraded his consciousness to a higher level, bid higher, but it just doesn’t fly”.
Here’s my response:
Thanks for your email and story. I appreciate your taking the time to ask this question – it’s a good one.
This is always the question with a competitive marketplace. “Price wars” drive down the price for everyone, but there’s always a floor that people can’t go below or you’re working for free. I don’t care if I get all the business there is if I can’t make a living from doing the work…
There’s a difference if you’re marketing the exact same “product” like a coffee mug – if it’s exactly the same coffee mug, a consumer wants the cheapest one. But with services, you want some qualities of being – I want the best coach, therapist, chiropractor, doctor, interior designer I can get and I understand the best isn’t going to be the cheapest. Services take time to deliver and that’s a finite resource – you’re going to run out of it. So if you’re selling time, you can charge more for your time the more experienced you are and the more popular you get.
I remember being taught once there are three things in pricing:
You can have two of the three but not all three: good and fast but not cheap, good and cheap but not fast, or fast and cheap but not good.
Even with the top notch professionals, there are people who will bid on their services and ask for deep discounts or “match this bid” or try to tell you the going rate is “x” and you can’t charge more than that, etc. They are welcome to go elsewhere to shop; you don’t have to lower your price or your standards. This requires a certain fortitude and determination as it’s scary to turn down work when you’ve got bills to pay and the next paying client isn’t visible.
Are there times when you will lower your price? Sure! Sometimes you’ve got to make an exception and do the next gig just because you need some dollars in the door now. But if this becomes your habit, you’re operating from fear instead of faith, and the Universe starts to think you just want “x” level jobs and starts sending those instead of the rich, wonderful, dolphin clients who praise you and pay you what you truly deserve. These clients may be fewer so you may have to do more marketing and selling to reach them in the numbers you need, but the payoff will be in a richer life.
I hope that helps! Have a wonderful summer – wishing you many big treasure ships in your harbor!