Six Profitable Tips to Consider When Pricing Services

2. Don’t work on commission.

Unless you are a salesperson, I wouldn’t recommend working on a commission only pay structure. Instead, maintain your grace and keep the lights on by asking for a retainer fee instead. A retainer fee is a monthly fee a client pays you for a certain amount of time. The fee can range from $2,000 up to $20,000 depending on the value you generate.

3. Secure long-term contracts.

Many freelancers and consultants cannot always predict future workload. Rather than managing the feast or famine syndrome, schedule work a few months out. Respect your own time by working on a calendar. Also, choose to work with clients over a longer period (e.g. three months or more). It works out better for the client as well. When you work with a client for a longer period you have the potential to create more value for them.

4. Become an expert listener during the sales process. 

Get as much information as possible in the exploration phase of a project to figure out how much ROI you are able to generate. If your number one success factor is your relationships, your number two is the ability to listen well.

Entrepreneurs must master the art of hearing what clients really want. Don’t sell things you are good at but they don’t need. Listen and your client will tell you everything you need to know about their burden. Make their life easier with your offering.

5. Think “short-term” when planning.

Winston Churchill once said, “Planning is essential; plans are useless.”

While most of us don’t know what will happen more than three months out, we can figure out what we need to do on a daily basis to move in the direction of a long-term goal. Rather than taking whatever comes your way, be strategic about your targeting and offer. You will be happier in the long-run.

6. Don’t undercharge just because you are a young entrepreneur.

You are providing value to clients, and you need to keep your lights on by charging what you’re worth. Don’t be afraid to ask for help and find out what consultancies and agencies in your area are charging in other industries. Information sharing can be a great way to build relationships and find mutually supportive power partners.

For example, did you know that even just the sales consulting market is more than a one hundred billion dollar market? If you are a sales consultant, how much of that industry are you claiming?

I can’t stress this enough–when you undercharge out of the gate it makes it hard to increase your fees later. For instance, if you buy a Chanel handbag on sale for $200 would you be inclined to buy a second one for $15,000? Probably not.

Lastly, it shouldn’t surprise you that the more specific and valuable your expertise, or the more name recognition you have, the higher your prices should be. So don’t forget about thought leadership. Remember the holy trinity from Alan Weiss—speak, publish, consult. At least fifty percent of your day should consist of marketing yourself. It’s not easy, but it is well worth it when you are a happier entrepreneur!

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