Not everyone reading this blog is self-employed, but this chapter is specifically for those who are. Many of my self-employed clients charge less than what they are worth. Many people do not charge market rate for the services they provide, or even close to it.
Mary is a client of mine who works for a large business-consulting firm. For her services, the firm charges $350 an hour. No one even flinches at this rate, because it is the going rate.
Another client, David, is the sole proprietor of his own business-consulting practice. He does work comparable to Mary’s, but he charges $85 an hour. Granted, there is a distinction between a sole proprietor and a large consulting firm. You would expect the large firm to charge more, as they have access to more resources and have to cover a higher overhead. But $265 more an hour?
David does quality work, but he works too long and too hard. I have encouraged him to raise his rates. I told him it would not be at all unreasonable to charge $150 an hour, and if he did, he could cut down the amount of time he spends at work by a third or more, and still earn the same amount of money.
Rarely can self-employed people offer me any information about what rates the market is charging. I get, “That’s what my clients are willing to pay me.” Or, “I can’t charge more than that!” Their comments are based on their own subjective opinions, which are often wrong.
I tell people, “You should charge as much as you can get out of your mouth and not choke.”
If you are charging $65 an hour and you know your competitors are charging $125 an hour, you have undervalued yourself. Is it because you are only half as capable as the other person? Not likely. Even if you have a hard time getting yourself to bill at that higher rate, you could easily charge $95 an hour. That would be almost a 50% increase in your billable rate, and that adds up to a lot of money on an annual basis. It might make the difference between just getting by and being able to afford some of the goals you are passionate about.
Here is the process I use with my self-employed clients. We first do research on what the market is charging for comparable work. Then we go through an exercise that asks the person to determine the value of his or her own work, based on the going rate and market conditions. We discuss what they really need to make and what they feel they deserve. Based on our research, we arrive at an amount that the person is comfortable with. If it’s $125 an hour, I tell them, “Okay, in the next week, I want you to say out loud 100 times, ‘I charge $125 an hour.’”
You can say it to the mirror, in the car to yourself, to your husband, or to your dog. But you have to get it out of your mouth 100 times: “I charge $125 an hour.”
For the first three attempts, most people often can’t even say the words without stumbling. They offer up a tentative half-sentence that they are not really committed to. After about thirty times, it gets easier. By seventy-five times, it begins to feel like a favorite pair of slippers. By the hundredth time, the person is ready to say to their next client, “I charge $125 an hour.”