5 ways to charge clients more money.

For the last few years, I’ve been coaching entrepreneurs. I’ve helped an illustrator who wants to illustrate live events, one of the world’s top UFC trainers who is rebranding and a developer who builds builds.

Though their businesses are all different, there is one thing everyone I work with tends to have in common. One mistake that almost all of them make.

What is it?

They undercharge.

Almost every entrepreneur I’ve ever worked with did not charge enough for their services or their products.

The problem is that often what we are offering comes somewhat naturally to us. My friend the illustrator took a long time to become an expert, but now it comes kind of easily. So of course he shouldn’t charge a fair rate for something that comes so easily. But he should, that’s if he wants to maintain a business for years and years.

If you are selling something right now, I guarantee you are not charging enough for it. How do you change that? Here are 5 easy ways.

1. Ask a friend if you are charging enough. Get an outside voice to review your prices. And when they tell you the truth, listen and act on it.

2. Ask the client what their budget is. This one isn’t something I’d always recommend but if you’re grossly undercharging, here’s what’s going to happen. You were going to design something for $500. But first you asked the client what their budget was. In some situations, the client is going to say, “Our budget is $750.” At which point you will say, “Awesome” and enjoy an automatic $250 raise before the project even started.

3. Remember why you are charging money. Don’t feel guilty for charging for a service. This isn’t a hobby, this is your livelihood. Would you rather disappoint your family with your ability to pay the bills this month or disappoint a client?

4. Test your prices. Where does it say you can’t run a few experiments with what you charge? You don’t have to raise them all at once or for every client. Start small and be smart.

5. Be honest about your hourly rate. If you’re spending 50 hours on a project for a client and charging $300 you’re making less than minimum wage. If you’re charging double or triple that, you’re still not earning enough. The problem is that you enjoy what you are doing. In most cases you did it for free for years before you started your business. Those years are over. Charge the right rate!

Those are five things I’ve done in the past to get my coaching rate where it needs to be. Do I think you should jack up your prices out of the blue? Nope. But good work should cost good money.

If you’re doing it, charge for it.

Question:
Have you ever undercharged for what you do?

45 Comments
  • Nick
    Posted at 04:28h, 02 May Reply

    High rates are scary. And that’s why it’s important to charge high rates. It motivates and reminds the seller that they need to deliver! Walk into the dollar store and nobody expects quality. Pay a premium rate and both sides expect and focus on providing and receiving it.

  • Barbara Frazier
    Posted at 06:32h, 02 May Reply

    We have just upped our web design fees. We’ve always charged too low in my opinion, and in all cases, the lower we charge, the worse the client. They want a lot for a little. I think the key is not being afraid for a prospetive client to walk away from a proposed price. If they walk, in most cases you don’t want them because they are going to cost way more than what they paid. It really has to do with valuing your work and your time.

    • Marcy
      Posted at 22:34h, 05 May Reply

      I agree completely that those expecting lower prices are often quite difficult. I’m a hair designer and have grown comfortable with the fact that some folks walk away from higher prices. This clears the schedule for clients prepared to pay for my expertise.

  • Sue Brage
    Posted at 07:47h, 02 May Reply

    My challenge is being a newer start-up (less than a year old) I feel like my value should be based on that NOT my more than 14 years in the industry (nonprofit marketing & communications.) Any tips/ideas on how to build my confidence and credibility, and of course, my fees as a result?

    • Mike Kaply
      Posted at 20:34h, 02 May Reply

      Sue:

      It definitely can be hard, but you need to know that your worth is based on your experience, not the age of your company. You take your experience with you.

      Don’t be afraid to bid high and have people say no. You don’t have to take all the works that comes your way. If you start out with low rates, you’ll be stuck with them.

      And if you do decide to give someone a discount, make sure it’s communicated as such. “My rate is $125 an hour, I’m giving you a 20% discount.”

  • Pamela S. Black
    Posted at 08:37h, 02 May Reply

    Thanks for this post Jon! I have worked as a professional photographer off and on since 2007 and I still struggle with this. I have consulted others in my field who are successful and they have all told me I’m not charging what I deserve. I read industry blogs and magazines, follow emails campaigns of Sarah petty, and other industry leaders who specialize in pricing, and yet, I STILL undercharge.

    I know what my work is worth. I just don’t charge it. And I don’t know why!!!! Some of the excuses I use are that I live in an economically challenged area, that I’m being generous, and that no one will pay what I deserve–even if I deserve it–because they can’t afford it. But the truth is, one of my competitors, who has barely been in business a year, is charging almost TEN x my rates, and GETTING IT! The sad truth is, she isn’t even very good. She is at best, only that–good! She has no where near the vision, talent, editing magic, or artist ability that I possess, yet she charges what I deserve…and sadly–I charge what SHE deserves….how is this happening????

    I feel like I just woke up today. So thanks, thanks for the wake up call. I need to start taking myself seriously so maybe everyone else will. Guess maybe it’s time I turned pro. In my own head.

    So, here’s my why–I want to get my photography business organized so I can be financially able to do what I love for years to come while helping support my family.

    • Jason
      Posted at 00:04h, 03 May Reply

      Never charge based on “what you think you deserve”. Only on the value you deliver. To some, your value may be be in line with what they are willing or able to pay. Those are the clients you want to build your business with. Not the “price only” crowd.

  • JD
    Posted at 09:13h, 02 May Reply

    I am a stage Preformer and speaker. When I charged 1x, I was only marginally busy. By ONLY raising the fee, my bookings increased by 10x. By charging 8-10 times showcased the value that was already there.

  • Zechariah
    Posted at 09:21h, 02 May Reply

    Yes I have undercharged a lot. I still do on somethings in my business. Thanks for this Jon. This is an area of struggle for me.

  • Mike Koehler
    Posted at 11:08h, 02 May Reply

    This hits me right between the eyes. When I first started the business, yes, I was undercharging because at that point I was so eager to get the Yes from a potential instead of the No. Even now, I need to guard myself against that and be OK when someone wants you to work for little or no money. Most of the time if those clients don’t understand the value of your services, they also won’t understand the value of your time or your process. It’s a lose-lose-lose proposition.

  • Andrew
    Posted at 11:39h, 02 May Reply

    I just started my business and thankfully was coached by an industry pro who shared this same advice. I’m charging way more than my competitors and it has scared off a few potential clients but if they can’t afford it they’re not my target market. It’s still unnerving to ask fit so much but it also motivates me to have the best service.

  • Andy Traub
    Posted at 12:53h, 02 May Reply

    You can charge almost whatever you want if you can show value. I’ve eaten a $1 burger and a $17 burger. Quite a range. Consider that when you price your services.

    There are people who will pay $20 for an hour of your time but there are also those who will pay $340 (20 x 17) for an hour of your time.

    Show value = Choose your fee

  • Kate Johns
    Posted at 13:42h, 02 May Reply

    It’s especially true for writers now. We undervalue ourselves, due to so many people writing. The Internet is both a good thing and a curse for talented writers. Seems so many businesses want people to write for free, because they think it is an easy thing to do.
    It’s only easy for people who truly know what they are doing!
    That’s why I started my own website.
    Thanks!

  • CJ Quiroz
    Posted at 14:38h, 02 May Reply

    This subject, I definitely understand. I’ve been a tattoo artist for 12 years now. But an Artist since I picked up my first Crayons. That’s over 25 years of experience. I’ve now owned my very own tattoo shop for over 4 years and I love it!
    My specialty is Typography, Lettering, Script, or however you’d like to interpret the art of letter design.
    I’ve won 4 awards for my tattoo lettering in the past 16 months. And have competed against many people I’ve always looked up to in my industry. After winning 3 first places and 1 second place, I still didn’t feel comfortable raising my prices. I’ve been charging the same prices for several years now, but I’ve been improving very quickly.
    Recently, I started raising my prices, even uncomfortably high. But my schedule is quickly booking up, at least months out.
    Clients don’t mind waiting for an opening. I feel alsmost guilty, charging as high as I do. But I know my competition, still charges higher than I do. My competition, at my level, isn’t even in the same city.
    It’s been a crazy change, but I can finally book my schedule how I’ve always wanted. One client per day. It allows me to design freely, take my time, and enjoy meeting all these great clients. I’m no longer rushing to complete 4-5 clients per day. Less stress… And more family time is also a great bonus!
    Thanks for the inspiration Jon!

  • Scott Asai
    Posted at 15:04h, 02 May Reply

    I think my mistake has been two-fold: 1) I gave too many things away for free – coaching sessions, events, etc. 2) I depended on coaching as the main source of my business. I’ve made the shift to keep coaching, but make it only a piece of my pie. I want to start using more sources of income that aren’t dependent on my time physically being there. Right now I’m working on an online course and hope to beef up my internet marketing.

  • Scott Yorkovich
    Posted at 16:26h, 02 May Reply

    As several have already pointed out, there is a big difference between charging an hourly rate and charging based on value. An excellent book on this topic is “Value-based Fees” by Alan Weiss.

  • Ronnie Barnes
    Posted at 20:10h, 02 May Reply

    Look around at your competition; specifically, the successful one. What are they charging, and how is their quality of work? If you are new, you do tend to undervalue your service, and sometimes it is because you have a low opinion of yourself as a new entrepreneur. That is the biggest hill you have to get over as quickly as possible, so you present yourself as being worth every last cent you demand for your services.

  • Kat
    Posted at 20:16h, 02 May Reply

    Perfect timing!! My husband was just telling me that I should charge more for my expertise and that I always undersell myself. Hard to hear from him but so much easier to take onboard in a post by a successful entrepreneur. I get so caught up in sharing my passion with clients that my fee is an after-thought which is obviously a bit financially careless when you are trying to make a living and pay the bills.

  • Jeremy
    Posted at 20:32h, 02 May Reply

    I charge just slightly under the going rate in my market. I very seldom get told I charge too much and from time to time get told I’m a bargain. One difficulty I have is that currently I’m charging a rate that often results in a nice, beautiful, round number – often $100 to the penny. If I were to raise my rates by, say, only a dollar an hour that nice round number ceases to be. I think there’s a psychological benefit to that. People, for some reason, seem much more willing to pay $100 than $104. If I were to increase by $5 an hour (now slightly higher than “normal” in my area) the numbers might be rounder but it would probably turn off a lot of people with the significantly higher rate.

  • Kristy
    Posted at 20:34h, 02 May Reply

    I regularly undervalued myself when I first started my own practice, plus I gave away way too much of my time for free. I finally woke up and realized it was not fair to me or my clients to continue to do that.
    First, I found if you give something away, people place no value on it, even though it has value. I run my practice as a ministry. As such, when a single Mom who worked picking tomatoes needed help, my instinct was to do everything for free. I then became frustrated when those clients started not making appointments and the like. They had no respect for my time, because by giving it away, I was conveying *I* had no respect for my time. Secondly, they had no buy-in. It was a one way relationship with me giving everything. By implementing a sliding scale based on income, I have seen drastic improvements in both client attitude and responsibility and my attitude toward work. What you charge, shiws how *you* value your work and clients get that big time. If I ever undercharge, clients are told its out of professional courtesy or the like, so they don’t miss the buy in. Firs

    • Karen
      Posted at 23:37h, 02 May Reply

      I think you and I are in the same profession. The difficulty I found was the fine line between business and ministry. One you charge for and the other one is ‘supposed’ to be free. But then I realized that I was sacrificing my financial stability to cater to clients with new cars who’d just returned from Cancun. I finally had to remind myself that THEY came to ME, so they recognize I have a service they need. I had to establish the professional/business aspect of my work and keep the ministry portion for those times when faithful clients temporarily fall on hard times.

  • Stephanie Morris
    Posted at 20:41h, 02 May Reply

    When you charge the right rate, you Wind up taking yourself and your product or service more seriously and delivering more quality. It’s a strange phenomenon to grasp.

  • Bradley
    Posted at 20:49h, 02 May Reply

    I’m a professional land surveyor. I’m currently in the process of taking over the forty year old family business. The way I look at prices is quite a bit different than my dad. I look at the competition that have similar overhead and structure then I charge more than them. I want to be highest priced surveyor with a company our size. I believe it adds value to our business and it makes it a bit easier to manage the work load. Little less work – little more money.

    Another thing I would add is that it’s okay to turn down jobs. I’ve learned this the hard way.

  • Ben Stewart
    Posted at 21:17h, 02 May Reply

    This is lesson I have been learning the past couple of years and it is finally sinking in. If nobody is telling you “no” then your rates are too low. You might feel good about yourself because you land every job, but you probably aren’t making enough money, either.

    Raising rates sometimes means finding a new client base. It also means getting used to more “no’s” from people.

    Like the old saying goes, if you double your rates and lose half of your clients then you make the same amount of money for half the work. It’s not as easy as that but the underlying premise is valid.

  • Iryssa
    Posted at 21:24h, 02 May Reply

    This is going to make me sound like a noob, but honestly one of my greatest barriers to charging what I’m work is lack of confidence. If you’re charging the going rate or more, you really ARE crossing the line from hobbyist to pro. There’s a level of expectation that comes with that that I find a bit scary!

  • Chris Yokel
    Posted at 21:35h, 02 May Reply

    I read this at a good time, since I am facing the opportunity for some freelance work, and struggling to come up with a fair price. I know I’m definitely tempted to undervalue myself, particularly because I’m a bit new to this.

  • Sam
    Posted at 22:06h, 02 May Reply

    SOOOO timely! Thanks Jon. I just raised my rate this week and told my fist two clients. Whew. That takes courage.

    And I did utilize your first point a lot, by asking another professional in the industry what he thought of my rate based on my experience. That helped a ton.

    Keep this all coming! Thanks for teaching us what you’re learning.

  • Charity Craig
    Posted at 23:03h, 02 May Reply

    I keep raising my photography prices for weddings because I just don’t want to do them anymore. I do way less, but I keep booking weddings with every price increase. Who knew?!

  • Pastor Joe Bell
    Posted at 23:16h, 02 May Reply

    I’m a small church pastor. What do you think?

  • Tami Romani
    Posted at 01:34h, 03 May Reply

    Oh, boy – does this speak to me! I record corporate voiceovers from my home studio and sometimes go to a pro studio. It is so much fun for me, I find myself thinking I would do this for free! I’m trying to be better at asking clients about their budget. But then, I still do the occasional $100 job…

  • Melody
    Posted at 05:51h, 03 May Reply

    I’ve upped my fees several times and I’m at a point where what I charge is at the low end of average, but at least it’s on the professional map. I’ve had a lot of people choke when they hear the price, but I’ve also gotten to work with some neat people who had a vision and the means to pay me to help them with it.

  • Amy
    Posted at 08:05h, 03 May Reply

    If you charge a price you are uncomfortable with in the beginning (and it’s fair for you and the customer), it won’t be long before you are comfortable. Also you will hopefully weed out the people who are expecting something for nothing (thanks to Walmart and other big box stores). Never give your services/goods away for free, even to family. It may be tough in the beginning, but the sooner you take yourself and your profession seriously, people will value your product and trust your expertise. Business is business. If all else fails, get someone to manage that part of your business. I have a family member who makes beautiful and delicious professional quality cakes. She is too nice to charge a fair price for her goods, therefore, people expect her to work for little or even nothing. It gets old quickly and you burn out in no time.

  • Joel
    Posted at 13:50h, 03 May Reply

    I keep track of all the hours I put into projects, even flat rate and pro-bono projects. Why? because I can see how long the project takes me, and I can use that info to help me adjust the price in the future to something more fair for what I do.

  • Mike J.
    Posted at 15:46h, 03 May Reply

    I constantly overcharge for my service. What do I mean by that? Well, I’m a family doctor. If I do not significantly overcharge I will not get a reasonable reimbursement for my services from insurance companies. Ok, so that’s bad enough but it gets worse. Because I charge so much to insurance I must, by law, charge the same to folks paying out-of-pocket for my services. I would love to be able to charge much less to those trying to pay for their own care…but I can’t. That, in our government’s twisted logic, constitutes Medicare fraud. I have to charge these patients the same as I charge Medicare for those patient even though Medicare will never pay even close to what I charge. Confused. Yeah, me too!

  • Liz
    Posted at 16:42h, 03 May Reply

    I haven’t charged anyone yet, technically. This coming week I’ll have some time off from school AND work, though, so I’ll be able to (hopefully!) focus on such things as:

    — Getting my online portfolio done.
    — Figuring out how much to charge for freelancing.
    — Research Graphic Design jobs in the area.

    Hopefully, by the end of summer, I’ll have something lined up! (I’ll be in school at LEAST through the Summer.)

    I’m currently doing a witnessing brochure for my church, but I’m not charging them for it. (This is a special, getting-my-work-out-there, I-Heart-My-Church deal. I wouldn’t pull that for just anyone. πŸ™‚ )

  • Kimanzi
    Posted at 20:27h, 03 May Reply

    I undercharged for years as I built my business. As I started to get my client results, they told me I should be charging more.

  • Danny
    Posted at 18:38h, 04 May Reply

    I have just quit my job of 38 years and just starting a business of my own. It is in recovering healthcare and office furniture. I have done it on the side in the past and I am told by friends and family that always under charge. Don’t really know where to start my base rate at. Any suggestions.

  • Elliott Garber
    Posted at 01:19h, 05 May Reply

    I’ve been thinking a lot about this as I try to determine what to charge for veterinary career consulting through my website. I spend hours every week communicating with other vets and students about their goals, but this is not really sustainable any more on a free basis.

  • Wes Brawner
    Posted at 09:27h, 05 May Reply

    I’ve undercharged more than I care to admit. In the wedding event industry, especially DJ’s (and photographers) are over saturated. So I would charge lower to entice people to book with me. Even as recently as yesterday I was re-evaluating my pricing. I don’t charge what “I think I’m worth”, I charge what “i know I’m worth” and what I’ve worked hard to earn. If you place value in what you do, you will attract clients that will do the same.

    I’m still working out a couple of the budget weddings that I booked last year when I needed a little extra income when I was still working full time, but I’m booking into 2015 at a higher rate now.

  • Jennifer
    Posted at 09:37h, 05 May Reply

    I suppose I undercharge, but I charge more than anyone else within an hour of here. Kansas city bakers charge what i do or more (I’m on the low side of normal). I run a small bakery doing custom work, and NO ONE around here charges a living wage. So many hobby bakers out there barely charge for supplies, so I have a lot of competition. But, I feel like I offer a much superior product, so I charge 3x or more than other bakers here. Thankfully, I was given some great advice when I started my business, “I can go broke without making you cake.” πŸ™‚ I tend to have wonderful customers who appreciate what I do, and come back year after year!

  • Randy
    Posted at 10:59h, 05 May Reply

    Oh yeah… I’ve been known to undercharge, and I have been very good at rationalizing it to myself.
    This post helps to stop the rationalization. Thanks.

  • doane
    Posted at 17:10h, 06 May Reply

    Do some serious homework when setting your price for a good. Make sure to factor in that most traditional retailers want to see at least a 50% margin (called “keystoning”) when selling your product.

  • Neal Howard
    Posted at 21:29h, 10 May Reply

    According to SCIENTIFIC research, (that’s right, there’s really evidence to support this), the more you pay for something, the more you value it.

    So when I charge you more for my service, I’m doing it all for you!

  • Jeff Goins
    Posted at 15:27h, 13 May Reply

    Yes, I do. Case in point: I was going to have lunch with you for free on Friday, but now you’ve encouraged me to not undervalue my time.

    So yes, lunch is on me.

    But expect an invoice in the mail.

  • Chris Boemler
    Posted at 05:57h, 18 December Reply

    I was actually just in a situation last night, when I was asked to sing with a church choir for their lessons and carols service. I do not normally sing with this choir, or go to their church, and I took some hours out of my life in a busy time to sing with them. The Christian part of me thinks it shouldn’t bug me that I didn’t get paid, but at the same time, I sang around 7 songs, while there were two ladies who sang only two duets, who I am fairly certain got paid, due to their being college voice teachers. I am a young high school choir teacher with a masters degree, who can’t help but fell like I was taken advantage of. This is the second year in a row with the same story. Thoughts?

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