1 - Specialise (or say that you do)
Without doubt one of the biggest things I’ve seen the more successful businesses do is to specialise. Here’s the thing though, to start being a specialist you simply need to tell people that’s what you do. Yes, you will need some social proof and case studies, but it’s not as big a hurdle as you might think. So, for example, let’s say you are a freelance graphic designer that works with all kinds of clients, but you really enjoy creating logos for doctor’s surgeries. Instead of having your website state that you are a local graphic designer, rephrase that and reframe your offering as a specialist logo designer, who works with a professional logo maker tool, for the medical sector. Clients will pay more and seek out this expertise, realising you have helped others just like them. Add to this, you don’t need to exclude other work that comes in, but over time you will get more and more of the work you enjoy, and people will pay you more for the privilege. Keeping with the medical analogy, who do you think gets paid more, your local General Practitioner or a specialist brain surgeon? And who would you prefer to undertake an operation on your brain?
Simply by reframing your positioning to focus on your target market, you will significantly boost your perceived value and therefore what you can charge. You will also learn how best to help these people, as you will build up experience helping those with similar challenges.
2 - Understand your value and charge more, today.
Many people when they start out, decide what to charge by looking at the local competitive landscape. Unless you are purposely working in a commoditised market this is a huge error, since most businesses that are open about their pricing are so because they are extremely competitively priced. You shouldn’t measure your value based on your cheapest competitors. Instead, you should be charging as much as you can until you start to lose clients. I know this sounds confrontational, and perhaps difficult to do, but if none of your clients are turning you down based on price then you are essentially in a race to the bottom along with your local competition. It’s a race that does not end up well for anyone.
Imagine you are a small photography agency or freelancer and you charge $500 day for a photoshoot. In any working month you typically have 10 clients that hire you for photoshoots, giving you a monthly revenue of $5,000. The cost of your staff and equipment are $250 per shoot, meaning each month you generate $2,500 in profit, or $30,000 per year.
Now, let’s say you put your prices up to $1,000 per day. Well, some of your customer’s won’t like that, so let’s say that half of them will no longer hire you (I think you might be surprised to know most will still hire you!). You would still be bringing in $5,000 of revenue each month, but with reduced costs you would actually end up with $3,750 in the bank each month or $45,000 per year, an increase of 50% and far less work and hassle to achieve it!
3 - Realise that clients want to pay you more!
Now, this is a hard one to get your head around, but stick with me. Value is largely determined by sale price. To give an example, there are multiple famous psychological studies whereby wine tasters participate in a blind taste tests. Unsurprisingly, these studies prove that people prefer the taste of more expensive wine. What is interesting about these studies is that in most cases all of the wine is the same, the only difference is the price stated by the experimenters. Being told something is expensive, increases its perceived, and therefore actual value.
Back when I first started my digital agency I was very hesitant to put our prices up, fearing fallout with our clients. Whilst some of the clients we had worked with for a long time were not keen on the price increases, they were largely supportive and we lost very few. Those that we did lose probably weren’t a good fit for us, allowing us to better focus and help those that really appreciated us. However what was a real eye opener was the fact that new clients clearly valued us much more. We were the same team, the only difference was that we were charging more. Work was easier to sign off, clients more easily pleased. As an added bonus, they were much more engaged in the creative process. All of these things allowed my team and I to do some of our best work, which again made our clients even happier.
I hope you found this useful and I’d love to hear from anyone that implements any of these strategies. I’ve seen first hand how all of them can make a huge difference to any small business or freelance career.
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