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Subject: |
"My Customers Love Me So Much, They're Trying To Kill Me" |
| Date: |
2009-07-20
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"My Customers Love Me
So Much, They're
Trying To Kill Me"
By Cliff Ennico
www.creators.com
"I run a very successful marketing consulting business - frankly too
successful. Because I work out of my home and have no significant
overhead, I charge less than half of my nearest competitor in this
area. Whenever I quote a job, the customer never complains - they
just roll over and sign my standard contract. Frankly, despite a
difficult economy, I've got more work than I can deal with. I am
extremely popular, and my customers always refer me to other businesses
in the area because I'm giving them the best deal in this area for
these services.
My problem is that I'm working my tail off - 80 to 90 hours a week most
weeks. And while I'm paying my bills on time, I'm not able to put
any money away for retirement and that really worries me. I can't
afford to hire anyone to help me. Even if I had time to take a
vacation - and believe me, I need one right now - I wouldn't be able to
afford it.
I know I probably should raise my prices, but I'm afraid I'm going to
lose too much business. Is there any way out of this dilemma?"
You know you are not charging enough for your services when the
customers don't bother to argue over your service proposals, contracts
or invoices. Afraid they will lose a deal that's "too good to be
true" by looking a "gift horse in the mouth," they just agree to your
terms without comment. Be assured that the minute you leave their
offices they are doing "high fives", breaking out the vintage claret,
and snarking about your naivete and lack of experience in business.
While as a home based entrepreneur you want to keep your overhead and
other costs at rock bottom, enabling you to charge lower fees than your
brick and mortar competitors, you want to be sure you are charging
enough so:
- you can make a decent
living, enough to compensate you for the fact that you are working 24/7
unlike many of your competitors; and
- you are happy with both your
work and your lifestyle, not grinding your teeth every night over how
your customers don't appreciate your true worth.
If you make a habit of giving your
customers too good a deal, two things will inevitably happen sooner or
later: you will become physically and mentally exhausted; and you
will end up hating your customers for putting you in a position of
indentured servitude (when after all it's entirely your fault).
Here are some tips to make sure that you are getting what you deserve
while still remaining competitive:
- never charge less than 90%
of what your closest competitor charges - your customers are still
getting a good deal, and you are not leaving too much money on the
table; and
- make sure you are charging
enough to enable you to live comfortably in your area - if you need
$200,000 a year to put your kids through college and live an upper
middle class existence in your community, then making $150,000 a year
just won't cut it even though a lot of folks elsewhere in the country
would gladly settle for that.
You can raise your prices now for
new clients, but what about your existing ones? Once clients get
used to paying a certain amount for your services, they squeal like
stuck pigs when you increase your rates. Here are a couple of
"stealth" tricks for raising your prices for existing clients without
being too obvious about it:
- charge "flat fees" that are
at least 125% of what you would charge for doing the same job on an
hourly or "per diem" basis (you would be amazed how many customers will
accept a higher overall fee in exchange for the security of knowing
what the exact amount of your bill will be); and
- consider charging a "premium
fee" for projects that are going to eat up a lot of your time, for
evening/weekend work, or for other "special access" a client demands
(for example, I don't give my cellphone number to any client that isn't
willing to pay a minimum $25,000 for legal services each year - if
they're going to bust my chops on a Sunday afternoon they should be
prepared to pay my home mortgage each month).
Whenever you "sell yourself short"
by not charging enough for your services, it's always due to a lack of
confidence on your part. If the customer doesn't call you back
when you quote them a fee, that's bad news. But it's also bad
news if they don't try to negotiate at least a little bit. When
the customer winces slightly when they see your proposal, contract or
invoice, but signs anyway after asking a couple of questions, that's
when you know "the price is right." Don't settle for a penny
less.
Cliff Ennico (cennico@legalcareer.com)
is a syndicated columnist, author and former host of the PBS television
series 'Money Hunt'. This column is no substitute for legal, tax or
financial advice, which can be furnished only by a qualified
professional licensed in your state. To find out more about Cliff
Ennico and other Creators Syndicate writers and cartoonists, visit our
Web page at www.creators.com.
COPYRIGHT 2009 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE,
INC. Permission granted for use on DrLaura.com.
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