Lifestyle and Marketing: Notes on Setting and Raising Prices

Written by: Jonah Fairmont – Entrepreneur

Lifestyle and Marketing

If you think you need to live large to attract business, think again. What attracts business is a valuable offer delivered to the right prospect with confidence, integrity, and consistency. On the other hand, it is almost impossible to attract business when you are desperate for work.

Your lifestyle choices can underscore your commitment to an authentic and connected life, one lived in awareness and respect of the well-being of others and of the planet. Living these choices and letting them inform how you show up in the world can be a compelling aspect of your personal marketing formula. They can distinguish the offer you are in your chosen market niche.

Insurance, Taxes, Retirement, and More

Other considerations for the self-employed are medical, dental, life, and disability insurance. In addition, you may need professional liability insurance, insurance on your equipment and records, and insurance to protect you in the event of accidents on your premises.

Self-employment taxes can take the unwary by surprise. Check with your accountant (you do have one, don’t you?) and find out what your tax liabilities are likely to be.

How do you plan to fund your retirement? There may be tax-advantaged plans available to you as a small business owner. Again, check with your accountant. (Have you noticed that one of the expenses you will need to plan for is accounting?)

It is easy to overlook hidden costs such as depreciation. Think about the furnishings and equipment you use and how often you will need to repair or replace them. Where will you get the money for these expenses? How will you pay for software upgrades or for a technician to debug your computer?

The following outline can help you understand how to set your own rates and why there is no “one size fits all” formula.

How Much Do You Want to Take Home? Net Income Versus Gross Income

Here’s a partial list of expenses you may incur in your business.

Taxes

Benefits

Medical insurance

Disability insurance

Dental insurance

Retirement

Overhead

Depreciation (it’s not theoretical!)

Replacing furnishings

Replacing equipment

Upgrading software

Administrative overhead

Clerical help

Bookkeeping

25-50% of your time to manage and market your business

Vacation, Holiday, and Sick Pay

Where Does the Time Go?

Hint: Keep a running list of everything you do for thirty days. Not a “to do” list, but an “I did” list. This will help you to understand where your time goes.

Sales and marketing

Service (email, phone, troubleshooting)

Email

Proposals, Prospects

Phone Calls

Meetings

Administration (bookkeeping, correspondence, contracts, reports)

Training

Variables Affecting Prices

Geography

Demography

Niche

Experience

Perceived value

Skills

Client capacity to pay/realize value from your work

Cost of delivering services

Competitors’ fees

Is It Time to Raise Your Fees?

Full calendar

Reputation as leader or expert

Turning away work

Recognized author or speaker

Prestigious affiliations or awards

Advanced training/certification

Improved services

Increased costs

Strategies for Raising Prices

Annual incremental increases

Business cycle increases

“Going rate” increases

Be sure the going rate is set by going concerns!

Do going rates reflect your costs and services?

More work to justify rate increases of more than 10%

Keep clients informed of how great you are

Training and skill development

Concern for their well-being

Improvements in service and capacity

How you saved them time or money

How you made them money

How you solved problems for them or for others

How much you are in demand

Create a mood that supports your declaration of value

The body of confidence

What Clients Want to Know When You Raise Prices

What are the new rates?

When do they go into effect?

Give reasonable notice

Consider giving current clients a grace period to adjust

Why are they going up?

What value will the client receive for the higher fees?

Adjust Prices to Manage Work Type and Work Flow

Projects you don’t really want

Rush work

Difficult clients

Profit is commensurate with risk (and distaste!)

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