Running a business can be overwhelming, especially when it comes to know how to charge what you’re worth. How can you know what value you are really providing?
IE 201: How to Charge What You’re Worth with Mike McDerment of FreshBooks
The truth is that we can all know the value we provide simply by talking to our customers, clients, and audience. If you are solving their problems, you are providing value.
My guest today is going to share some ways you can make sure you are charging what you are worth.
Mike McDerment is the founding CEO of FreshBooks. FreshBooks is cloud-based accounting software.
Mike created this software when he was running a design firm. The accounting software that he was using just wasn’t working well for him as he tried to create and send invoices and collect payments.
Mike created the software and transitioned away from the design firm to being a software company. Since then over 20 million people have used their software with customers in over 100 different countries.
How to Determine What Your Time Is Worth
Mike has written a book on knowing your worth and what your time should be valued at.
Breaking The Time Barrier is a free ebook about divorcing what you charge from the time it takes you to do a specific task. The time you spend creating something or doing a task is not what matters; what matters is the value that the work you do provides to your client.
Your customers determine what you are worth. You have to understand what problem your audience needs to solve and find out if you can solve it.
The value you provide by solving their problems is what determines what you can charge.
Figuring Out What to Charge
It will take some trial and error to figure out exactly what the price point is that you can and should be charging.
There are some steps that need to be taken in order to really determine what you are worth.
- Understand what problem your customer is trying to solve. If you have people reaching out to you, asking questions, or seeking your expertise, then they have a problem they are trying to solve. Are you paying enough attention and trying to find out what that problem is?
- Show them how you can partner with them. You don’t want a transactional client, you want to create a partnership.
- Discuss creative things you can do for them that will increase the value.
You are the biggest obstacle you have when it comes to increasing your value. You may need to shift your mindset.
Increasing Your Rates With Existing Customers
Sometimes we undercharge the first time we work with a brand on a sponsored post. We realized that the time and value we provided were worth more.
Usually, you under-value yourself when you are first getting started. Everyone struggles with this.
Test and try with an existing client. If they are someone you have been working with for a while and you have a good working relationship, you can let them know that you are going to be raising your rates in the next few months. If you have been serving them well, most of the time they will keep working with you.
Try out higher rates for new customers. If you have some customers who decide not to work with you, ask them why they went a different route. If they say it was because of your price, you can work with that information.
This is really trial and error. For bloggers and influencers, Quarter 4 is a great time to start testing this out.
Value Is in the Eyes of the Customer
Is there a way that you can prove your value?
Value is in the eyes of the customer. The way you can figure out, (and then prove) your value is to ask the customer.
Be open-ended. Ask what you could improve or do better. This allows you to receive constructive feedback. This allows you to learn and continuously improve.
Improving these things will increase the value and increase the number of people that will be attracted to it.
Creating Your Own Feedback Cycle
It is important to track things like invoices and payments in your business.
Having software like FreshBooks is helpful for things like:
- Having bills that you haven’t collected
- Reminding customers who haven’t paid their invoice
- Tracking your accounts
The other thing to do is to use Word or Excel to build a forecast of work you plan to do. Write down what work you will be doing and what money you think you will bring in based on that work.
This forecast allows you to have feedback on yourself. If you’re terribly wrong on your numbers, you can adjust and reset.
Writing down what you think will happen and then what actually happens allows you to see trends. This is its own feedback cycle. Feedback is a gift.
Make sure you check out FreshBooks and Breaking The Time Barrier.
If you’re committed to building your business, check out “The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It.” The principles in this book will help you with all of the things you need to do in order to advance your business.
You can find Mike on Twitter and LinkedIn if you have a question.
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I use fresh books to bill my clients in my cleaning business. But never thought of it like this. Loved the podcast, thank you!