Announcements, Art of Earning
In last week’s post on collaboration, I mentioned I’m hard at work on a new collaborative project with Adam King.
Our goal is to bring you something you’ve probably not seen before in the digital space: raw, honest conversation centered around a multidimensional definition of wealth.
To support the launch of this project, we’re building the conversation space from the ground up. Last week, we traded posts on the fundamental pillars of the idea of “reclaiming wealth.” This week, we’re attempting to frame up the experience of the project.
We’re experimenting with opening the collaborative process to the public.
And we’d love for you to be a part of this conversation.
Check out progress so far and invite your friends: click here!
Art of Earning
Your clients won’t give you an annual raise like an employer might. If your rates are too low, few people will tell you. So how do you know?
It’s time to raise your rates when:
- you resent your customers or your work.
- working is killing your creative drive.
- you question whether the time you put into work is “worth it” at all.
Check, check, check? It’s time. Now to face the raising-your-rates music!
How do you justify the increase?
First, know that discovering you need to raise your rates means that you’ve been gaining valuable experience along the way. You know what value you create for your clients.
Holly Neitzel, an accountant who specializes in small business clients, was concerned the first time she sent out her new rates (doubled!) to a client:
“The client had no qualms about my new rate. I think it made him feel secure in the fact that he was hiring a professional. You know, you get what you pay for?!”
When you’re trying to justify your own rates, you often forget that inexpensive is often seen as “cheap.” Raising your rates can be a sign that you’re ready for new responsibility and more challenging clients.
Second, consider how you can further differentiate yourself in the market. Few clients are looking for jills-of-all-trades. What’s your expertise? What clients do you work best with? What specific & tangible problems do you ease?
By claiming your unique strengths, you make it difficult to challenge your higher rates.
What if you lose clients?
How would you like to earn the same amount of money and work less? That is a reality for some who raise their rates. Unfortunately, I’ve never experienced this myself. Each time I’ve raised rates, I’ve gained clients. And that’s not uncommon.
Raising your rates singles that you have something of value and many potential clients find that highly attractive. Sort of like a pair of Louboutins.
Bridget Pilloud, a life-shifter whose clients work with her to enact positive change in their lives, raised her rates this summer:
“The quality of my clientele went up immediately. I found myself working with people who could really take advantage of my advice. However, the number of clients that I served went down much more than I expected.”
Bridget discovered that in order to attract customers who would pay her rates and benefit most from her services, she needed to adjust her branding. Clearly an easier choice than getting by with less.
If you do lose clients, you might finally have the time & energy necessary to create more leveraged streams of income like workshops, digital products, or masterminds. Raising your rates may just give you the breathing room you need to take your whole business to the next level.
How do you handle existing clients?
Use this as an opportunity to evaluate which clients you’d hate to lose and which you’d hate to keep. You could offer a discount to favorite customers (and ask for a testimonial). If you can’t afford to fire your tough customers, maybe offer them a grace period–or let them go.
Tanya Geisler, a life coach who helps clients step into their starring roles, has been on both sides of the price increase dilemma. She suggests approaching clients directly:
“You could try to explain how your rate increase means you’ll be working with fewer clients and providing them with better service etc, but truthfully, when I’m on the receiving end of this speech, it rarely resonates. I get it. You’re in business. And you deserve to be compensated.”
Just communicate how your new rates affect your existing clients.
There are countless combinations you can use to make your work & life easier while providing great service to your clients – new & existing. Raising your rates is about taking care of yourself and your clients. Make sure you do it in a way that feels honest and full of integrity.
What’s holding you back from raising your rates?
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If your relationship with the not-so-almighty dollar is holding you back from raising your rates, check out my digital guide on radically reframing your money mindset. Get the pdf package & name your own price. Or grab the Kindle version for Amazon!
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A shortened version of this piece was featured yesterday on The Daily Worth. Not a subscriber? You should be! Sign up here.
Art of Earning, society & culture
How did you set your very first self-employed, entrepreneurial hourly rate?
Pat yourself on the back if you did some research on competitors, crunched the numbers on the amount of hours you could bill & the amount you needed to earn, and set a rate that reflected both.
I didn’t do that when I started my business. And I hear that many of you didn’t either.
Most of us didn’t set out to become consultants, freelance designers, and New Economy entrepreneurs. Nope, we got our liberal arts degrees – or misguided business management degrees – and tried to enter a job market that didn’t want to have us.
We talked about experience (or lack thereof) instead of value, of skills instead of significance. We polished our resumes and customized cover letters.
And we got jobs ranging from $10-15 per hour.
And we cursed our parents for telling us we could be whatever we wanted to be when we grew up. We cursed society for wanting automatons instead of freethinkers.
Frustrated & desperate, many of us have stepped off on our own. We gather in coworking spaces, corners of the internet, and networking events. We talk about doing business differently and making money with meaning.
But many of us are still holding on to the one thing that threatens our ability to make this happen: the way we price our work.
We’re grounded. We’re grounded by the traditional employment model we’re trying to escape. We’ve been sitting on the tarmac with no hope of taking off into the wild blue yonder or our vast earning potential.
So what gives?
An opposite phenomenon is at work in pricing. “Anchoring” is the practice of using a cost-prohibitive product to make another product seem reasonably priced.
It’s not always a scam – it’s often just smart. For example, I offer individual coaching at one rate and more affordable group coaching at a second rate. You know you’re receiving a comparable service with stellar results but the lower price on group coaching looks much more accessible. Without the individual coaching price (more than double!), you might still balk at the group coaching price.
With wage “grounding,” we are setting rates based on old employment models.
When I first set my consulting rates, I set them at $25 per hour. That was double what I had earned before so I figured that was a great place to start.
But the reality of self-employment is nothing like the reality of traditional employment. Double my old wage still resulted in working for pennies per hour. Sound familiar?
The first step towards beating this grounding effect is to realize that it’s happening and then to declare:
My previous jobs do not define my current or future value in the market.
Okay, I’ve done better with rallying cries. But sometimes straightforward is where it’s at!
Go ahead, say it out loud:
My previous jobs do not define my current or future value in the market.
Most likely, in your previous employment situations, you have had to fit your skill set into a predefined container. That container came with a price tag (the lowest price someone could pay another human being to do that work) and, while you may have had some negotiating power, the price was set.
You are no longer defined by a job “container” – you are instead constantly defining & redefining the skills that are of value to you and your clients. This gives you the opportunity create the optimal circumstances for your earning.
If $50,000 – $80,000 – even $150,000 per year or more has never seemed realistic, you can create circumstances in which they are.
Your earnings are not determined by what you have earned in the past but by the optimal circumstances you create around the valuable skills you have.
Your past wage is rendered obsolete.
You can choose to be grounded by your past wages or you can choose to be anchored by your goals.
You can choose to bemoan your past or celebrate your earning potential.
You can choose to concentrate on the going rate for your skills in the traditional market or you can create your own market based on what makes you unique, highly qualified, and oh-so-perfect for the job.
What’ll it be?
Art of Earning, Business Brainstorm
If it works for William Shatner, surely, it will for me.
Right?
About halfway through the development phase of my last digital guide, The Art of Earning, I was in an all-out mind battle about what to charge (or to charge at all) for it. This wasn’t a “pick a high number and stick a 7 on the end” kind of deal.
This was a deeply personal book but one I knew could help a lot of people.
And I wanted it to help a lot of people.
In the shower – where else? – it hit me. Name your own price.
Here’s why:
Free is great but investing in yourself is better.
I love free content. And I produce a hell of a lot of it. But at some point, free content becomes something you consume mindlessly. You might find an idea or two “nice” but act on the main principles? Honestly answer the questions contained therein? Nope. No way.
It’s too easy to think the answer is in the next piece of free content.
Investing in a product – even as little as $5 – helps you pay attention to the ideas at hand and take concrete action based on those ideas. Investing in a product is very much about investing in you & your business.
Ben Bernanke isn’t the only guy concerned about inflation.
You don’t have to be chief of the Fed to be concerned about price inflation. While there are many stellar digital programs that deserve to be priced in the top-tier of information, there are many which do not. There are some 50 page pdfs that deserve to be priced at $50, $100, or ever $200. That’s the kind of value they provide. That’s the exception, not the rule.
The Art of Earning is not those books. Yes, I believe that if you apply the principles to an active reevaluation of your relationship with money, you’ll have the capacity to make tens of thousands of more dollars per year quickly. But you’re going to have to do a heckuva lot more work to build your business than I did to write that book.
I could have made the price much higher. Maybe I still will. But I’m happy with the price as it is.
Everyone needs an exercise in gratitude.
Especially me. Had my money workout not been so total & complete, it would be easy for me to look at the smaller payments that come in as proof that people just want things cheap, that a steal is even better than a deal.
But honestly? That’s not my reaction. It’s been one of gratitude. Seeing $5, $7, or $8.44 payments roll in has left me feeling warm – not cold. I haven’t been focused on the difference between the “real price” and the price paid, I’ve accepted the enormous gift of trust & hard-earned coin those customers have been willing to part with.
I’m sure the next question is: will “name your own price” work for me?
Answer: It might.
For name-your-own-price to work for you, you need:
- A product you can afford to have lower profit margins on. A digital book is a great way to experiment with this model because it’s almost all profit. How could you incorporate a high profit margin product into your business?
- A reputation of high value. Generally, I would not recommend this pricing structure for those just beginning in business. I have a collection of ebooks and a reputation as a coach & blogger that allows me to trust my customers with pricing a valuable product. Are you building a product/services line that represents high value?
- A way to capture the leads. I won’t kid you, The Art of Earning has been a great lead generator. Traffic to the blog, sales of other products, speaking gigs, and coaching clients are all up up up since the release of this book. I had a wide & strong platform to support the buzz that I generated through this book and knew how I was going to channel that buzz. If 500 new sales came through your business in a month, how would you continue the customer relationship?
I’m planning interviews with some other entrepreneurs – both product makers & service providers – who have tried this model of pricing. What questions should I ask them? What questions do you still have for me about the name-your-own-price model?
***
By the way, if you haven’t yet, you can pick up The Art of Earning – and name your own price – right here.
Art of Earning, Blogging for Business
Money is power.
It’s not just cliche. There’s truth. Gut churning, denial busting, world rocking truth. You know it: with money, comes power.
You also know that this seems to be most often exploited: get money, exploit power selfishly.
But there’s the flip side: get money, use power for good.
Last week, I returned home from Blogher with much the same reaction as I had last year. It’s not my scene but I dig the camaraderie, the exultation of women of all ilks, and – maybe just a little – the shock & awe of the experience.
Tara Mohr, Megan Auman, and I came armed to present a different way to generate income from the immense work people put into their blogs. Our panel was well-received and I know we got quite a few people thinking. But I couldn’t help but be overwhelmed by the spectacle of swooning put on by blogger & corporation alike.
BlogHer is sponsored by BIG corporations: McDonald’s, PepsiCo, Proctor & Gamble, and Ford to name a few. There is a lot of money being waved, sparkled, and confetti-ed about. And while I understand the role that big corporations play in our economy (and government, healthcare system, technological evolution, etc…), I couldn’t help but think about the New Economic model I’m helping to build.
Money is power. Potentially, your power.
If the power just flows back & forth between individual and major corporation, we end up forfeiting choice. Corporations can choose to honor our will or not. We don’t have much say. If we claim the power – cash – for our own, we have infinite choice in the good it can do.
Starting a business, sustaining one, growing one isn’t just about earning a living – it’s about claiming power.
You – just like the on-fire women I met at BlogHer – have a vision for this world. Maybe you want to leave it a better, more heart-driven place for your children. Maybe you want to eliminate poverty. Maybe you want to see college students make better decisions. Maybe you want to get healthy food on more tables, end bullying in school, or help girls learn to express themselves through writing.
I like you. I’m down with your goal.
Sisters, brothers, you’re going to need money to get there. Courting corporations, investors, or your Grandma Jean is probably not going to get you there. They each have their part to play – I’m looking at you, Grandma Jean (just kidding… I don’t have a Grandma Jean!) – but it’s your ability to earn your money and earn your power that’s going to give you the charge you need to create real world change.
A few don’ts:
- Don’t compromise on your vision because it looks to big. Find ways to generate the resources to pick apart the puzzle one piece at a time.
- Don’t be intimidated by those who seem to have it more together than you. Trust me, they used to be right where you are.
- Don’t underestimate the power of starting small. We all start somewhere. Starting at the top is no better than starting at the bottom.
Do allow money to motivate you. Recharge yourself.
Not in the more, more, more-is always-better way but in the earn-more-to-do-more way. Feel confident about making the offer, charging what you’re worth, and developing new products by equating those things with furthering your mission.
Putting your mission out into the world – whether through blogging, designing, making, writing, engineering, develping… – is a drain on your batteries. Make sure the effort that you’re putting out is allowing power to flow back in – not just allocating it to outside holdings.
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Want another account of BlogHer? Take a look at this article by Tara Mohr on Huffington Post: Why Blogher Got Me Angry.
Art of Earning
This is a guest post by Catherine Caine of Cash & Joy.
Unless you work for a mint, or in the high-risk world of currency forging, you don’t make money.
You receive money.
And the people you receive money from receive something from you, too: the work they’re buying.
Some people call this an exchange, which would mean that both halves are equal – the money is worth the same as the offering it is purchasing.
Unless you’re buying something with very direct equivalence (like $50 of casino chips), it’s not really like that. It’s more like simultaneous gifts.
And so now I get to write something rather delightful.
The economics of gifts
To be successful, a gift needs to provide more value to the recipient than it cost the giver.
It’s frustrating as hell to give a gift where this doesn’t happen – like when a toddler gets much more satisfaction from the $1.35 wrapping paper than the $38-no-batteries-included toy it held. (“Why did I bother? I could’ve just bought her a cardboard box!”)
We feel like we’ve been played for suckers if we spent more than we received. (And we are receiving something: in the case of presents. It’s usually the experienced or imagined delight of the recipient, plus the social status benefits of being an excellent gift giver.)
As the example of the toddler demonstrates, we’re a bit irrational about this. We should be happy that the baby is enjoying our gift, because they are! But it feels wrong to us anyway, because they aren’t valuing it the same way we did.
Ideally, what should happen is this:
Giver spends x on gift.
Recipient feels and expresses x + 2 satisfaction. (Or better, x + 5. Or 10 times x!)
Giver is satisfied and proud of themselves for giving an excellent gift.
So if most business is a mutual exchange of gifts, what does that mean?
There are three assessments of value that matter deeply in your business.
I bet you want to know what they are, right?
What you get compared to what you give.
There are two ways this can go awry.
One is the province of extortionate sellers, who charge as high as the market will bear and devote most of their effort into selling the bejeezus out of a mediocre product. No-one reading this falls into that category, so we’ll go to the other problem:
Making an offer you’ll regret
Low-charging business owners often end up resenting the hell out of their clients.
A new coach, Steve, makes an offer: one hourly session every week for ten weeks, for $500. For the first few weeks it’s wonderful. Money in the bank! Clients! Hooray!
But after six weeks the money has long gone to pay the mortgage, and Steve starts feeling put-upon. “One more month to go? These bozos are grinding me into the ground!”
It doesn’t matter that he initiated the offer. He still feels like he’s being taken advantage of, and he resents it. Zillions of client relationships have been damaged or destroyed this way.
How it should go
What you deliver should feel like it costs less than what you get. This is best expressed as, “All I had to do was…”
All I had to do was three hours of consulting and I got $500!
All I had to do was assemble this necklace and I made $95!
All I had to do was spend a weekend to write this resource and people are paying $27 for it!
You feel blessed and energised when you make a successful offer like that. Everyone wins when your most blessed and energised self is doing the work.
What they get compared to what they give
The same calculation happens in your buyers’ mind. They hate being taken advantage of just as much as you do, and they want to feel like they made a smart decision.
They balance the cost (the money they pay, but also the time, emotional investment, awkwardness and switching costs) against the outcome. Notice I didn’t say “the thing they bought”, because in their mind they’re not buying the resource as much as they’re buying the outcome they think it will deliver.
There are two ways this can go awry.
Sucka got played
The buyer handed over their hard-won money for what sounded like a beakerful of pure, undistilled awesomeness, and it completely failed to meet those expectations. This can happen because:
- The marketing of the offering was better than its delivery
- The seller wilfully or accidentally overpromised
- The buyer had their own misconceptions about the outcome
In all of these cases, the buyer feels exploited. (You’ll note that in the last example, this isn’t in any way the seller’s fault – it’s entirely due to the buyer’s internal assessment. The seller will still get blamed.) Even if the offering delivers some of the outcome, or a different outcome, the buyer will not feel like they got value for their investment.
Guilt and resentment
The buyers handed over their money and received an incredible amount of value in return. So much value, in fact, that they feel like they’re taking advantage of the seller and thus feel in debt to them.
Reciprocity is a huge trigger in our behaviour – it is actively uncomfortable to owe someone. It’s manageable when you have a shifting dynamic: if your friend pays for parking, you buy the popcorn and the balance is achieved.
But in many businesses, the sale is the end point – after the sale, there are few opportunities for the buyer to give something important enough that they feel like they no longer owe anything. The buyer will generally try – by recommending potential leads, or sending long and loving testimonials – but they will still feel like they owe the seller.
And then they start to resent them.
Again, it’s a weird quirk of human nature: “How dare you give me so much in exchange for so little! How dare you!” But still: an unaddressed balance that can’t be resolved will create suspicion, guilt and resentment in your buyers.
How it should go
The buyer receives an amazing (but not overwhelming) amount of value in exchange for their investment. This is easily expressed with “All I spent was…”
All I spent was $95 and my feet have never been so comfortable!
All I spent was $800 and my business vision has never been clearer!
All I spent was $5 and this gelati is om nom nom nom…
Your buyers can happily sink into the outcome they’re purchasing when they feel they got a great deal, and will happily tell others about the wonderful resource they’ve found.
The fair deal
So the third assessment of value is comparing the two: whether the buyer feels they got the best of the deal, or whether the seller feels they they got the best of the deal.
Ideally, the answer is: they both do.
Because they’re not comparing the same things, this is totally possible. The seller is comparing the simple, worthless act of creating something they can do quite easily against the very very valuable food-purchasing money they made for it. The buyer is comparing the imaginary, come-and-go worthless money against the very very valuable outcome they received.
And so you can have both parties walking away feeling like they came out just slightly ahead of the other. Not so much that they feel like a scumbag, but just enough that they feel rather smart.
It’s a lovely way to do business.
If you’re looking wistful at this point…
…because it does sound, indeed, like a very lovely way to do business and you wish that you could experience it, then here’s how.
If you feel like you’re getting screwed over
Raise your prices.
You can do this by simply adding a bigger number to the price tag, or by offering less for the same amount: like three laser-focused sessions instead of five, or the necklace without the matching earrings.
And revise the outcomes to ensure they’re clear and concrete for your buyers, so it’s easy for them (and you) to see the value in this deal.
If your buyers send you long emails saying, “It’s frustrating, I wish I could pay you back for all you’ve done…”
Raise your prices, and/or offer premium versions.
Offer a premium upgrade to the people who send you those emails so they have an opportunity to redress any imbalance they perceive. They get to give you more money, and you both feel better. WIN.
If you’re not getting many sales
Don’t drop your prices – clarify your outcomes.
Actually, increasing your prices might help if you’re woefully underpricing yourself – your potential buyers might be feeling that mismatch. (“All the information I need for this important outcome for $12? Suuuuuuure.”)
One thing to keep in mind
You are not calculating the value in the same way your buyer is. You cannot set the price according to what YOU would pay, because you’d pay nothing – you already know how to achieve the outcome they want.
So set the price in line with the outcome, and find ways to deliver it so you’re proud of how easy it is to make the money. That way you and your buyers both benefit.
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Catherine is an expert on business magnificence. She writes fairy stories about marketing at Cash and Joy, and offers a free 30-minute Marketing Check-Up to her readers. The volume of insight she crams into one of those sessions defies all known laws of thermodynamics.
