What hourly rate should you charge for your expertise?

Do you charge an hourly rate, !FIRSTNAME!? If you do, this might be like rolling the proverbial grenade at you. But before we do that, have you heard the one about...

The Repair Job with an Added Kicker?

As the story goes, a repairman was called in to fix a washing machine. The lady of the house led him to the laundry, and showed him the faulty machine.

The repairman inspected it for a few moments, stood back, and gave it a solid KICK! To the home owner's astonishment, the machine began to work perfectly again. And without any further comment, he wrote a bill for $120 and handed it to the owner of the home.

At seeing the bill, she was indignant. "How can you charge me $120? You've been here less than two minutes! And all you did was kick the washing machine!"

The repairman replied: "Well, that’s $40 call out fee ... and then there's $80 for knowing where to kick."

Chuckle we may at that little anecdote, but there's actually a key distinction in this story for YOU. It is...

The VALUE of knowing where to kick

Think about it. How many years has it taken you to know ‘where to kick’ to solve problems and achieve results? That knowledge has a 'marketable' value.

Think of the number of times you’ve been confronted with a specific problem or challenge that needed a creative solution. How many mistakes did you make over the years to be able to get that solution?

How many tens or hundreds of thousands of dollars in mistakes, delays, making good and lost productivity has it cost you? Sure now, you can fix the problem and fast. But surely that doesn’t DEVALUE the results you achieve, does it?

Look at the OUTCOMES, not the inputs

Really, it doesn’t matter if you create the solution in a week, an hour or a minute, if your expertise delivers what the client needs, what is that worth to your client?

It’s for that very reason that charging by the hour or day is crazy. Once you and your client have agreed on the value of the result, that should be the basis of your fee.

Of course, that opens up a whole new topic of HOW to ‘position’ yourself ethically yet assertively on the value of your outcomes, and get agreement on the fee up front. But from that point on, there should be no time clock, no accounting for your hours, and no apologies if you come up with the solution while playing golf.

When you begin to focus on the VALUE you bring to the client, you will not only ethically make more money each job (by charging the actual value of your service), you’ll win more jobs. Why? Because while everybody else is probably toting up their hourly rates and … all looking the same ... YOU will be the standout.

So then... what is your hourly rate again?

Chris Newton

P.S. In the past, this topic has created some really valuable discussion.  If you'd like to share your thoughts, please leave a comment.

How to Make Sure Your Invoices Get Paid

As the economy continues to splutter, more of your clients are going to struggle to pay your invoices.  No surprise there.

In fact, those who’ve long been in the habit of using YOUR money to run their businesses (or their lifestyle) will stretch things even more now.  Some will default.

This begs the question... 


How do you make sure you get paid in full, on time?

The best solution of course, is to get paid UP FRONT.  And more on that in a moment.

Regardless though of what your payment terms are now, getting to the front of the payment line is a function of how well you’ve set up the expectation of getting paid. ‘Laying the ground rules’ on being paid.

If, at the beginning of the business transaction, your client senses a casual approach to being paid, that’s what you’ll get.  In contrast, by firmly but nurturously explaining your terms BEFORE providing the service, and then following up immediately if the client misses a due date, you have a far higher likelihood of being paid.

‘Laying the ground rules’ on being paid is something many businesses are uncomfortable with.  And they pay the price later in tardy collections, which then create their own cash flow crises.


Why not get paid up front?

Our own invoicing policy is an agreed first monthly instalment paid before we begin a project, and further instalments at the start of each month.  If it’s a ‘lump sum’ project, we require 50% of the funds upfront.

Of course, to be paid up front, clients need to trust your capabilities to ‘deliver’.  And trust that you’ll go all out to give them an amazing result. 


But the key point is this. 

Create the expectation of being paid up front, educate your clients to the value you’ll deliver, and most will accept this graciously.

On the other hand, if you present your product or service merely as a ‘commodity’, something your clients can get anywhere, you’ll simply invite them to shop around for another supplier who will give them 90 days … or 120 days.


Bottom line?

Be passionate about what you ‘deliver’, and about the value you bring to the table … communicating your ‘value package’, your legendary service, your responsive support, your problem solving strengths and so on … and you’ll create the right expectation in your client.  They simply won’t go anywhere else. 

The alternative is to be a commodity.  And that means, getting to the back of the line!