RAISE YOUR REVENUE
Want to double your income in six months? Double your rates. That answer isn't as smug as it seems. Home-based business people who have been wage slaves for big companies can't believe that they can charge big bucks—and get them.
Let's look at how the real world sets rates. Remember when you were a $40,000-a-year big shot for a service company? You were paid $20 an hour.
Meanwhile, your time was billed to the client at $60 an hour—three times as much. That allowed the capitalists who paid you to split the amount equally to cover salary, overhead, and profit.
Many companies that charge by the hour for such services as legal advice, accounting, and public relations have used this rule of thirds for generations to justify their fees, meet their obligations, and laugh all the way to the bank.
One possible drawback to this strategy is that your clients can't pay those rates and they'll find someone who charges less.
Don't fret. There are several strategies that you can employ to boost your bucks. Each will work. Choose the one that meets your special situation.
The first strategy is to raise your rates. I know, I know. We just said that many clients might not be able to afford double rates. But we didn't say they could not afford higher rates.
Many home-based business people are shy about asking for money. In fact, some are downright bashful. They think that it's close to criminal larceny to ask for the kind of money they really deserve to make.
However, the guy working out of his house down the road, doing the same work as you, might charge $25 an hour more than you, and his work might not even be as good. Why is he making more money?
Because he asked for it!
Find out what the going rate is for services in your area. If your competitor charges $100 an hour and you're asking for only $50, then you can make a lot more just by meeting his rates.
You might say "That's stupid. I have time on my hands. I can attract many smaller clients and make up the difference in volume." That kind of thinking is flawed, and here's why.
With a limited number of hours to sell, you have to sell twice as many hours at $50 to earn $100.
The person who charges less is perceived as less qualified than the person who charges more. Strange, but that's how some people think. If we're offered a bargain, we wonder what's wrong with the product or person. Perception is everything, as Tom Peters said.
More clients means more paper-work (read unbillable time). Writing invoices. Collecting late debts. Marketing for new clients. All this downtime costs you money in the long term.
You won't have time for the big project when FatCat, Inc., asks for your services.
The moral: It is better to have fewer clients who pay high rates than it is to have many clients who pay less.
The second strategy is to get bigger, better clients.
Small companies should do business only with large companies. Why? Because big ones have money and don't mind spending it.
When a company is big, $3,000 for a project doesn't seem like a lot of money. When a company is small, $3,000 is a big sum, indeed.
A corporate mindset is in play here. When you say to a big company, "That project will cost $2,500," it says, "Great. That's less than we spent on lunch to recruit our new marketing director."
When you tell a small company the project will cost $2,500, it might balk. If you negotiate and lower the price, the small company will wonder how many corners you'll cut. You can't win.
The third strategy is to work efficiently. Plan your income, expenses, and time.
Never do something once if you can't sell it twice or use it twice. There are exceptions, of course, but here are a few ideas.
If you create a newsletter, you might be able to use the same basic layout for another client in another industry or geographic location.
A proposal or budget might work for several prospects. Create a boilerplate and save time. Change only what is needed.
Create boilerplates for your invoices, monthly reports, form letters, envelopes, and marketing materials.
Sell to your existing customers. They're your easiest sales because they know that you exist, that you're credible, and that you charge a fair price. Since existing customers might not be aware of all your services, make sure you discuss these benefits at your next meeting.
One way to turn dead time into productive time is to make a list of mindless tasks, like formatting disks, filing correspondence, and sorting file folders. Place the memo near your phone. Take care of those tasks when a telephone operator puts you on hold. You'll be surprised how much can be accomplished.
If you work smart, not hard, you'll increase your income.