You too can pump up your profits by turning away business! Start today! You can make $1000 by next week! Okay, perhaps I'm being a little silly, but the concept is solid. You will never make more money than you are willing to ask for.

Most of us start our businesses and set prices by doing very little market research. Perhaps you asked others what they have paid for the service you plan to provide. Maybe you called competitors and acted like a potential customer to see how much they charge. You might have seen prices listed in someone's brochure or on their web site. And, at some point, you decided where you fit into the marketplace and set your price.

Some hang toward the bottom of the price scale fearing that a higher price teamed with their inexperience will scare away clients. Others choose the high-end thinking that if the firm they just left charged their customers that amount, why can't they. And some choose the middle ground wanting to provide a service people find valuable - a good service for a good price. Not the cheapest guy in town, but not the one that makes you feel taken advantage of either. SugarCRM can be easily integrated with the most popular office applications

When I started my web business, I charged $75/hour. This was the middle-of-the-road in my area according to my limited research, so my goal was to build up my skills to warrant this hourly rate. Even so, because I knew projects would take me longer to complete due to my inexperience, I decided to quote flat rates for specific projects.

In my first meeting with the prospect, I would ask very specific questions about their business and how they planned to use their new web site. I would come back to my office and put together a detailed proposal creating a flow chart of proposed pages of their web site and would calculate a price based on my hourly rate and the number of hours I anticipated it would take. As I went along, I made adjustments for those things I thought would take me longer than they would if I already knew how to do them, and I'd adjust down. Once the final price was ready to go on the page, I would again adjust down if it "just looked too high."

In addition, I only marketed to those companies I felt comfortable with - small, low-budget businesses – but I still feared they would balk at my final prices. The problem, as I understand it now, is that I was not comfortable charging for my services. And perhaps rightly so at the beginning when I had no experience and no portfolio. But even after I had several web sites under my belt and understood better what I was providing and who wanted it, I still felt uncomfortable about the pricing even though in actuality, as I'd later learn, I was UNDER-pricing.

On the surface, $75/hour looks pretty good, but I could only bill 20 hours/week of actual client work. The rest went to prospecting and follow-up, writing proposals and contracts, and keeping up with accounting, marketing and skill development. But even then, it was difficult to maintain 20 billable hours each week since it was impossible to accurately estimate exactly when certain jobs would come through.

Then, I realized that low-end jobs took just as long, if not longer, to get from the prospecting stage to project completion as higher-end jobs. Small clients generally required more follow-up to get to the contract stage, more hand-holding during the project, and generally very little opportunity for future work. That’s when I decided to set a minimum. I would not pursue a project that required less than $5000 worth of work. If approached by a business whose needs were below that level, I would refer them to a couple of other companies that might be able to help them.

Throughout my four years of owning my web business, I probably got 90% of the jobs I pitched. The interesting thing was that this number didn't go down after I raised my minimum. It was just like that first time I asked a boy to go to the Sadie Hawkins dance. That thing I feared most actually ended up being quite successful and made me wonder why I hadn’t done it earlier.

~~ It's Your Turn ~~

Are you under-pricing your services? Are you making the amount you want to make? What do you need to charge to make your business worthwhile to you? Who would you need to market to in order to get more money for the service you provide? Are you willing to do that for the potential reward of making what you’re worth?

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~~ Ask The Biz Coach ~~ How do I raise prices without losing clients?

"Setting prices is a dilemma most service business owners encounter at one time or another. This week, it was Susan’s turn. ‘When I first started my business, I felt uncomfortable charging for my services. Since I was doing it to make a living, I finally just picked a price I thought wouldn't scare too many people away. Now, based on my available work hours, I can't really take on more clients but at the rate I'm charging them, I'm not going to make enough money to keep the business alive. How do I raise my prices without losing my clients?’

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