Perspective is another 90%
I once had a client ask me to reduce my rate as he promised he would “guarantee me hours.” My response was that all he was doing was guaranteeing me that I would make less money for those hours.
The client’s perspective was that I “needed” the work. That’s a problem for many of us, especially at the beginning. When you “need” the work you will settle. You’ll settle for less money and you’ll settle for more difficult clients.
The reason you went into business for yourself was for the freedom. Everyone wants to make more money and you can do that easily enough at any job by working hard and climbing the corporate ladder so that is not a reason for starting your business. Freedom is the real reason. Why would you sacrifice that freedom to get a new client in? Difficult clients suck your freedom and your life away. They aren’t worth it. You deserve better and that means patiently waiting for the “right” client instead of taking on anyone who will have you.
Change your perspective. You don’t “NEED” the work. You “WANT” the work because you love helping people. A client who can’t be helped no matter how hard you work or how well you do is a lifesuck! You deserve better. You’re thinking you need the money so you can pay the bills, and the low quality client is counting on that. Hold out. I promise you it will be worth it.
In the previous post I mentioned that I had figured out that $25/hour is about $50,000 annually.
Later in that post I mentioned that I was charging $40/hour by the time I was working with Tiki Shark.
$40/hour equates to approximately $80,000 per year. When I was charging this I thought I was making all of the money I ever needed. I could work all week, take off early on Fridays, take my wife (then girlfriend) to the Arclight theater in Hollywood for a nice lunch and a movie, and generally life was really good. It was easy, especially when I was only paying $1,400/month in rent and we lived right up the street from the Arclight. Sometimes I really miss those days 🙂
Sure enough I eventually decided I wanted to make over $100K per year so I wanted to know what that would take. $55/hour does the trick. I had to get my rate up and I decided, why stop at $55. Might as well do $65 because most CPA firms charge about $85/hour for bookkeepers. Since I wasn’t a CPA firm but I had now gained a ton of experience and felt very confident about what I could offer this did not seem far out of reach.
I know what you’re thinking. Oh my G-d Seth makes $385,000/year!!
Not exactly. I charge $185 per hour for a 1 hour training. I have consulting clients who have been clients for years. They are still at a lower rate. I have other clients who have been giving me a lot of work, so I lower their rate as well.
In all likelihood you will start out charging everybody the same amount and over time as you move on from some clients, raise your rates, and take on new ones, like me you will have a blend of hourly rates that you charge.
Don’t be afraid to raise your rates with existing clients.
Again perspective is everything. More than 90%. The thinking is that you don’t want to raise their rates because they’ve been good clients and they’ve been with you for a long time or even since the beginning.
Here’s why you are doing your clients a dis-service when you don’t raise their rates. Your new clients are coming in at your highest possible rates. Meanwhile your existing, loyal clients are still hanging around at the lower, older rates. Who do you think is more likely to get the benefit of your attention? Who are you going to be more excited to work for? Remember what I said in the previous part. When you are excited about what you are getting paid to do a job you love, you will do a much better job. I don’t care who you think you are and how fair you think you are, this will be a natural and subtle inclination. You’ll want to put in more hours at the higher rates because it will make your life easier.
If you can put in 40 billable hours per week then the model works. If not, adjust the weekly hours. The way I used to make it work so that I could put in 40 hours per week while also handling the admin stuff was by working on Saturdays. A lot of clients loved to have me work on Saturdays because it would mean they could focus on running their business all week without me interfering. Then on Saturday they could really focus with me on the accounting.
Keep your perspective in check. Remember the following things:
- Freedom is the real reason why you went into business for yourself. Don’t sacrifice it.
- Decide what you’re worth and stand by it.
- Never let yourself fall into the trap of thinking you NEED the work. Even if you think you do, behave as if you don’t
- Charge the rate you feel confident charging. Your prospects/clients will sense if you are not confident, and that will cause them to lose confidence in you.
In the next section we are going to do what accountants and bookkeepers do best; look at the numbers and do some planning in terms of what we can charge and how much we can make.
Share this Post