Despite the battles women have fought over the decades to earn equal pay as employees, there’s still often a disparity in what female entrepreneurs charge from their male counterparts. Whatever the reason for this lopsided equation, it’s time to turn the tables on this situation and start earning more money.
Comparing Apples to Apples
When comparing similar services or products, the ones sold by a female business owner tend to be lower than that of male entrepreneurs. There’s no specific reason, though Melinda Emerson, known as SmallBizLady, speculates that it’s lack of confidence at the core:
“Many women fear they’ll lose their values or become someone they don’t care for if they have more money. Ladies, snap out of it!”
Do we think we don’t deserve to make more money? That it will somehow change who we are? The products or services created by women are no lower in quality or value than those of men, and yet, we seem reluctant to ask for what they’re worth. Maybe we’re simply used to not earning as much as men and can’t get over the hump.
Here’s how you can earn your worth and boost your business as a result.
Check Out the Competition
You can’t charge what you are worth until you know what others are charging. Poke around and see what your competitors are pricing their goods at. Consider whether your own products are similar in quality, or go beyond what others offer. In that case, you’ll want to charge more than they do.
Consider the Value of Your Time
If you consult or offer services, there’s no easy formula to calculate profit margin the way there is with products. So you’ve got to determine what an hour of your time is worth. If you charge hourly, just quote potential clients this rate. If you charge by the project, then assess how long a given project typically takes you to find your flat rate. Again, see what others charge and use this data in your decision-making.
Go Beyond Your Comfort Zone
Whenever I tell my husband what I’m charging for marketing services, he always says, “That’s too low.” We bicker about it, but ultimately I end up bidding a higher rate, and that number usually scares me. But you know what? Clients pay it every time. So that tells me that even if I am a bit uncomfortable asking for that dollar amount, my brand is clearly worth it. Push yourself further than you want to go. The worst that can happen is someone says no.
Bid High with the Expectation of Negotiation
Not every client will negotiate, but you’ll always have those that will. And you don’t want to start lowering your prices when they’re already low. That’s where that slightly-uncomfortable number comes in handy. If someone’s prepared to pay that rate outright, bonus. Otherwise, you have a little wiggle room for negotiating without cutting your prices lower than you can afford to.
Also, if sales and promotions are part of your marketing strategy, it’s easy to discount your new higher prices than to slash what’s probably already too low.
If you waver when you quote a price, your potential clients will smell blood in the water. Practice in the mirror if it helps. But you should look your client in the eye if you’re face to face, and boldly announce the price. You’ve got this. Be brazen and ask for what you deserve. You just might get it.
Ward Off the Wrong Clients
Early in my career, when I did charge much too little, I had lots of clients…but wasn’t making any money. When you try to be the lowest price in town, you make a lot of work for yourself, but not much profit. In all honesty, do you really want the kind of client who bargain-basement-shops for your kind of services? Probably not.
As you raise your rates, you may lose clientele. Don’t let that scare you off; these aren’t the kinds of people you want to do business with. But you will start to attract better clients who are willing to pay more for what you do. You’ll have fewer clients, less work and more money. A winning formula.
Handling Existing Clients
You can implement your new higher prices with the next potential client that comes your way. But what about existing clients? Is it fair to suddenly charge them more? You’ll have to find your own answer. For me, I tend to consider them “grandfathered in” to my old prices, but for any new services, I raise my rates slightly (though maybe not as much as I’d charge a new client). For one client, who I was doing more and more work for, I simply told her that I’d raised my rates, and offered her a decent price that was still a little higher than what she’d been paying. She didn’t even blink.
If you think a great client will balk at paying more, don’t raise prices if their business is something you value.
Raising your prices and charging what you are worth is an instant confidence booster as well as business growth strategy. Have you raised your rates? If not, what’s been holding you back?