Many new solopreneurs struggle with setting and receiving fees. Today I will share some service pricing strategies.
These three aspects that must be considered for every business:
- Setting your fees
- Communicating your fees
- Receiving your fees
Setting Your Fees
I’ve noticed that many solopreneurs get caught up in one of three traps;
- Wanting to undercut their competition
- Not wanting to appear greedy
- Being dishonest (making it look as though they more successful than they are)
While it does make sense to be aware of the going rate for your type of service, you must set realistic fees taking your financial needs into account. At least an estimate of business expenses is critical to the exercise. Focusing on the competition leads to a scarcity mentality that tends to shut down our understanding of our own future potential.
Many of us have received messages in our youth about being greedy or conceited. When our fees are set on solid business concepts, we can put those old messages away because the fees are set according to business reality. For some detailed instruction on setting fees that are logical, see my Service Provides Guide to Setting Fees.
Communicating Your Fees
Many solopreneurs are reluctant to state clearly what their fees are on their website and brochures, etc. because they are uncomfortable with something “written in stone”. This stems from their uncertainty about what will be acceptable to the prospective client. Yet we know that today most consumers do their research online prior to making purchasing decisions. We must provide the information that helps them include us in their list of possibilities. Our potential clients want to know what to expect ahead of time.
I read a very useful book (They Ask You Answer by Marcus Sheridan) recently that suggests why we are reluctant to give this information:
- Our prices vary
- Our competition will find out
- We’ll scare customers away
Sheridan explains that we will make a much better impression by addressing what factors determine varying prices. Our competition will find out anyway and there are some people that are not a good fit for our service, better to let them self select and save our valuable time.
Rather than negotiating what the fee will be, remember that business needs must determine the fee and stick to that. If there appears to a good reason for a reduction – DON’T DO IT. Do it for free as a donation/contribution instead. Never negotiate fees – stay in business!
Receiving Your Fee
- Ensure that you have a separate business bank account used only for paying business bills and receiving fees.
- Always provide invoices and receipts to your clients.
- Get online banking set up with your Bank.
The simplest way to receive payment is by e-transfer. You receive an e-mail payment from your client and you deposit it to your bank account on-line. This is the cheapest method there is because the client pays the $1 service charge.
If you are conducting cross border business, your best bet is Pay Pal because of differing dollar values. PayPal does all the conversions for you. You can send invoices and your client gets to pay by credit card or bank account at no cost to them. You pay a service charge when your service fee is transferred to your bank account electronically.
Mindset Monday Challenge
How do you Set your fees, Communicate your fees and Receive your fees? Is there some work here for you to take care of?