Know a female independent consultant, coach or freelancer who’s struggling to generate enough income? It’s possible that she may be underpricing her services. Unfortunately, not charging enough can spell disaster for a small business. Lower profit margins and longer hours can cause job burnout, or worse, cause a service provider to shut her doors for good. Let’s take a look at why women (and maybe you) may hesitate to raise consulting fees and get paid based on worth.
Surprisingly, the disparity in women’s fees doesn’t show up until she starts to earn higher hourly rates. According to a 2012 International Freelancer Study, “Female freelancers earn more per hour than do their male counterparts at almost every rate level from $20 to $59. And, at $60 to $99 per hour, men and women are just about equal. But as soon as you get to the $100, $150 and $200+ per hour ranges, men are consistently out-earning women.” One possible cause: Do women freelancers set their prices lower than men due to being less confident in their pricing?
Female Consultants and Coaches: Bridging the Confidence Gap
“A recent study found a big confidence gap between men and women who started their own businesses. About three-quarters of both male and female entrepreneurs start businesses to pursue an opportunity, (rather than out of necessity), but men show more positive perceptions about opportunities and their own capabilities, as well as lower fear of failure.” Nearly two-thirds of men are confident they can start businesses, but less than half of women feel they have this capability. This is despite similar levels of education and experience. – Forbes
How to confidently set your consulting fees
The good news is you can learn strategies for how to value your services and confidently set your fees (and raise them when that makes sense). Once the system is in place within your business, you can charge what you’re worth, and feel really good about it.
Here are 7 ways you can develop a system that will increase your pricing power.
- Build your confidence. Make a list of all the special qualities you bring to a project that others in your field cannot. In short, what makes you special? For example, do you have any special training, unique experience in the corporate world, or a unique process you use to solve your clients’ problems?
- Ask around. As an independent service provider, it’s difficult to know the market rate for your products and services. If you ask trusted friends in your network, many of them will be happy to tell you what they know. You can also hire a business coach to help you price your services.
- Conduct Online Research. Check industry websites and blogs for what others feel is the right fee range for your industry, your experience and the types of services you offer. Check the Bureau of Labor Statistics for salary information about your field or industry, and then add your overhead and benefits to those costs in order to get a feel for the minimum you should charge. In the end, your fees should be most influenced by clients’ willingness to pay, but it will help to gather some facts first so you can decide where the “floor” is.
- Don’t be afraid to walk away from a client. It’s better to have a few clients who will pay higher fees than a lot of clients who want rock bottom prices.
- Understand your worth. Ask yourself what your client achieves when they work with you. Those gains can be reflected in terms of new accounts, increased revenues, cost savings, or a better quality of worklife. Set your rates based on the value you bring, and include a brief statement of value in your proposal.
- Begin working with larger companies. When you are first starting out, it’s understandable you are thrilled just to get any client, but as your business grows, begin searching out larger companies to work with that can afford more.
- Explain how you develop your consulting fees. Rather than just stating a flat rate for your services, explain the process you go through to deliver the product or service for the client. Is there research involved? Do you offer multiple change requests to make sure they are totally satisfied? If so, make a list of these items and review it with your clients. It helps them to understand your reasoning when you set the price.
Pricing your services with confidence becomes easier as you understand the value your services create for the client.
If you’re a woman freelancer or entrepreneur who is struggling to set the right prices for your business, download our free video and learn more about Pricing to Prosper, our online training group program for consultants and business coaches. In Pricing to Prosper, experienced consultant Bob Sherlock will lead you and your peers in interactive discussions of proven frameworks for deciding your fees and communicating your value.
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