As small business owners, one of the hardest things we face is how to increase revenue from our efforts. This is especially so because we worry that cost-conscious customers might go to our competitors if we dare to raise our prices. Given this limitation, is there is there a reasonable strategy that will allow us to get more money for our work? According to Erik Sherman there are seven ways for us to do so:
1. Get them to go first:
We all know that the person who gives a number first is usually at a disadvantage in any negotiation. So it’s a no-brainer to try and get your client to give you an offer to which you can then respond. In scenarios where this is not possible, Sherman advises against immediately giving a price. Instead, you should ask detailed questions about the scope of the project and in the course of doing this, ask the client about their budget "because it will help you understand whether their expectations are realistic.” Sherman believes that even if they refuse, “you've have set the tone for any negotiation and are controlling the process, which gives you a strong starting position.”
2. Work like mad so you can say no
Per Sherman, the more desperate you are for projects, the less ability you have to turn down any offer your customer makes (even if it is less than desirable). As such, Sherman says you should implement a strategy where you get more customers by “working like mad” in the short-term then selectively choosing the clients you want to keep and the type of work you want to do afterwards. This will give you more control over your business while still retaining the means to earn a living.
3. Use six magic words
And what are these words? "I usually get more for that." According to Sherman, using these words in response to low-ball client offers not only “indicate that the offer is inadequate, but they put much of the responsibility for its betterment onto the client. [Even better,] you haven't set a level that they know they needn't exceed.” Sherman advises us to only use that approach if those words are in fact true because “[t]ruth rings in your voice and creates confidence that projects outward.”
4. Keep tight on project scope
Are you a list-maker? I am and I find it to be the most efficient way of doing things when I am working on any project. Not only does it force me to think through all the steps involved, I also have to think about the time it will take to achieve each task. As such, I have a pretty fair handle of what needs to be done, so projects rarely explode out of hand.
This approach is in line with Sherman’s advice about how to prevent the scope of you projects from expanding (thus, “forcing you to do more work for the previously negotiated amount.”) According to Sherman, it “is critical that you explicitly work out the details with the client of what the engagement will entail and then have that in a written contract.” He also believes that your “contract should have a provision for negotiating additional compensation for the extra work.”
5. Develop your reputation
We see advice about 'How To Build Your Brand' every day here on social media . These days, this is clearly an integral aspects of running a business. And, as we all know, the better your reputation, the more you can command for your services. Though we all know that we should do things like write articles, speaking engagements and (depending on our business) build a following on social media, per Sherman, it’s “far more important..[and effective to do] better and more complex work for larger clients.”
6. Gain specific expertise
Being “a jack of all trades” has its merits, but according to Sherman, being “a master of one” i.e. having subject matter expertise will allow you to command top dollar from your client.
7. Change your pricing model
Sherman advises us against charging by the hour because the “more significant the hourly number, the more clients will get scared off". Not to mention the fact that the more efficient you are, the less you are paid. Instead, he proposes that you use a “project- or value-based payment” approach. This will allow you to increase your efficiency and, your clients will start paying you for the value you provide instead of focusing on the amount of effort you put in.
I believe that these are seven excellent and realistic approaches that we can all easily implement. Hopefully, it won't be long before you see an impact on your bottom line!