Have I ever told you how I got started in business? I got the concept of entrepreneurship in high school. My mother was a Mary Kay consultant and I helped her and her colleagues with their marketing materials and got paid to do it. I only made a little considering my income now, but I provided value to these women–a solution for creatively reaching new customers without having to spend time figuring out technology or art to make an impression.
What I was doing for folks was priceless. I didn’t have a problem getting business or return business and that was pre-social media, when I only had a second hand computer that mom bought for me to do homework. Yet, I only charged based on what I thought folks would pay, which was around the $15-20 amount, for design and printing.
In 2007, when I fully decided to embrace the idea of being a full time entrepreneur, I thought it was a good idea to bid on Elance at $10/hr and get gigs. I did. My very first client, who ironically is in the same high-end circle that I’m in now, was wonderful and I got her after my FIRST ever proposal. We worked together shortly, me letting go of the gig after quickly seeing my business wouldn’t be sustainable, and after being offered a better paying opportunity that only involved me working one day a week.
Fast forward some additional jobs, freelance gigs, and more experience, I finally was able to go steady working full-time in my business. I made decent money but I didn’t understand value. I didn’t understand the problems I solved, or why what I did mattered to the people I worked with.
As a matter of fact, I felt bullied by my clients and at their mercy, much like an employee, but without the perks of paid vacations, health benefits, and banquets that served as lunch meetings. I didn’t know my value and so I couldn’t compel others to know it either. What to do?
A chat with a sales professional who I was quoting for a high-end gig helped me to understand the difference in pricing and value. He even taught me how to have a sales conversation. It all boiled down to a simple math equation. The conversation went a little like this:
N: Jasmine, I got your quote, but I wanted to talk to you about your pricing? How did you come up with it.
J: Well, based on your needs, these are my rates.
N: Oh, okay. But you didn’t offer any options. Just your flat rate.
J: Well, based on what you said you needed, I came up with that calculation and presented it to you.
N: Well, Jasmine, do you know that after talking to you for thirty minutes, I took what you told me and made $500?
J: No, really?!
N: Yes, really. See, my clients are worth $500. So if what you told me resulted in a client, after just thirty minutes, your value to me is about $1,000 an hour. If I had have paid you $500, I would have made a return of 100% with that one client. You need to change your pricing to reflect the value of what you bring to people, not just the going rate.
J: Gee, I never thought about it like that.
N: Yeah, and I’m willing to help you because I know you can be doing much better than what you showed me in the proposal. Imagine this: How much do you want to make each month?
J: $7K monthly would be good.
N: Okay, so how many clients do you need to make $7K each month?
J: Well, if I charge $3,500/month, only two.
N: Okay, so if I told you that I can help you get two clients at $3,500 a piece, would investing $3,000 today make sense to you.
J: Yes, because you’ll help me get two clients at $3,500.
N: Well, I know I can help you get those two clients and I’d be happy to work with you. How would you like to make your payment to get started?
At that time, I thought the reasoning and showing me the value of HIS business as an example made so much sense. He had flipped the conversation and put me in a hot seat of sorts, but it was groundbreaking. I liked how he showed me how to have a conversation with someone else about what I could bring to them, much depending on WHAT was valuable to them. That needed to be clearly defined ahead of time and it would be up to me to bring it out and show them that I would be able to deliver this value and commanded a certain price.
After that conversation, I started to think about price and value much differently and my business experienced a shift. I didn’t even want to consider taking what amounted to beans. In fact, some opportunities even came up that when considering the cost to acquire that customer, plus the time investment of working on their project actually would have cost me money. That would have been terrible, wouldn’t it?
So when you think about your prices, are you keeping in mind what solution you are providing. It’s often not about you or your product itself but about saving time, creating freedom, making things convenient, giving a person status, or something else that they highly esteem. Sell them on that and get what you’re worth. After all, we know that is doesn’t cost $8 to make a breakfast meal, but we’ll pay McDonald’s in a heartbeat because they offer a hot meal on the run, saving time and energy as we dart off to work each morning.
A chat with a friend reminded me that this week when considering how I would move forward on another venture that I’m working on. It also has been coming up in various conversations around the web. It’s obviously something that many folks don’t fully understand.
In my next post, I’ll show you how valuing yourself in your business needs to translate in other areas of your life. It’s time to do some work, ladies. We need to know our worth ALL around.
In the meantime, shoot me your strategy of defining value to customers? Are you getting your point across and getting what you want? Tell me in the comments below.