If you’re in business for yourself, whether it’s running a small business or operating as a freelancer, learning how to manage time can be complex. Not only how to fit all your work into your day, but how to justify your pricing so you can keep clients happy whilst also supporting your financial needs. In this article, I’m going to show you how you can INCREASE your income with LESS effort, using something called Value Based Selling.
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If you’ve never heard of this before, this concept might just rock your whole world - it certainly did for me! I first read about this in a book called ‘Breaking the Time Barrier’ by the creator of accounting program, Freshbooks (which is brilliant by the way - both the book and the program!). Let me first explain the opposite of this concept: charging an hourly rate.
The problems with charging hourly.
Most freelancers and consultants charge an hourly rate for their work, and this creates two problems:
You can only charge for the number of hours you think the job will take, and when you stop working, you stop getting paid.
The client might get frustrated that something is taking too long, and may sometimes think you are deliberately stretching the job so you can get paid more (which can happen!). Not only does this create an awkward situation between you and the purchaser, but it creates more work for you, which you could be spending on another income-generating task.
Understanding their needs.
Value-based selling begins with communicating to your clients why your offer is valuable. Through this method, you increase the chance of landing a client as well as the price they are willing to pay. As Josh Kaufman puts it in his book ‘The Personal MBA’, it’s all about listening, not talking. By asking your prospects what they need, you:
Increase the prospect’s confidence in you and your understanding of the situation.
Discover information that will help you emphasize how valuable your offer is, and how to frame your price appropriately.
Discover how, why and how much your offer will benefit the customer, and you’ll be able to connect more effectively, and ultimately land more sales.
Always sell based on the value your offer provides, not the cost.
For example, rather than charging $40 an hour for web design and maybe getting 60 hours out of it (totaling $2400) you could pitch it as a percentage of the total value you will create. Let’s say this website allows your client’s business to sell products online and raises their value by $50,000. You could easily justify taking $10,000 for that site. The client pays $10,000 to receive $50,000. Seems like a no-brainer, right?
Implementing this concept.
Now that you’re aware of value based selling, you can change your prices accordingly. Perhaps on your company page you had 'web design' at $40 an hour. You could now have web design 'packages' valued at $5000, and another at $10,000 with premium features. Each package may take you between 40 and 60 hours, but you are getting a staggeringly higher return on your investment of time, and the client is getting a valuable finished product that they are happy with. What's not to like about that? Time to make a change!
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Equipped with your new method of selling yourself, you will now be able to increase your income with less effort required, simply by changing the way you sell your products! This made a big difference for me, and I’m sure it will for you too. Happy selling!