WHY TRADING TIME FOR MONEY IS HURTING YOUR BUSINESS
There’s a lot of talk about how trading time for money is the root of all evil, but I’ve not really seen much about WHY this isn’t a sensible monetisation strategy.
I have A LOT to say on this subject, so it’s time to get my thoughts into a blog so that when I have this conversation again (it comes up A LOT!), rather than babbling on I can direct people to this explanation.
Let’s think about your time first….
- How many hours have you spent on learning and development?
- How many hours have you spent doing the work that has given you the knowledge and experience to enable you to offer the services you do?
- How many hours does it take you to create and share valuable content with your audience?
- How many hours does it take to run your business?
- How many hours does it take you to win each new client?
- Now think about how many hours you put into actually delivering each piece of work (and I mean actually – like, have you logged it all and know without a shadow of a doubt how much time delivery takes – including all the to-and-fro calls / emails / amendments etc. If you aren’t tracking this stuff: start today!).
So…what did you say you charge per hour???
Taking all of that into consideration – are you even putting the right value on your TIME?
Now it’s time to move on to value. I’m a huge proponent of value-based-pricing, and here’s what that means…
We price our services based on the RESULTS our clients will get from working with us.
No matter what you are selling, what service you provide, or what you believe – people are buying the results.
Despite what you may think, no-one actually WANTS a VA, Coach, Accountant, Marketing Consultant, Aesthetician…they want the RESULT of what you give them.
If you sell based on TIME – that demonstrates that the ONLY VALUE you are delivering is the physical time you are spending on delivery.
If you focus on the VALUE, RESULTS, TRANSFORMATIONS in all of your messaging – your audience and clients will recognise the value of what they are buying as a whole, and place their focus and energy on that value as opposed to hands on a clock.
Value-based-pricing gets you out of the trading time for money trap and actually increases the perceived value of your offering in your client’s mind!!!
Let’s turn our attention to the results your clients get from working with you.
If your clients are focussing on the time you take for delivery – where do you think their energy and intention is going?
Now flip that…
If you clients are focussing on the Value of the Transformation Result they know they’ll get from working with you – where is there energy and intention going?
Value-based-charging actually set’s your clients up to achieve their desired results in a much more powerful way because that is what they are focussing on.
Time-based-charging is distracting for your clients – it has them watching the clock rather than watching out for results.
Value-based pricing actually increases the likelihood that your clients will get better results!
When you go into a Pound shop (Dollar store), do you expect to buy one high quality item, or do you expect to get lot’s of low-quality stuff at a bargain price?
When you pay for a service that has a low hourly rate attached – do you expect to get a high quality, premium service, or do you expect to get as much as you can, for as little as you can pay, because you perceive it’s a low-quality bargain?
Just think on that for a minute.
By charging low rates, you are completely undervaluing the service you provide in your client’s eyes.
Do you think that means they will value you, your skills, your time???
People who want real results will understand that they come at a cost.
By undercharging you are attracting low-quality clients who want low-quality results on the cheap.
Is that the business model that’s gonna work for you AND how is working with that type of client going to make you feel?
HOW TO SET VALUE
Hopefully that all makes sense – and it’s all very fine and well, but I know you are now thinking ‘How do I figure out what to charge?’ – am I right?
This can be the trickiest part of being a service-based business owner, but I use a little method that may help. It’s gonna sound counter-intuitive at first, but bear with me…
Calculate how much your time is REALLY WORTH by taking into consideration everything in the TIME section of this blog, and set yourself an hourly rate.
Promise me NEVER to communicate your ‘hourly rate’ externally!!!
This is a basic monetisation measurement that means you’ll NEVER undercharge again!
Next, track how much time it actually takes you to deliver a specific service. Track everything. Then add a couple of hours on, ’cause life happens!
Based on the above, set a BREAK EVEN RATE for each of your services.
Yes folks…all this time you may not have even been charging a Break Even Rate!
Next really spend some time thinking about the value your clients get from you. The incredible results you achieve for them. The impact it has on their business, finances, health, wellbeing…
Drop all your preconceptions and think about the real value of the results you deliver.
As The Clarity Coach, clients who work with me get a powerfully positive mindset, and a strong, strategic business and marketing model that will enable them to achieve success and financial freedom….what’s the long-term value of that?
What’s the long-term value of changing someone’s life in such a powerfully meaningful way?
Write that value down. Sky’s the limit [note: writing this amount down generally leads to you feeling a little sick – so if that’s how you are feeling right now, congratulations – you’ve nailed it!!].
Next write down the amount that, if you told someone you respect and that respects you, you’d actually feel embarrassed.
When I started coaching, I charged £375 for a 3 month programme!! (a) I didn’t win any work and (b) when I had to tell someone I really respected that, someone who’d experienced the value of working with me, I felt ashamed and embarrassed. I immediately upped my prices and sold two programmes that very week!
Now, starting from that sick-inducing figure, work your way down until you get to a figure you feel comfortable with. A figure you are totally confident accurately demonstrates the VALUE of the TRANSFORMATIONAL RESULTS your clients get.
THAT’S what you should charge!
This figure will be WAY HIGHER than your Break Even Rate – but it’s important to have that figure in mind because we are running a business afterall, and should always have a very clear picture of how much is break even and how much is PROFIT!!!
So…that’s it. As you can probably tell, this is a subject I’m EXTREMELY passionate about and one that I spend quite a bit of time working through with my coaching clients.
The transformational result of just this alone is absolutely mind-blowing.
Please let me know in the comments below if you have found this useful and if you will be re-evaluating your monestisation strategies from time to value-based.