Recently the Institute for Women's Policy Research released study results which showed female executives earn approximately 75 percent of what male executives earn. Yes, we are still here in 2010.
For whatever reason, women have historically had problems measuring up to men when it comes to earning power. We may have “come a long way baby”, but somehow our purses are straggling behind – way behind.
Now, until this point, you’ve probably heard a thing or two about how women in service-based businesses can earn what they are worth. Countless articles, books and professional speakers have given you advice ranging from dividing ideal annual revenues by 12 to determine your monthly income goals to charging ever higher hourly rates.
These are well-meaning bits of advice, but they’re wrong.
I’ve been an entrepreneur for over 13 years and I’ve found only three things that help women to consistently get paid what they’re worth, they are:
1. Stop exchanging money for time. There’s a saying that time is money; that’s a lie – this couldn’t be further from the truth. Time is not money. Money you can make over and over again. You can double and triple your money provided you do the right things. Time is a resource that once spent, you never get back again.
I don’t care how much you charge per hour, you will never build a solid company if you charge by the hour. There are some exceptions to this rule. For example, if you offer laser or “hot seat” consulting sessions, then it’s perfectly acceptable. Why? Because these are “one shot deals”, there’s not an on-going engagement with the client.
So what should you do? Focus on value-based or project-based pricing. Let’s say you’re a consultant who knows that when clients work with you, they increase their topline by a minimum of 20%. If a potential client has profits of a million dollars a year, you should at least be charging $25,000 for your consulting services – at least. If a company is not willing to spend $25,000 to make $200,000, they’re probably not a client worth having.
People will want to pigeon-hole you into an hourly rate. It’s a sideways form of control. Don’t allow it. Oftentimes they will say, “Well, it only took you 30 minutes to do this.” Remind them, they are not paying for your time; they are paying for the level of expertise it takes to get a task done quickly and correctly.
Also, when you charge by the hour, even if you don’t intend to – you become a clock-watcher; and no one likes a clock-watcher.
2. Being scarce. People from all walks of life place a high value on resources that are scarce. That’s why during natural disasters, retail stores try to charge $20 for a gallon of water or gas. They get this concept.
What does this mean for you? Well, if you’re at every networking event, every conference, every Meetup and Tweetup, people begin to associate you with availability. And, if you’re always accessible, the assumption is that your time can’t be that valuable.
You may say that assumptions are other people’s problems; they have nothing to do with you. And, normally you’d be right – except when you’re trying to build a business.
3. Don’t post your fees online. Again, there are some exceptions to this rule – special programs, self-contained items like books and audio or video recordings, one-time-only events like teleclasses and webinars, etc., but by and large, it’s a good idea to steer clear of advertising your prices.
Why? The answer is a bit crass; but if you ask anyone in a service-based business who’s truthful, they’ll agree. You don’t post your fees online because you just might encounter a client with deep pockets.
I used to think this was slick and underhanded until a friend helped me to understand the other side of value – the client side. My friend was a stylist and she worked with both A-list celebrities and everyday people, but she charged the celebrities more. When I found this out, I told her that I wasn’t sure that that was 100 percent above-board. And, she told me that for celebrities, their image was worth more to them. If I have a bad hair day, no one really cares, but if an A-lister has a bad hair day, it’s plastered everywhere online and it’s the lead story on Inside Edition. Now, that, I understood!
Small shifts in how you approach client engagement can make big differences in both your income and your ability to get paid what you’re worth.
Image credit: dynamicsonline
