This article is part of our content series How To Build A Better Bookkeeping Series: The Journey of Continuous Improvement.
Just for a moment, I want you to imagine what you want to earn out of your business – personally.
What should your income be for the work that you do, to enable you to have the life you want to live? Is it £40,000, £50,000, £60,000?
Maybe it’s more, maybe it’s less. But get that figure in your mind.
Then decide how many hours you should work for that money – is it 20 hours, 30 hours, 40 hours.
Think about that, just for a moment – the money you want earn, for the hours you want to work – be reasonable, none of us are premier league football players after all.
These are your numbers.
Now think about what you actually earn and the hours you actually work.
Are these two numbers the same? Are you earning the right money for the right hours?
Fundamentally the easiest way to improve your results is to charge higher prices – makes sense right – no matter what you do, you put your prices up by 5% and you increase your profits by 5%, simples, right?
Truth of the matter is, you probably need to put them up a lot higher than 5% to make the difference that you need to – to reach YOUR NUMBERS.
How much would you need to increase your prices by?
I imagine it’s more than 5%.
What happens when you are too cheap?
You work too hard.
When you work too hard you lose focus, you start to resent the work you are doing, you don’t spend enough time with your family and the people you love.
You don’t have time to be creative, ideas do not flourish, you don’t grow as a person, you don’t grow as business and you cannot increase your own knowledge and offering.
More importantly, you don’t have fun anymore – I lost sight of that for a long time, it should be fun and it’s not fun when you work too darn hard to enjoy it.
You have too many clients.
Clients are demanding – they need your help, they want your time, they call and email everyday with questions.
Sometimes they call you and ask you things you don’t know.
What should you do? You should have time to respond to all these requests, all these emails, all these calls and you don’t – you don’t have time because you are trying to respond to too many people with too many requests – you are too busy, trying to serve too many clients.
When a client asks you something you don’t know, more often than not, you have every right to charge them to do the research.
But you don’t, you don’t because you don’t have time to have the conversation with them about the fee involved.
You slot it in amongst all the other stuff you fill your day with and you ping them another email with the answers.
Then you plough on through the rest of it – doing doing doing it until you finally fall into bed exhausted before you start all over again tomorrow.
If you were charging the right price you would have time to serve your clients properly, without exhausting yourself and giving too much of yourself of away.
I want you to think over the next few days, weeks how much you want to earn and how hard you want to work.
Then you have an idea of what prices you need to be charging to have the right number of customers so you can serve them to the very best of your ability, get even better prices and have an even better life.
But I don’t feel right putting my prices up
Sometimes people say they don’t feel right charging high prices.
When we talk in our mentoring sessions about value pricing I sometimes get resistance – some people have thought it seems underhand to charge higher prices for what they’re already doing.
It’s not – you have every right to be fairly paid for the valuable work you do and the more fairly paid you are, the better quality the work you do will be, the better service you will give your clients.
However, you cannot just increase your prices, you have to do more than that – you have to ensure that the value you give, the way you give it and the work you do are commensurate to the prices you charge.
You have to join it up.
Being ‘too cheap’ means that you work too hard, you need to do too many hours and you have too many clients.
You cannot provide a good standard of service this way sustainably – you are doing no one any favours by being cheap.
Being ‘too expensive’ means that you are not delivering well enough and your customer service is not up to standard.
There is no such thing as ‘too expensive’, there is definitely such a thing as not delivering value for money.
There are tools and methods and some psychology that will help you get better prices, delivering higher value services will help you get higher fees.
However, unless you are charging fees that are commensurate with the service you are delivering and the way your customers feel when they are in contact with you, you are charging the wrong price and the business, as a whole must be looked at.
This article is part of a content series How To Build A Better Bookkeeping Series: The Journey of Continuous Improvement.
Click here to register to the complimentary series with UK bookkeeping expert and author Jane Aylwin.