Self-employment and entrepreneurship can be an empowering career choice for those who have something to offer to customers. You know your services are valuable and that customers will pay for what you provide.
But for those starting out on their own, determining how much you’re worth on the open market can be a challenge!
That’s why it’s important for entrepreneurs to review whether they are asking for rates that are in line with what they offer. Having a finger on your value will allow you to negotiate with confidence and scale up your earnings.
Here are 4 questions entrepreneurs should ask themselves to determine whether they are charging what they’re worth.
1.) Do You Know What Your Competitors Charge?
You’ve spent a ton of time creating a service that meets a need in the market. Now all you need to know is what your clients should pay.
A great place to start determining your value is looking at what your competitors offer. Understanding your competitors – including their rates and services offered – can help you set a helpful baseline for what you should charge.
Keep in mind, however, the difference between your business and competitors. If you’re a one-person operation, you may have to charge more than a larger business that has a scale on its side.
2.) What Are Your Short- and Long-Term Costs?
Formulating a rate for your services means having a grasp on what your costs of service are and how much profit you are aiming for.
For businesses or freelancers, your costs can vary widely depending on what you offer and how long it takes for you and your employees. Looking at your costs also gives you a leg up while searching for efficiency.
It’s crucial that you cast an unsparing eye on how much you need to charge just to break even on what’s spent. From that point, you can determine how much profit you want to reinvest in your business and expand your offerings.
3.) What Do You Bring to The Table?
Determining your value means understanding how you and your business are set apart from competitors.
For freelancers, your background, skills, and efficiency can help you differentiate yourself and charge clients more for your services. Even for businesses, variables like the quality of your services, your communication skills, and added value can help you rationalize higher rates for your work.
It’s important to know that you are a valuable part of your business. Explaining that value to clients will help you in the long run.
4.) Are You Able to ‘Just Say No?’
Negotiating a reasonable rate for your work sometimes means walking away from clients who don’t see your value.
Untrained entrepreneurs will sometimes take work below their desired rates. That strategy can help you determine what you’re worth, but it’s important to know when you’re being low-balled.
Establishing constant rates for all of your clients helps you find stability in negotiations and predictability in your earnings.