Jeanne Yocum presented this Webinar to the members of the CareerPivot online community and in this episode, Marc Miller shares her valuable insights with you, the Repurpose Your Career podcast listeners.
[1:41] Marc welcomes you to Episode 99 of the Repurpose Your Career podcast.
[1:54] If you’re enjoying this podcast, Marc invites you to share this podcast with like-minded souls. Please subscribe on CareerPivot.com, iTunes, Google Play and the Google Podcasts app, Podbean, Overcast, TuneIn, Spotify, or Stitcher. Share it on social media, or tell your neighbors and colleagues so Marc can help more people.
[2:16] We are rapidly approaching the magic Episode 100 of Repurpose Your Career. When Marc started this podcast in October 2016, he didn’t think he would get to 100. Except for Thanksgiving and Christmas, there has been an episode every week for the last two years.
[2:41] Next week, Marc will put together a special program, the key piece being, Marc will interview his wife, Lotus Miller, about her experiences around their move to Mexico! Mrs. Miller is a former Registered Nurse and massage therapist.
[3:01] This week, Marc presents a special episode, which is the audio from a webinar that Jeanne Yocum presented to the Career Pivot membership community, called “Pricing Your Services — How to Get it Right.”
[3:14] Many of the Career Pivot membership community are becoming freelancers or consultants. Setting the right prices is one of the most difficult things for freelancers and consultants. Jeanne was on Episode 89 of the podcast talking about her book, The Self-Employment Survival Guide.
[3:32] There are quite a few community members who are realizing that they want to control their future and need to start their own business. It may be only something on the side but it is their business. They own it and no one can lay them off.
[3:51] This will give you a taste of what is available inside The Career Pivot Membership Community. Listen at the end of the podcast for how you can become involved in this community.
[4:27] Marc introduces the webinar, invites questions in the chat box, and welcomes Jeanne Yocum.
[4:46] Jeanne refers to her previous webinar, “The Thrills and Chills of Self-Employment” and presents the topic of the current webinar, “Pricing Your Services — How to Get it Right.” In Jeanne’s 30 years of experience, she has seen people struggle with this and make pricing mistakes.
[5:25] Over the years, Jeanne has gotten the impression from some freelancers that they pulled pricing numbers out of a hat instead of doing the research and calculations necessary to get this very important decision right.
[5:44] If you get your pricing wrong from the start, this is going to hinder your ability to succeed, over the long haul. Ironically, this is the case, both if you set your prices too low and if you set them too high.
[5:58] Jeanne will repeat some very important points because they are points to remember and they cover basic principles to follow and mistakes people make.
[6:19] Let’s look at the factors that affect pricing.
[6:33] Level of skill — People of age 50 and over have plenty of experience in your business field, but people venturing into something totally different that involves new skills need to take that into consideration when setting your rates.
[6:53] Amount of experience — more experience allows charging a higher rate. Jeanne tells an anecdote from her own life.
[7:47] What your competitors are charging for the same service or product — You can justify higher rates with more skills and experience but not if all things are equal.
[8:10] Your community. Jeanne shares a personal experience. Word can spread.
[8:34] The amount of competition in your field. The more people in your area that duplicate your offering, the less you can charge for it. Very specialized areas without much competition are different.
[9:02] If you’re offering something that companies around you aren’t used to buying, they’re going to be more price-sensitive than if you’re in an area where the service you’re offering is very common. Jeanne talks of why she lowered her rates in Western Massachusetts, after working in Boston.
[9:58] The nature of your clients -- corporations vs. nonprofits, small businesses vs. large businesses. Jeanne often had to lower her rates a bit for smaller nonprofits. The same with family-owned or small businesses. You need to know to whom it is you’re going to market.
[10:35] Are you going after the businesses who are able to pay you more? If so, you will be likely facing more competition.
[10:49] What is your motivation? Many people work for nonprofits for their purposes. You won’t make a lot of money off of them but you may enjoy it.
[11:18] Jeanne says the biggest mistake people make starting up is overestimating the number of hours you can actually bill per week. If you worked in an agency, someone else was in the back office and in the field while you worked billable hours. In a startup, the sales and back-office tasks fall on you and your billable hours take a major hit.
[12:27] Overestimating your potential billable hours will cause you to charge a lower rate than you will actually need to survive and thrive. Nor will you get paid days off or vacations as you probably did working for your former employer. In your calculations, allow for these hours when you won’t be earning income.
[12:54] Another huge mistake beginners make is low-balling your hourly rate to get your foot in the door. If you charge too little, you can’t possibly survive.
[13:15] You can get pricing wrong by not doing your homework to understand what your skills and experience are worth in the marketplace. Different marketplaces bear different kinds of pricing. Jeanne is paying a graphic designer in Durham half of what she would have paid for the same services in Boston.
[14:07] In a rural area you just can’t charge the same kinds of rates as in a metropolitan area.
[14:13] Professional societies can help you find the information you need about your market area. Networking can help. Jeanne finds that recently, people are more open to sharing information about billing rates than they used to be. Tread carefully in this sensitive topic.
[14:32] Sites such as Glassdoor.com provide salary ranges for what somebody working in your job for an employer is making in your area. Then you have to add in things like paying your full self-employment tax and other overhead to come up with a billable rate.
[15:13] You need to understand that the same internet that gives you information about billing rates gives your prospects the availability to outsource work to labor markets that pay the worker less. You can also pick up clients from other parts of the country or the world, so long as you prove your value to them.
[15:58] In some fields there are potential customers looking for the lowest possible cost for services. Sites like Upwork.com and Freelance.com cater to them. These customers are often difficult and very hard to satisfy. Jeanne recommends her freelance clients not to use that type of site. Look for clients who will want a recurring relationship with you.
[17:01] How do you get your pricing right? Know how many hours you will be able to bill weekly. If you bill for 40 hours, that means you will be working nights and weekends doing the unbillable but very necessary work of running a company. That leads to burnout.
[17:41] Research what people with your skills make where you live. If you research thoroughly then you can be confident in telling a prospect your rate. Your confidence will help convince that person that the rate is reasonable and justified. If you are insecure about your rate, that will undermine your position. Don’t undersell yourself.
[18:40] Be prepared to respond when potential or existing clients push back. It’s inevitable that someone will push back about your proposed rate by quoting a lower rate from someone in India or Rumania.
[19:10] You have a load of good arguments to make is such cases. The time difference alone adds an unnecessary level of difficulty and definitely slows things down. Also, unless the person being hired overseas is a U.S. expat, there may be language and cultural differences that may impede client communications.
[19:39] Yes the overseas freelancer may speak English, but do they really understand all the American idioms that your client is apt to use. Will the client have to figure out new ways to explain things?
[20:03] Always be ready to talk about what backs up your proposed rates -- your depth of experience and breadth of skills. This applies to overseas and local competition. Jeanne tells a case study from her own career as a ghost-writer.
[21:36] Never ‘buy the job.’ If you low-ball your rate to get in the door, you will almost always be sorry that you did that. If the hourly rate does not pay your bills, you’ve made a big mistake. You’ll have to work an unsustainable number of hours to make ends meet.
[22:15] Once you have set a rate, that will be the rate your clients will expect to pay you, at least for a year or two. If your goal is to form a long-term relationship, do you want it to be to your disadvantage? Existing clients will not like your raising your rates and they may go off in search of a less expensive provider.
[23:04] Be very careful how you communicate price increases. Sooner or later you are going to need to raise your rates, even if it’s just to keep up with the cost of living. Jeanne recommends being as formal as possible about communicating price hikes.
[23:31] Jeanne started sending out letters for a January 1st price hike in late November. She sends out letters on letterhead, not emails, because people are prone to reply and push back to an email message, but rarely write out a letter to push back.
[24:08] The first time Jeanne sent out some price hike letters she could barely breathe until she knew the people had received them. She was positive that the phone would ring like crazy but it didn’t. When she was talking to customers a couple said they had gotten her letter but nobody pushed back. It depends on how you do it and how often.
[24:44] You gradually need to cull out low-paying clients from your roster or get them up to the rate you are currently charging. If a client really can’t pay a higher rate, bid them a fond adieu and recommend them to somebody just starting out, with a lower rate. The client will be happy, and your competitor may refer larger clients back to you.
[26:06] If your low-paying client is really a favored client, and you believe they could pay even just a little bit more, have a serious chat with them about this. If you can gradually move them in the right direction it’s worth a try before you write them off as clients.
[26:28] There are various ways to price. You can charge by the hour or you can charge a flat project fee. To charge a flat fee you need to be accurate about the time it will take to do the various tasks associated with the project. This can take a while to master when you get into a new field.
[27:16] When you have built up trust with a client, it is possible to get away from the flat-fee method. Once people know you’re going to deliver good work and on a timely basis, they aren’t as demanding about having you commit to a specific project fee up front.
[27:37] Jeanne has also had clients where there is a limit of how many hours she will put in during a month, and when that limit is hit, additional work is pushed off until the next month. This differs from a retainer agreement, as clients are not paying up front, so they are not getting a discount.
[28:02] With retainers, the benefits are that you get paid up front and you get paid regularly. The downside is that you generally have to give a discount on your hourly rate to retainer clients. Jeanne shares an example from her past.
[28:40] You need to have other options available in your head because you’re going to be asked. Some clients wanted a day rate, for attending conferences for them. Jeanne generally gave a day rate discount for a large chunk of time.
[29:15] Jeanne always required a 20% deposit from every new client before she started work on any project. Until she had that check in her hand, she wouldn’t do anything for anybody. Just be clear with them about that.
[29:50] 70% to 80% of Jeanne’s business came to her through referrals from her clients but she still kept to that deposit policy. People don’t know their associates’ payment habits. Once payment for the first project went smoothly, Jeanne dropped the deposit requirement for future projects. If the client was a slow payer, the deposits continued.
[30:54] If a client did not pay or was very slow in paying, then for any future work, full payment was required up front, before any work was done. Jeanne only ever had to do that with one client, but they understood that because they had messed up so badly. The other option is to drop the slow paying client entirely from your client roster.
[31:31] Offer a menu of services in your proposal. Offer separate pricing for each element of the project. This is helpful in introducing your services to a new client and facilitating the sales process.
[32:32] Jeanne covers common issues that come up regarding pricing and project costs.
[32:40] Mission creep occurs when a client adds “little tasks” to the project beyond what has been agreed. Get that under control ASAP. You should have already provided the client with a thorough list of action steps you’ve agreed upon, and who is responsible for what and what the deadlines are.
[33:12] Mission creep can get ugly fast, in terms of hours you will burn. Revisit the action list with the client, and explain what the additional tasks will add to the price of the project. Do not let someone expect a Mercedes when they’re paying for a Chevy.
[33:48] Slow payers can impact you. Never be afraid to fire a client, particularly one you have to fight to get your money or who argue over your fees. This type of person is a huge drain on your energy. Jeanne has a whole chapter in her book on strategies for getting your money from slow payers.
[34:47] Cashflow ebbs happen to everybody, so get used to it. Do what you can to protect yourself, like asking for deposits and getting clients on retainers, setting your prices right, to begin with, and most of all, never letting up on your marketing and networking. You’ve got to devote some time to generating business each week.
[35:28] If you ever decide your dance card is full and you no longer need to do any marketing or any networking, shortly down the road something will happen that will cause a client to fall off your dance card and leave a big hole in your cash flow. Jeanne tells of an unexpected client defection worth over $8K a year in her book.
[36:35] Jeanne invites listeners to write to her with questions.
[37:19] Marc reads a question for Jeanne from the chat box. “What percentage of time do you spend on marketing vs. product delivery of services you get paid for?” Jeanne never charted that. Her goal, when she was working full-time, was to bill at least 20 hours a week. Marc says he spends three-quarters of his time in marketing.
[38:27] Jeanne says it would vary by profession. Jeanne recommends at least one hour a day into marketing, networking, proposals, and prospect meetings.
[39:06] Marc asks Jeanne to talk more about billing by the value you deliver. She goes back to her client that tried to talk down her pricing, and how she defended against that by the value she brought to the table and her familiarity with the client’s work. Marc notes the value Susan Lahey brings to him when she helps him write a book.
[42:09] Jeanne talks about how all her experience with clients in the financial and insurance fields gives her expertise for financial services clients. You have to figure why your prospect would find value in you.
[43:14] Another chat box question for Jeanne: “Please elaborate on how to propose a retainer agreement and why a discount is needed.” People expect a discount if they are agreeing to write a check every 30 days. Retainer clients are not that easy to find and Jeanne was willing to accommodate them.
[43:53] It depends on the field. If projects are few and far between it is a hard sell. But you can guarantee a certain availability and readiness to a client with a retainer. Jeanne had few retainer clients but they were all clients she had for a long time. Pam, a listener explains her retainer experience at PR agencies.
[46:05] Jeanne explains how she worked the retainer with a big non-profit with a tight budget. If there were under the hours they evened it up in another month.
[47:58] Jeanne charged travel time at half of her regular rate (or one-way at the full rate). People in general understand they will pay for travel, but not at the full hourly rate.
[49:03] Roberta asks if it’s better to charge a straight per hour rate or a rate tiered by the task performed. Jeanne has never tiered her rates. Whatever she does is at the same rate. But she does have a “friends and family” rate, different from somebody she knows is going to be a long-term client.
[51:12] Martha asks Jeanne how often did she say to herself it would be so much easier just to get a job. Jeanne never said that in 30 years, after all of her experience in corporate America. It took Jeanne about a year to get things rolling — during a recession — and she never looked for an easier way.
[52:18] Marc thanks Jeanne for the webinar and for her giving attitude. Jeanne says she knows how hard it is to start over again after 50.
[53:15] Marc says Jeanne has been a real resource to the CareerPivot community. You can reach out to Jeanne at Jeanne_Yocum@Yahoo.com.
[54:29] If you are interested in learning more about the CareerPivot.com community go to CareerPivot.com/Community and sign up for the waiting list.
[55:11] Check back next week for Episode 100! This will be a special episode where Marc brings his wife to the microphone!