Succeeding in Your Business by Cliff Ennico

"I run a very successful marketing consulting business — frankly too successful. Because I work out of my home and have no significant overhead, I charge less than half of my nearest competitor in this area. Whenever I quote a job, the customer never complains — they just roll over and sign my standard contract. Frankly, despite a difficult economy, I've got more work than I can deal with. I am extremely popular, and my customers always refer me to other businesses in the area because I'm giving them the best deal in this area for these services.

My problem is that I'm working my tail off — 80 to 90 hours a week most weeks. And while I'm paying my bills on time, I'm not able to put any money away for retirement, and that really worries me. I can't afford to hire anyone to help me. Even if I had time to take a vacation — and believe me, I need one right now — I wouldn't be able to afford it.

I know I probably should raise my prices, but I'm afraid I'm going to lose too much business. Is there any way out of this dilemma?"

You know you are not charging enough for your services when the customers don't bother to argue over your service proposals, contracts or invoices. Afraid they will lose a deal that's "too good to be true" by looking a "gift horse in the mouth," they just agree to your terms without comment. Be assured that the minute you leave their offices they are doing "high fives," breaking out the vintage claret, and snarking about your naivete and lack of experience in business.

While as a home-based entrepreneur you want to keep your overhead and other costs at rock bottom, enabling you to charge lower fees than your brick-and-mortar competitors, you want to be sure you are charging enough so:

— you can make a decent living, enough to compensate you for the fact that you are working 24/7 unlike many of your competitors; and

— you are happy with both your work and your lifestyle, not grinding your teeth every night over how your customers don't appreciate your true worth.

If you make a habit of giving your customers too good a deal, two things will inevitably happen sooner or later: You will become physically and mentally exhausted; and you will end up hating your customers for putting you in a position of indentured servitude (when after all it's entirely your fault).

Here are some tips to make sure that you are getting what you deserve while still remaining competitive:

— never charge less than 90 percent of what your closest competitor charges — your customers are still getting a good deal, and you are not leaving too much money on the table; and

— make sure you are charging enough to enable you to live comfortably in your area — if you need $200,000 a year to put your kids through college and live an upper-middle-class existence in your community, then making $150,000 a year just won't cut it, even though a lot of folks elsewhere in the country would gladly settle for that.

You can raise your prices now for new clients, but what about your existing ones? Once clients get used to paying a certain amount for your services, they squeal like stuck pigs when you increase your rates.

Here are a couple of "stealth" tricks for raising your prices for existing clients without being too obvious about it:

— charge "flat fees" that are at least 125 percent of what you would charge for doing the same job on an hourly or "per diem" basis (you would be amazed how many customers will accept a higher overall fee in exchange for the security of knowing what the exact amount of your bill will be); and

— consider charging a "premium fee" for projects that are going to eat up a lot of your time, for evening/weekend work, or for other "special access" a client demands (for example, I don't give my cell phone number to any client that isn't willing to pay a minimum $25,000 for legal services each year — if they're going to bust my chops on a Sunday afternoon, they should be prepared to pay my home mortgage each month).

Whenever you "sell yourself short" by not charging enough for your services, it's always due to a lack of confidence on your part. If the customer doesn't call you back when you quote them a fee, that's bad news. But it's also bad news if they don't try to negotiate at least a little bit. When the customer winces slightly when they see your proposal, contract or invoice, but signs anyway after asking a couple of questions, that's when you know "the price is right." Don't settle for a penny less.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.

COPYRIGHT 2009 CLIFFORD R. ENNICO.

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