Ex-lawyer turned relationship coach

Business Owners Have It Easy

Take the winemaker. Although most bottles of wine only cost a few bucks to make, people will easily spend anywhere from 10 to 30 dollars for a bottle. So once a wine-maker has a good reputation, he can make money as he sleeps.

The freelancer has it rough. She only gets paid as she works. And she has no easy formula to calculate her fee.

Even if you follow the cost-plus formula, a freelancer will run into a myriad of problems.

For one, you’re always competing with prizefighters and DIY apps. So if you’re charging above budget value, you’ll lose out on clients.

And the clients who do pick you will want extra perks. Perks you probably didn’t take into consideration when calculating your fee. So now your costs are higher than expected and your profits lower.

After struggling to get by for long enough, you’ll eventually want to raise your rates. But the bulk of your new clients will be referrals from old clients. Which means most of your new clients will expect marked down rates.

And if you’re still desperate for an income, you’ll take on the new low-paying business. And struggle to get by.

If you want to be a successful solo-preneur, you can’t treat yourself as an employee with a fixed paycheck.

Hourly rates don’t work.

Think about it. What do your clients care about more: the hours you sink into your work, or the problem they need solved?

The problem. DUH!

What you’re selling goes beyond time. It’s about solutions.

Plus, your solutions aren’t just a result of the hours you’ve sunk into the work. But also a result of your years of experience, skills and creativity.

So it makes far more sense to charge based on the impact your work has on your clients.

Does your work barely put a dent in your client’s problem? You should probably charge a modest amount.

Does your work help your client save or create thousands and thousands of dollars? You should charge a lot.

And that’s not the only problem with treating yourself as a punching card.

As you get better, you’ll get quicker. So if you charge by the hour, that means less money even though you’re providing more value. After all, you’re fixing your client’s problem sooner than expected.

Suppose two different clients want an identical solution. That solution takes you 10 hours to create, so you bill the first client accordingly. What do you charge the second client?

If you charge by the hour, the answer would be zero dollars.

Finally, using time as a marker of value leads to an unhealthy lifestyle.

There are only so many hours in a year. So if you want to make more money, you have to work round the clock. And burn yourself out.

Business owners have it easy because they only have to solve a problem once. Freelancers have to solve a problem everytime they get a new client—which is far from easy.

So don’t charge as if it is.

By Jeroen Elsing
Ex-lawyer turned relationship coach