Monday, July 21, 2014

How to Charge What You're Worth and Get It: Part 1 of 6 - Understanding Your Value

Ask yourself the following question: Would I like to earn an additional £10k, £20k, or £30k in the next 12 months without having to necessarily get more clients? If the answer is yes, then read on.With a sinking feeling, David checked his billings for the past month compared with his colleagues and wondered if the computer programme was on the blink. His earnings were barely higher than any of them and yet he'd easily spent double the amount of hours they had on client work over the past four weeks.Despairing, he packed up his things and made his way out of the office wondering how on earth he'd be able to face another month like the one he had just finished.I met David a few weeks later. By his own admission, if we hadn't started working together, he'd still be clocking up 80-hour weeks and never really making the money he deserved. He'd still be wondering what he could do to improve his situation.By the end of our first session, David had realised that he didn't need to get more clients to earn more money or to work even longer hours. All he needed to do was to start charging his clients for the extra work he did.You might be like David where you're not charging your clients for all the work you do. You might be discounting your normal rates to attract new clients or to retain existing ones. Or you might be charging less than you know you should for the work you do. Whatever you're doing or not doing, the result is that you're in a situation where the money you earn is nowhere near the value you deliver to your clients.To really get paid what you deserve for your work, you need to understand the value of the work you provide, communicate that value to your prospective clients and be comfortable asking for fees.As a formula, it looks like this:UV + CV + CA = CW.UV is understanding your value; CV is communicating your value; CA is comfortable asking for fees and CW is charging what you're worth.It is a simple formula but I know for many people, it is also very challenging.For the purposes of this article, we'll be looking at the UV part of the formula and then in subsequent articles, we'll continue with CV and CA.

There are three key aspects to understanding your value:1) Your expertise
2) The client's need/perception
3) Your general self-worthYour expertise is the qualifications you gained, your Continual Professional Development and the experience you have had over the years putting it all into practice. It's very difficult for you to see how valuable this is because you take it for granted - to you, it's easy - you've been doing it for years. You are what's known as unconsciously competent. What that means is that you do things automatically very often without having to think that much. An example of unconscious competence is driving a car. If you've been driving for years, you don't have to think how to drive the car - you just do it - and it's the same with your expertise.Which reminds me of a story I heard some time ago about an engineer. A manufacturing company rang and asked him to come in and look at a machine which had broken down. He had the foresight to ask the company what the cost of non-production was and they said £100,000 a day. Armed with this information, the engineer went in to take a look at the faulty machine. As he walked around it, he prodded, poked and listened to it and then, after just a few minutes, he hit the machine hard with a hammer. Bang. Hey presto, the machine immediately burst into life. He then stayed around for a few minutes, until he was satisfied that the machine was running sweet and as soon as he was happy that all was well, he packed up his things and went on his merry way. Even though it had only taken him 10 minutes, he sent an invoice into the Company for £2,000.00, because he understood his value. The Company wrote back and asked for a breakdown of the invoice. He immediately replied:For hitting the machine with the hammer £50.00
For knowing where to hit the machine £1,950.00
Total £2,000.In the next article, we'll look at the client's needs and your general self-worth in relation to understanding your value.

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