Why You're Not Getting the Rates and Fees You Deserve
In a recent presentation to a professional association of productivity experts, I was asked a question that always floors me: How do I get better at saying, "that's my rate and I'm sticking to it"? Typically, my answer is something like,
"Your bottom line is not your starting point...you need to find your wiggle."
Whether it’s an hourly fee or a retainer for a package of services, entrepreneurs who think they need to steel themselves to a solid, gotta-have-it number, unwittingly give themselves absolutely no wiggle room and more often than not fail to get the client.
What's more, they tell me they feel disingenuous asking for more. "I don't want to lie about my rate," they say.
This is where I like to start talking about shoes. When you walk into Nordstrom, you usually have a rough budget in mind about what you want to spend. You say to yourself, "no more than $150." And then the salesperson brings out a few pairs, including a cool pair of Paul Green pumps marked down from $325 to $195. Now your mind kicks in and justifies that extra $45 bucks because, well, they're on sale, it's a killer brand, they fit like butter, and the salesperson tells you that you look hot, and that they'll last forever.
You buy that pair of shoes not just because of the price, but because of the benefits they promise to deliver on your feet. The original price was the anchor, the sale price was, in effect, a concession, and $150 was your bottom line. In the end, you and Nordstrom wiggled your way to agreement.
At this point, I hear a lot of "yeah, buts" and questions about how to set fees and rates that provide for wiggle room. So I ask people to imagine doubling or tripling their hourly rate. Now instead of "yeah, buts" I hear gasps of horror.
Are you kidding? I’ll never get work.
The number you set on the table is far from what’s hindering you from getting the gig or job. What’s missing from your success quotient is the experience of having a good conversation—listening and feeling heard, with both parties going the extra mile to find mutually beneficial solutions. (It's also about evaluating the market you serve, so keep reading.)
Most of us excel at this kind of conversation, but because negotiation carries the baggage of conflict, we discount the possibility of a collaborative, mutually beneficial exchange.
Fall in Love with Your Wiggle
Negotiation is not about sticking to your guns. It’s about communicating your value to your conversation partner in a way that allows them to see opportunities and solutions they couldn’t see before--solutions you are uniquely qualified to provide.
If you’ve based your income goals on your hourly rate, and you have a habit of “steeling yourself” during conversations with potential clients, you get two kinds of results: you either whittle your rates and packages down past your resentment number (what you were trying so desperately not to do), or you fail to get the client because you didn’t have any give and take.
No grace. No wiggle. No bank account.
Re-Value Yourself and Re-Examine Your Market
Once upon a time you invented your hourly fee. You looked at what others were charging, researched, tested your offers with some low hanging fruit, and settled into a groove. That groove is now a rut and the only way out is to raise your fees and re-examine your market.
Diana, a friend of mine who is a productivity consultant, decided to shift focus from working with individuals to doing staff/team training and productivity coaching for small businesses and corporations. In other words, she shifted her focus to a market that matched her career aspirations and her income goals.
A year ago Diana started out charging a small fee for group trainings, and the same hourly coaching rate she’d been charging individuals. She was working harder, making less and getting fewer clients.
To stop me from brow beating her, Diana doubled her hourly coaching fee and tripled her training fees. She now has more work than she can handle and she met her 2014 income goals midway through the year.
While the money’s good, what’s really shifted is Diana’s experience of negotiation. Because she created wiggle room in her fees, her mindset changed from “steeling herself” to something more like “improvising a recipe…a pinch of this, a dash of that.”
From a skills perspective, Diana spends most of her energy asking open-ended diagnostic questions for discovery, needs assessing and brainstorming and she feels she’s working less to “sell” and more to “accommodate.”
And when she anchors her price, she lets it sink in. If her potential client seems a bit itchy, she asks more questions. And if things feel like they’re headed south, she changes the conversation. She tosses everything out the window and asks, “If you could have anything you want, what would it look like?”
So…slow things down, get conversational, raise your fees, and call me from the bank.