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Lifestyle and Marketing: Notes on Setting and Raising Prices

Written by: Molly Gordon

Article Overview: Find out what variables you should take into consideration while setting prices and what strategies you can use to raise your prices.

Lifestyle and Marketing: Notes on Setting and Raising Prices

Lifestyle and Marketing

If you think you need to live large to attract business, think again. What attracts business is a valuable offer delivered to the right prospect with confidence, integrity, and consistency. On the other hand, it is almost impossible to attract business when you are desperate for work.

Your lifestyle choices can underscore your commitment to an authentic and connected life, one lived in awareness and respect of the well-being of others and of the planet. Living these choices and letting them inform how you show up in the world can be a compelling aspect of your personal marketing formula. They can distinguish the offer you are in your chosen niche.


Insurance, Taxes, Retirement, and More

Other considerations for the self-employed are medical, dental, life, and disability insurance. In addition, you may need professional liability insurance, insurance on your equipment and records, and insurance to protect you in the event of accidents on your premises.

Self-employment taxes can take the unwary by surprise. Check with your accountant (you do have one, don't you?) and find out what your tax liabilities are likely to be.

How do you plan to fund your retirement? There may be tax-advantaged plans available to you as a small business owner. Again, check with your accountant. (Have you noticed that one of the expenses you will need to plan for is accounting?)

It is easy to overlook hidden costs such as depreciation. Think about the furnishings and equipment you use and how often you will need to repair or replace them. Where will you get the money for these expenses? How will you pay for software upgrades or for a technician to debug your computer?

The following outline can help you understand how to set your own rates and why there is no "one size fits all" formula.

How Much Do You Want to Take Home? Net Income Versus Gross Income

Here's a partial list of expenses you may incur in your business.

Taxes
Benefits
Medical insurance
Disability insurance
Dental insurance
Retirement
Overhead
Depreciation (it's not theoretical!)
Replacing furnishings
Replacing equipment
Upgrading software
Administrative overhead
Clerical help
Bookkeeping
25-50% of your time to manage and market your business
Vacation, Holiday, and Sick Pay

Where Does the Time Go?

Hint: Keep a running list of everything you do for thirty days. Not a "to do" list, but an "I did" list. This will help you to understand where your time goes.

Sales and marketing
Service (email, phone, troubleshooting)
Email
Proposals, Prospects
Phone Calls
Meetings
Administration (bookkeeping, correspondence, contracts, reports)
Training

Variables Affecting Prices

Geography
Demography
Niche
Experience
Perceived value
Skills
Client capacity to pay/realize value from your work
Cost of delivering services
Competitors' fees

Is It Time to Raise Your Fees?

Full calendar
Reputation as leader or expert
Turning away work
Recognized author or speaker
Prestigious affiliations or awards
Advanced training/certification
Improved services
Increased costs

Strategies for Raising Prices

Annual incremental increases
Business cycle increases
"Going rate" increases
Be sure the going rate is set by going concerns!
Do going rates reflect your costs and services?
More work to justify rate increases of more than 10%
Keep clients informed of how great you are
Training and skill development
Concern for their well-being
Improvements in service and capacity
How you saved them time or money
How you made them money
How you solved problems for them or for others
How much you are in demand
Create a mood that supports your declaration of value
The body of confidence

What Clients Want to Know When You Raise Prices

What are the new rates?
When do they go into effect?
Give reasonable notice
Consider giving current clients a grace period to adjust
Why are they going up?
What value will the client receive for the higher fees?

Adjust Prices to Manage Work Type and Work Flow

Projects you don't really want
Rush work
Difficult clients
Profit is commensurate with risk (and distaste!)

Related Articles
  Raising Your Prices Without Losing Clients
  Unscrupulous Competitors
  How to raise your prices due to the increased cost of gas
  Raising Service Prices in a Recession
  Design Your Business to Fit Your Lifestyle

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Related Forum Posts
$1000 and a stupid idea - [quote="OmnivoreInk":8mkh1lv7]Bill and Heidi Dittmar: Executive Lifestyle founders of a magazine called Executive Lifestyle. Started in 1991. Revenue has grown more than 200% since 2004. 4 full time, 3 part time employees "We started off with $1,000 and a stupid idea." It began as This Month, a guide for tourists, and morphed into Executive Lifestyle.[/quote:8mkh1lv7] Hi Barbara, I find this story about Bill and Heidi Dittmar's success to be especially interesting! Would you happen to know what the catalyst or tipping point was for their change from a guide for tourists to an Executive Lifestyle magazine? Thanks
5 Entrepreneur's success stories - My local paper's business section profiled 5 successful entrepreneurs in the Jan 6, 2008 issue of the paper. Thought I'd share just a bit of it here. Bill and Heidi Dittmar: Executive Lifestyle Jeff Wassmer: Spectrum Deloise Hawkins, Star Whitaker and Lenzy Hill: Touch of Elegance Stephen Brosius: Advanced Door Systems Pam Watson: Goodrich and Watson Insurers Bill and Heidi Dittmar: Executive Lifestyle founders of a magazine called Executive Lifestyle. Started in 1991. Revenue has grown more than 200% since 2004. 4 full time, 3 part time employees "We started off with $1,000 and a stupid idea." It began as This Month, a guide for tourists, and morphed into Executive Lifestyle. Jeff Wassmer: Spectrum Company specializes in computer network security and intelligence surveillance and reconnaissance. Wassmer was an 11-year Air Force guy, so he had "ins" in order to form this business. Deloise Hawkins, Star Whitaker and Lenzy Hill: Touch of Elegance Founded business in 1994. 12 employees. Their company designs and plans an average of 25 events each month in Hampton Roads and other parts of Virginia. Stephen Brosius: Advanced Door Systems Started company in 1995. 5 full-time employees, plus subcontractors. After having worked as a subcontractor for others in the construction business for 20 years, he decided to start his own business. Pam Watson: Goodrich and Watson Insurers At age 49, she was approached by an insurance colleague to buy out their employer's insurance division. They did so, and became employers themselves., witj 4 full-time people.
Re: What is your Business? - We are running a Online Marketing Firm and we have some good clients to which we are offering a complete Digital Marketing strategy like Search, Mobile Marketing, Branding and Design. I think in Online Marketing company online presence can be a wining factor for the success of the company.
Re: What would you do with $500,000 or less? - there's a show on TV that talks to this point about saving time by getting other businesses to do the work for you. Anyone watch that show (Canada)? It may be on SLICE TV or Lifestyle.
Re: How do you monitor what people say about you in the web? - Setting up Google alerts for your keywords can give updates about your site. Also the publicity you create in the social media sites will do help too


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