Latest / The Life-First Solopreneur / 207. Your Rates Are Too Low—Let’s Fix That

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207. Your Rates Are Too Low—Let’s Fix That · The Life-First Solopreneur

• 0:00
  Carly Ries: Pricing your services as a solopreneur can feel like throwing darts in the dark, especially when you're just starting out. In this episode, Joe and I dive headfirst into a topic that we've danced around for ages. How to actually set your prices and raise them confidently. From charging based on value, not time, to navigating client objections and using pricing as a positioning tool, we unpack the mindset and strategy that solopreneurs need to avoid burnout and stop living invoice to invoice. Plus find out why low paying clients are often the hardest and what a $10,000 hammer teaches us about worth.
• 0:35
  This one's a must listen for anyone still undercharging. You're listening to the Aspiring Solopreneur, the podcast for those just taking the bold step or even just thinking about taking that step into the world of solo entrepreneurship. My name is Carly Ries, and my cohost Joe Rando and I are your guides to navigating this crazy but awesome journey as a company of one. We take pride in being part of LifeStarr, a digital hub dedicated to all aspects of solo solopreneurship that has empowered and educated countless solopreneurs looking to build a business that resonates with their life's ambitions. We help people work to live, not live to work.
• 1:14
  And if you're looking for a get rich quick scheme, this is not the show for you. So if you're eager to gain valuable insights from industry experts on running a business the right way the first time around or want to learn from the missteps of solopreneurs who've paved the way before you, then stick around. We've got your back because flying solo in business doesn't mean you're alone. So, Joe, we've had a few guests on recently that I feel like we've kind of alluded to pricing. We've talked about it specifically in some of our episodes, but it made me realize I don't think we've ever actually talked about pricing as its own topic on the show.
• 1:49
  We've been around the bush with it a little bit. I think it's really important for solopreneurs to get right, and they're not gonna get it right the first time. I really think that it's something that you have to learn through experience of what to price. But let's say I mean, what are your thoughts on setting your price and getting it to a point where you're not just living paycheck to paycheck and scrambling?
• 2:14
  Joe Rando: Well, first and foremost, I really think and it comes back down to something we do say all the time on this show. It's about niching down and solving a very specific problem or set of problems for a bunch of people to have those problems and see you as the solution. Because if you come in and you say, I'm a writer and I'll write stuff for you. Now you're basically that kind of pure and simple freelancer selling time for money.
• 2:42
  Right? so you're a writer, so I need a writer, so maybe I'll hire you to write things. But if you come in and you say, I am a copywriter for top performing social media posts, or I will help you write your memoir so that your children and grandchildren and great grandchildren will know your story, or something where there's a really specific need, pain point, whatever it is, and you position yourself as the solution, now your rates are a lot higher. Right? You're not trading time for money anymore.
• 3:16
  You're trading solutions for money. So I think that's one of the things that you need to do to really get to that point of being able to charge what you're worth. I think that's a step one.
• 3:25
  Carly Ries: I think it's a mindset thing. I think you need to chart the person that we were talking to that made me think we should do this episode is they were saying chart, like, think of what you think you're worth, and then add 10%. So that it's not like you're shooting for the moon, but you're charging more than than you think you should. But that also accounts for technology that you need to purchase. I mean, you're not just billing for your time. you have software you need to use. You have taxes you need to pay. You have buffer time that things are gonna take you longer than you think they will. And even if we are on a retainer model, you still have to factor in how long things are gonna take to set your prices. And so go just above what you think that is to start, and then I think you can always scale from there.
• 4:09
  Joe Rando: So there's this old joke, and I can't remember it exactly. I don't know. I think it was you know, an engine on a navy ship, and it wasn't working, and nobody could make it work. And everybody was trying to fix it. And this one guy comes in, he says, I can get that working for $10,000.
• 4:27
  And they said okay. If you can fix it, we'll give you $10,000. And he walks in and he takes like a hammer, and he just whacks it at this certain spot, and boom, the engine starts moving. And they said, $10,000 to smack a thing with a hammer a couple of times? He goes, no.
• 4:43
  You're not paying me for smacking it with your hammer. You're paying me for all the experience it took to know where to smack it. And that's what you're really dealing with here. You know, you're not just getting you paid for the hour that you work or the project that you do. It's the thousands of hours that went into making you the expert that you are, that you didn't get paid for, or maybe didn't get paid a fair wage for, or whatever it is that you're now charging for.
• 5:07
  And you need to keep that in mind, because it's not just about that hour you put in, it's about the fact that there were probably a thousand hours that let you do that one hour effectively.
• 5:17
  Carly Ries: That is such a good point. And I also the other thing I wanna bring up is we have read Alex Mosey's books, along with millions of other people who have read those books. Maybe I'm making the millions of them up, but I don't think I am. I think that's true. What does he say about pricing that appeals to you?
• 5:35
  Joe Rando: Well, I mean, first
• 5:36
  and foremost, he says and he says a lot of things about pricing. One of the ones I read the other day was, that the less your customers pay, the more problem they are. And I gotta be honest, I've had that experience in my life where my last startup, we had created an enterprise software company, and we had customers spending anywhere from 4,000 and change a year to $700,000 a year for our software and systems. And it was true that some of those smaller customers, you know, the one, two seats, maybe three seats, were sometimes such a big pain in the neck, especially on a per dollar basis compared to the ones that we're spending a lot of money. And it's just got to do with, they don't have as many systems in place and that kind of thing to deal with stuff, so they're always putting it on you.
• 6:38
  And there's only so much a solopreneur can typically do in that department. I mean, you're not gonna necessarily be selling $700,000 a year software packages to Fortune 25 companies as a solopreneur. Maybe you are. Good. Good for you. Awesome. But the idea that, sometimes those bargain hunters are the worst. And charging a little extra and having a few people say, no, That's too much, isn't bad.
• 7:03
  In fact, if you don't have a few people balking at your price, you're probably priced too low.
• 7:08
  Carly Ries: Yeah. And if you are priced too low, you'll just get overwhelmed because you'll get so many of those bargain hunters that you were talking about. And it's just a one way ticket to burnout and not liking the business that you've always dreamed of running, which is a really big bummer.
• 7:22
  Joe Rando: Most solopreneurs need to charge more than they're charging. But you need to position it right. Otherwise, you just look like, maybe you look like I'm a writer, but I charge twice. What do the writers charge? And people go, no.
• 7:34
  I'm not gonna pay double for no reason. But give them a reason, and, you know, now they'll do it happily.
• 7:41
  Carly Ries: Yeah. Absolutely. And I mean, this is kinda like setting your initial price, I feel like what we're talking about. But this also applies to upping your prices for current clients too. Because if you're providing the value that you say you're gonna provide, and even go a step further than what you say you'll provide, they'll wanna stay with you.
• 7:58
  I mean, the guy with the hammer, he likes to I mean, hopefully they'd still hire him for other projects because it may have taken a few minutes to use that hammer to fix the problem. But if you provide the value, one, they're probably gonna wanna stick with you. But they'll also refer you to others and you can charge that higher price point to others. So I think it scares people to raise prices, but you shouldn't be scared if you're providing what you say you're going to. And obviously, like you were saying, you don't need to triple prices on a client that you've had for a while.
• 8:28
  But just do a little incremental increase, and people understand they're probably doing the same thing.
• 8:33
  Joe Rando: Well, the thing that we need to remember, and this is where my gray hair comes in handy, is that we've had a long spell up until a few years ago of very low inflation. And it was hard to raise prices because inflation just didn't feel like a thing. I was a kid back in the seventies when inflation went crazy. And, raising prices was kind of just expected. And so now we're back there with we've got this inflation thing going on again.
• 9:02
  You know? And so it's a lot easier for people to go, yeah. I guess they're raising prices too because the eggs are more expensive and you know, I'm paying more for my gasoline or whatever it is at the time. But, it's just a function of it's an easier time to raise prices now than it was, say, in 2018 or something when inflation was running at two and change percent.
• 9:25
  Carly Ries: And like you were saying, a more necessary time.
• 9:27
  Joe Rando: That too. Yes.
• 9:28
  Carly Ries: Just for cost of living, you probably should be raising your prices because it is going up. Joe, any other parting words on this topic?
• 9:37
  Joe Rando: Well, I think an important thing to do, and this goes back to Hermozi's thing, is to kind of, position your product in a way that you're solving these very clear pain points for a group of people and, try to make it a pretty narrow group of people. But then also anticipate the reasons that they think it won't work for them and be able to very quickly talk to those those things that maybe make them say, no. It's not gonna work for me, and and why it will. And address their concerns with reasons that they think it might fail or might not work. And have that right in your back pocket as you're, creating your website or your landing page or a video or, a on one sales pitch, whatever it is, you know, understand that from the perspective of the buyer, they're looking to get rid of a pain point or two.
• 10:24
  They're looking for somebody that they feel confident can do that for them. And you need to be able to basically say, I'm the one for you. I can do this. And yes, I know you're worried, but here's why it's gonna work. And here's why your worries are not you know, why I'm gonna make sure those worries aren't gonna come to fruition, and it's gonna be alright.
• 10:42
  And if you can give people that level of comfort in what you do, which is why I suggest narrowing down, because you wanna know you can do that. Right? Now you've got a situation where you can charge a lot more money, and people will be happy to pay it.
• 10:57
  Carly Ries: well said. I think that's a great place to stop, and I just think it's such good food for thought for people that are considering raising their prices or just where to start in the first place. So listeners, thank you so much for tuning in. As always, please share this episode with a friend. Subscribe on your favorite podcast platform, including YouTube, and we will see you next time on The Aspiring Solopreneur.
• 11:18
  You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a one person business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.