3 Ways To Charge More

As an entrepreneur, small business owner or a business executive, you’re selling something. Either you're selling a product or a service. The easiest way to increase sales is to offer a better product at the same price or the same product as your competitor at a cheaper price. The former is tough, the latter is much easier. In the short-term. It is short-lived because it is not sustainable at a small-scale. Commoditisation, i.e that which cannot be sold at a premium, survives only by volume. You have to sell a large amount of a commodity for the business to become profitable. So how can a small business or an individual without economic power survive against bigger players with seemingly infinite resources?

1. Become an Expert

Expertise fuels a virtuous cycle. The more you study something, the better you become at it and the more passionate you become about the subject. The more passionate you become, the more you study. And the cycle continues. Expertise also means specialisation, which in turn leads to differentiation. Differentiation by definition sets you apart from your competition. Differentiation also enables your business to become a brand. Being a brand decommoditises your offering and allows you to charge more, as you will read below. As Seth Godin says, the value of a brand is how much extra your customers pay above your competition.If your customers are not paying extra, you don’t have a brand.

This is the basic concept of goal dilution as defined in behavioural science. Basically, goal dilution states the more singular something is in its purpose, the more effective we believe it is. The more features/products/services you add to your offering, the perceived quality of each reduces. As entrepreneurs, we are pulled into being the one-stop-shop for everything within our business category. This is counterproductive.

Additionally, differentiation also allows you to deal with prospects, clients or vendors from a position of strength. It allows you to set terms and conditions without blinking an eye. When sitting across from a prospect, it becomes a respectful “take it or leave it” scenario. When a client has few options to choose from due to your specialisation, you set the terms of engagement.

2. Be Selective

In our earlier days as a digital marketing agency, one of the worst experiences was when we accepted work from companies that did not share our values. Yes, in some cases the money was good but it was an uncomfortable experience. Consequently, we were not motivated to do out-of-this-world kind of work. Big companies are used to getting their way so they bully, intimidate and hold out carrots that will never be redeemed. Further, due to sales targets, we also accepted work from cheap clients who turned out to be the most disorganised, with an irredeemable entitlement mentality. Thankfully, we have also had the opportunity to work with companies whose staff share similar values and with decent renumeration. They are rare, but they exist. This client is the one you should strive for. The bottom line should be based on quality not quantity.

Therefore, being selective means three things:

1. You have a specific target audience

2. You have a rigid process of customer qualification

3. You are not scared to walk away from the table

3. Be Profit Driven

You will price your work, product or account to include healthy margins that allow reinvestment in your expertise. You shall not work for free. Absolutely not. You shall also not discount your product or service. This does not mean the price of your service or product is fixed - it merely means that when a negotiation is made in good faith, your discount does not imperil your profit margin. Moreover, discounts should be limited to repeat and valuable clients with whom a long-term relationship exists.

In conclusion, the words collaboration and partnership have been bandied a lot over the last decade as corporates seek to be perceived as more humane towards their employees, customers and vendors. However, the reality is that in almost all situations, those expressions are merely buzzwords meant to fulfil internal audits. On the ground, the power dynamic remains with the buyer. And they can sense it. The way to overcome this lopsided engagement is to become very good at what you do and become known for being very good at what you do. Being good at something does not come easily though. You have to be willing to invest time and energy into becoming a highly skilled practitioner. Rest assured though that your high competence will give you the confidence to dictate your price and draw your ideal customer to your door. More importantly, because you have your ideal customer, you will deliver a great customer experience for him/her, therefore creating a true and valuable collaborative partnership.

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