Let’s Talk About Your Money, Honey!
A few weeks ago, I had the sincere pleasure of talking with my incredible LinkedIn community about something that seems to be a massive stumbling block for creative entrepreneurs, self-employed folks, and freelancers of any kind...
Money.
Specifically, conversations around money from a sales perspective.
Eep.
I know, I know. The three things we don’t talk about in ‘polite’ society (ick) – politics, religion,
and money.
Well, I’m sorry, Arbitrary Social Norms Gods, but we’re flipping the bird at that last one, because frankly, we need to talk about money.
To get the conversation started, I asked my network what their thoughts were on money as it relates to them. What does money mean to you? What does it do? How do you think about it?
I got some incredible responses that were too good not to share.
On the subject of setting your pricing:
The question isn't "what will people be willing to pay?" but "what value am I adding?" and being able to show that really clearly. – Hedvig Sandbu
And what about the value of things, vs. the price of them? Ben Hulme nailed this one:
I was just looking at something that described the interplay between "value" and "values".
Big topic! My short answer is that if you understand how your work is creating value for your client, then your price should feel fair and reasonable to everybody involved.
The values bit is where it gets more complicated… If you can balance feeding the family with job satisfaction and peace of mind, then I reckon you're on the right track.
Alicja Teagle raised another great point about the meaning of value:
When thinking about this, should it all be about money? What about quality of life vs how much money you actually need to achieve your own idea of success...?
This thinking came about for me when I read ‘The 4-Hour Work Week’ by Tim Ferriss who looks at the 'new rich' being those that have enough money to live how they want to, but most importantly the time to do the things they want to.
For me personally this comes down to living in a smaller house, with a smaller mortgage, but then being able to afford to ski more often.
Multi-lingual mega-translator, Martina Abagnale, makes an excellent point about really know what you offer a potential client:
Just this morning I sent a message to another translator who has been inspiring me to dream big when it comes to making a good living doing only translation work. I think that at the beginning we all fall in the "what will my client pay for this" trap, instead of looking at the value that we bring to the table.
Design guru and business owner, Jack Chan (hit him up for all your presentation needs) actually reverse-engineers his financial success, blending it with a positive mindset:
I ask myself how much I plan to earn monthly and break it down from there. I work backwards that way.
It helps me focus on higher quality clients because I'll end up getting paid more per project rather than chasing more smaller projects. Know what I mean? The smaller ones come as a bonus.
And how about the meaning of the word ‘value’ – rather than just ‘money’ or ‘cost’?
Ultimately, I think it comes down to that word "value". What, ultimately, are you delivering in terms of true value to your client? In other words, what exactly would it mean to them to be the recipient of your services, once you've ultimately delivered them?
For some it's about kudos and therefore most likely more knock-on business / growth / happiness. For others it's actual economic "money" growth. For most of us here we're asking for investment in return for our services. All we need is the confidence to know, for sure, that what we're offering (at whatever investment cost) is a relative pinprick in terms of the value they'll receive in return. – Jez Kay
Serial entrepreneur and all-round excellent person, Mark Brennan, made a point about your sales strategy being rooted in real value:
I think that wherever possible, you should sell on value because (when it's done right) it demonstrates a deep knowledge of subject matter and its relevance and importance to the customer.
When you're selling an intangible, or something new, it's difficult/impossible to know the value, so the tendency is to go down the route of commodity sales on price/time. Asking the right questions of your customers is the Key.
Anyone who starts a comment with a Warren Buffet quote is a bit of a brainiac in my book. Jim Meldrum (follow him for excellent sales advice) says of money and the trap of undervaluing yourself:
"Price is what you pay. Value is what you get".
We all have different ideas of what value actually is and, in turn, how value is perceived by others so it's often the case that we undervalue ourselves (especially in the early days of a new venture).
There are probably two things in play ... the message and the audience. Give the correct value message to the correct audience and the value gained is usually easily seen ... give the wrong message to the right audience OR the right message to the wrong audience and things don't go so well.
Then as we begin to doubt ourselves our prices drop quicker than shares in a buggy whip factory.
Speaking about pricing policies as the Founder and CEO of Eclectic Minds, Noémie Jean Clarke says:
To me, it has to be comprehensible and comfortable. I had a fascinating conversation with a mentor last year about MY own time value. I was quite shaken by the end of it, but the resulting consequences were the steps in the right direction. And lastly, if we talk money, we talk value and all the free stuff around. I don’t give for free. I give away in exchange for something.
On that pricing note, what about project pricing vs. hourly rates?
My pricing is based on my package which is basically offering a solution the client is looking for and placing a value on that. I used to charge by the hour but came to the realisation that clients perceive that as paying for your time and not the value you generate for them. – Shahriar Nejatbakhsh
And what happens when work is your passion? As Luna Checchini points out:
One of my issues when it comes to money is that my job is my true passion, and I'd do it for free as long as I was given the chance of teaching. Over the last few years, I've learnt to stand my ground and keep my prices where I want them to be, without taking it personally if someone doesn't choose me - we were not a good match, clearly.
Specialising in stress and anxiety treatment, Gin Lalli offers her wisdom and wonderful sense of humour on the money issue:
It's a natural mistake at the beginning of business to think more about what people are willing to pay you than thinking about the value you bring...once you work through that then everything falls into place quite quickly.
I still don't understand the discomfort we have around talking about money. Money brings freedom. And when people say money doesn't buy happiness, I'll challenge you to say that to someone who is relying on food banks or struggling to pay the bills.
It's an important and inherent part of our lives that we should talk about more openly. To leave on a light note though - "if you think money doesn't buy happiness then you don't know where to shop!"
How about you?
What money myths are you operating under? What beliefs do you have that might be holding you back?
Drop a comment and tell us all about it!