The other day, I came across an old contract when I worked at <confidential> from a famous consultancy called <confidential> in NYC. The contract was signed prior to my employment and after 2 months, I fired the consultancy based on their incompetence with the project. I was amazed with the short and cavalier agreement and the associated fees for each service:

Project Management: $39,800
Creative Development: $45,025
Website Development: $57,350
Audio Production: $8,550
Testing & Delivery: $27,350
On-Site Production: $98,580
Electronic Mail Campaign & Fulfillment: $5,875
Recording Studio & Equipment Rental: $15,885

The Grand Total? $298,415 for approximately 2 months work building a simple web site with six hour-long webcasts. Oh by the way, the price doesn't include any changes/additions, overtime, hosting, travel expenses, or technology. That's extra. (I get the feeling they came up with the number and worked the financials back into logical groupings — again just a feeling)

Three-Hundred-Thousand-Dollars. Granted, the agreement was dated 2000, so in today's dollars, we're talking over $400K to build a simple site.

But I present this contract to you to illustrate one simple fact:

MOST PEOPLE DO NOT CHARGE ENOUGH FOR THEIR SERVICES.

Why? You're afraid of losing clients and scaring away any potential prospects.

Guess what? GOOD! You don't need to work with them! It's time for you to fully understand the value of your services and to get a better idea what the market will bear. What would happen if you increased your fees by 50%? 75%? or 100%? I know what would happen . . . it happened to me:

You would have less clients. You can then spend more quality time with your current client base.
You would have higher paying clients. People who are probably more successful.
You would have clients who are serious about working with you. You will be working with people who play better tennis, so you'll have to bring your 'A' game.
You would have clients you really want to work with. Charging more allows you to be picky and not just take anyone.
You would begin to build a long list of clients who demand your services.

Are there lines around the door when HTC releases a new phone? No. How about Apple? Absolutely. You need to be the Apple of your industry.

At first it's scary. Clients will bolt, they will complain. But new clients will appear and start telling their friends.

As an example, I have a client who was charging some of her clients $100-$125 per session. After much prodding on my part, she is now charging $200 per session, and her clients are telling their friends — and her appointment book is overflowing with new clients. (By the way, she just hit her all-time yearly revenue goal in 2016!)

I also coached another client who was feeling unappreciated in their current role. They have been delivering key improvements to the company for over five years (most making the annual report). But for some reason, they received no raise, promotion, or accolade from management. They tried to inquire, but were rebuffed time and time again. Ultimately, I had them look outside of the company and within a month, they had a brand new position at a bigger firm with an increase in pay of 20%.

Raise your prices with chutzpah and the clients will line up at your door.

P.S. I'm not a hard-liner on this. I do coach two pro-bono clients every month. So there.

This weekend, I was hiking with my family in a state park — lots of trees, streams, and ticks. We all had a great time and the summer heat wasn't too oppressive. While we were exiting the forest, we were speaking about the economy and business, and my brother Jeff mentioned a quote I've never heard:

"Shame on you for not charging enough to stay in business."

It hit me like a thunderbolt. How many businesses do we encounter that bemoan the fact they aren't making enough money to survive?

Here's a little financial equation I use to understand the financials of your business and career.

How much money do you want to make this year? Let's say $125,000 to make the math easy.
Divide it by 50 weeks (you get 2 weeks off for vacation) = $2500 each week.
Divide it by 5 days a week = $500 each day.
Divide it by 8 hours = $62.50 per hour. But you have to have 40 solid hours of billing. If not, you need to increase this figure — even double it.

That's your hourly rate you need to make to pull in $125K a year. It doesn't take into account overhead, materials, help, etc. But it gives you a generalized idea of how much you are WORTH.

Then I have my clients build their business model the other way:

How much can you charge each client on an hourly basis? Let's say $100 an hour.
How many billable hours a day do you have? Let's say 5 = $500 per day.
How many billable days per week? Let's say 4 = $2000 per week.
50 weeks per year = $100,000. A $25K shortfall.

This is important — usually the salary and hourly rate don't add up. I usually have to tell them to charge their clients MORE MONEY. Or figure out a way to deliver additional services to their clients so they make more money. Can you upsell? Can you sell them more stuff?

In any case — you need to charge enough to stay in business.

What are you charging? Do you need to charge MORE?

You're Not Charging Enough For Your Services.

This One Phrase Will Transform Your Business.