You're pretty proud of yourself! After all, only four months ago you came up with the idea of opening your own business - "Jenni's Interior Design" Your friends have always said you were gifted when it came to arranging furniture and picking out colors, and you love to do it, so you decided it was time to get serious.
You went to a few "Starting Your Own Business" seminars, picked out a name and registered it, had your nephew build a great website, printed up some business cards, got a second phone line, and took out an ad in the local paper - "Are Your Walls and Furniture as Stagnant as Pond Scum? You Don't Need to Break the Bank for a Fresh Look, You Just Need a Makeover!"
Then you crossed your fingers and waited. Day one, no calls. Day two, no calls. Day three - the phone rings! Success! Your heart is pounding as you pick up the phone. The conversation goes something like this:
"Hi! This is Jenni with Jenni's Interior Design, how can I help you?"
"Hi, my name is Celia, I saw your ad in the paper. What do you charge for your makeovers?"
"Well, my rate is $25 per half-hour for consultations or $100 per room to redesign the entire room. If we decide on new furniture or paint, that is your cost of course"
"Hmm, I have a lot of rooms I'm thinking about changing. Can you come over for a free consultation just to see what I have? If I do more than one room, can I get a discount?"
"Umm? sure, that's fine. If we do more than one room I can do a discount too, no problem"
Hold on. Maybe Jenni hasn't given away the farm yet, but she's on her way. When Jenni hangs up the phone she's going to realize a few things:
The problem here isn't that Jenni was caught off guard, the problem is that she instinctually began to doubt herself and her prices. You can't blame Jenni, after all, this is her first potential customer and while she's talking on the phone she's probably thinking "Gee, am I really worth $25 per half-hour? I do this for my friends for free. I don't know if I'm really qualified to charge that kind of money"
The potentially bigger problem is Jenni pretty much threw her pricing structure out the window when questioned. There is nothing wrong with bartering and making deals, but it shouldn't be your standard business practice. Without a doubt, if Celia likes Jenni's work and recommends her to a friend, Celia will be sure to brag about the great deal she negotiated as well. Now, Jenni is probably stuck with this "free consultation with a discount" policy for any referral customers. Jenni is setting herself up to run all over town free of charge, give good advice, and potentially not make a dime.
What Jenni should say is, "I would be thrilled to come out, but I'll have to keep the consultation charge in place. What I can do is credit your consultation towards the first room we makeover, each additional room would be at the regular rate. I'm sure I'll have some great ideas that we can work on together"
Of course it takes confidence in yourself to come back with that kind of a reply. Jenni is only going to have that kind of confidence in herself by knowing her competition, what they charge, and that fact that she is as good, or better, than they are.
So here's the key to not giving away the farm:
Know your competition and the commonly established rates for your service.
If you are competent, confident and know you have as much skill and talent as your competitors, there is no reason why you should be charging any less than they do. In fact, some people believe if you charge more it's a sign that you must really be good!
But let's not get carried away, the point isn't to see how much you can charge before you run yourself out of business. The point is, "Don't sell yourself short"
One great way to measure your competition is to call and try them out. I personally did this not long ago when I was thinking about opening a software consultation / training business. I found a small business specializing in software training and had them send out an employee for two hours of Microsoft Access training. The friendly lady who arrived spent two hours reading the 'help' screens (to herself) and flipping though the paperback user's manual trying to figure out how to show me some rather simple tasks I had questioned her about. Hardly what I would call expert training. However, it served its purpose - I knew I could do a better job.
Do your research and provide an efficient, professional service. Show them that you're worth every penny. If you build that kind of reputation, price will not be much of an issue. Your customers will admire your confidence and work ethic and be happy they're doing business with you.
Oh, and keep the deed to the farm in your drawer where it belongs.
About The Author
David James is the editor of "Home Income Digest", a publication updated quarterly which presents more than 40 of the best home-based businesses currently available in the country. Located at http://www.homeincomedigest.com, Home Income Digest includes only well-researched, established, small business opportunities. For more information about the author, visit http://www.homeincomedigest.com/aboutus.htm
It is essential that you fully understand how the fuel... Read More
Consistency is a huge word when operating your business. I... Read More
In these days of insecurity and uncertain futures, the tendency... Read More
Pet Transportation Services are needed as the number of pets... Read More
In the Truck Washing Business every single type of vehicle... Read More
Due to the over regulation in the Franchising Industry and... Read More
Does your small business have a banking and credit card... Read More
How do you make sure you have the business solutions... Read More
If you are in a franchise and have a territory... Read More
"What do you do?" It just might be one of... Read More
Cleaning concrete is tough and there is an easy way... Read More
You are selling your small business (business value under $1... Read More
Would it help you as a real estate investor to... Read More
If you run a pressure washer business you need complete... Read More
Too often in business we get trapped into reviewing our... Read More
One of the greatest pitfalls in e-commerce is Field of... Read More
Business card size works well for invitations to special events.What... Read More
The difference between rates and wages is not always clear... Read More
A common hazard faced by new entrepreneurs is a lack... Read More
Once you've decided to incorporate your small business the next... Read More
So you want to get into the auto detailing business... Read More
What would happen if you decided to take an extended... Read More
One of the primary concerns all small businesses have is... Read More
One overlooked individual in the process of taking a company... Read More
Most small businesses will not even try to advertise on... Read More
How a donation is different from a sponsorship and what... Read More
First, we need to define the different kinds of skip... Read More
The last time I spoke and went into a bit... Read More
A recent survey showed that only 28.7% of small business... Read More
Each day we hear of companies entering the franchising industry.... Read More
As the owner or an employee of a small-to medium-sized... Read More
Mobile carwashing is hard work, it is tough on the... Read More
As a practise gets larger & larger the associated problems... Read More
As an Investment Representative you've worked hard to build trust... Read More
COLLABORATIVE NEGOTIATING:Collaborative negotiating is a win-win strategy that can focus... Read More
I have to admit, I was curious. When I saw... Read More
Setting priorities in your business? Your first job is to... Read More
Most small businesses simply go about their daily business and... Read More
Q: I will be retiring this year at age 60... Read More
All franchises must meet the legal definition of a franchise... Read More
If you plan to do business online, then your website... Read More
The Federal Trade Commission is assisting competitor to cheat and... Read More
Last week's question from Anthony R. on how to choose... Read More
1. Leadership Is Learned ? While many people appear to... Read More
Due to the over regulation in the Franchising Industry and... Read More
There is much competition in the mobile auto detailing business.... Read More
While there are few career paths that some would call... Read More
Start thinking about buying an established business if you want... Read More
Send handwritten notes. That applies whether you're a guy or... Read More
$37.4 million funded from venture capital today. $86.4 million funded... Read More
Many of our nations 400,000 franchisees run their businesses out... Read More
Last summer the FTC put forth a report and then... Read More
Many have not experienced a fire up close. One year... Read More
(Although this article is geared towards small business owners, the... Read More
The resume writing service serves an important role in the... Read More
Continuing from the second article:6. About the aground mathematical model,... Read More
When deciding to host a fundraiser for your company or... Read More
Have you been searching for the perfect home-based business? I... Read More
When someone owes your small business money, you certainly feel... Read More
Here are a few tips on how to hand out... Read More
Why Alliances FailWhen do you know an alliance is falling... Read More
Why does consistency in the message have an effect on... Read More
If you want to start a business in 2005, and... Read More
A consultant must remember that the business belongs to the... Read More
And is having a logo really that important?My answer to... Read More
Announcements can be handed out as a business cardAnnouncements can... Read More
Small Business |