Most often, the first piece of advice I give a new client is: “You need to charge a lot more money than you currently do.” Most receive this with skepticism and resistance.
The usual argument is, “Charge less money, and you will attract more customers.” That may be true. But are they the right customers? Will charging less really help your clients? And will the “low price/high volume” approach be more profitable in the long run?
The most troublesome, most high-maintenance client I ever worked with paid me just $1000 for a sales letter. (This was many years ago.)
Perhaps the second most bothersome client I’ve ever worked with was a person for whom I worked at no charge. (I did this as a favor.) But the fact that I didn’t charge for my work came with a huge backlash. For some reason, this person took that as his right to be abusive, rude and inconsiderate.
On the flip side, the two easiest clients I’ve ever worked with were those who paid me the most money.
7 Great Reasons to Charge More for What You Sell
- Clients who pay more are more committed. If you've enjoyed the privilege of taking an expensive vacation, you already instinctively understand how this principle of “intrinsic self-leverage” works. When you pre-paid a large sum for that cruise or resort vacation, you most likely had the feeling that this was going to be a great vacation, no matter what. We protect and value most that in which we are most invested.
- Clients who pay more have greater ability to leverage your advice. If they can afford your high fees, this is a good indicator that they have the financial reserves and well-developed self-discipline to actually use your consulting advice (or software, or coaching, or whatever you offer) and get a return on investment. On the other hand, if you charge low-ball fees you will get clients who have neither time nor money enough to get a return on your product or service. Even worse is selling to the “mediocre middle”: those who are able to scrape together enough money to pay you, but who then have no further margin to actually use your product or service. They have “bet the farm” on their investment and cannot afford even the slightest setback or delay (both are inevitable parts of any business project.) Working with the wealthy (or at least with the affluent) enables you to achieve greater success and returns for each client.
- High-paying clients free you up to expand your business through marketing, staff, infrastructure, etc. When you work with fewer clients who pay you more, your business has more financial margin, and you have more personal margin. With more financial and time margin, you'll find growing your business to be easier and more fun. That makes for a healthier less stressful business and personal life.
- By impacting more influential people, you impact MORE people. This truth is so obvious that many people miss it. If you offer a powerful, life changing product or service, the fastest way to help more people is to first help influential people.
- The client who pays more places higher intrinsic value on you and your services. Whether or not it is rational, we automatically assume the more expensive product or service in a category is the more valuable product or service. Which is better: a Toyota or a Lexus? A BMW or a Rolls Royce? If you're like most people, you probably answered “Lexus” to the first question, and “Rolls Royce” to the second. Yet in both pairings the automobiles are made by the same company, and very close to being the same vehicle. But we instinctively believe the Rolls has more intrinsic value than the BMW. (Yes, I know there are some differences – but they are almost all differences that affect only the perceived value of the vehicles, and not the actual utility.) To be sure, if you offer mediocre products or services at premium prices, you will not be in the game very long because your sins will surely find you out. But by and large, people tend to believe the more expensive thing is the better thing.
- Premium clients are more self-sufficient and need less babysitting and hand-holding. Few high-paying clients are “problem children.” They understand they are not buying magic beans or pixie dust – they already possess the core belief that while it is your job to deliver a quality product or service, it is their job to make proper use of that product or service. Premium clients are not whiny, entitled cry-babies (these pitiable creatures exist almost exclusively in the Mediocre Middle.)
- The extra wealth you create by charging more allows you to help more of the poor and needy. Volunteering personal time is noble and something you should do. But volunteer time doesn't scale. Money does. The first step toward helping the poor is not being one of them.
You may find it hard to accept, but charging more actually serves your clients better. Higher rates help you create more value for clients. And charging more brings greater benefits to you, your business, and your family.
What would happen if tomorrow you charged 10 times your current rates? How would this change your life?