Do your rates match your target market? Today I’m talking to vendors.
Set your rates to whatever the market can bear, right? We’ve all heard this before. So how do you know what the market can bear? More specifically, how do you know what your target market can bear?How do you know what your target market can bear?Click To Tweet
It’s no secret that my company, Wiser Sites, is a general contracting agency. We are always on the lookout for specialist vendors, VAs, and new team members. I get contacted fairly often from people asking me if I have any work to send their way.
Many times, these vendors are excellent at what they do, but they’re having trouble drumming up some work. Why is this? After we talk for awhile it always goes back to rates. Simple as that.
So, do your prices match your target market?
When I started out in business, I was at the turn-and-burn level. I installed WordPress templates, populated them with content, and got them out the door for $500 – $1500 each. I was able to do 3–5 a month.
It was just me; I was a one man band. My hourly rate was $15–$30/hr. The value of that level was the building of clientele. I was getting paid to learn. I was building my business, and I was never in the red.
After about two years, I was saturated with work and couldn’t take on any more clients. So It was time to move to a different target market.
I was talking to a business coach friend of mine who said, “If you are turning away work, you need to raise your rates; but don’t just raise them, add a zero.”
I replied, “My market will never bear those rates.”
“You’re right. You need to move to a different target market.”Don't just raise your rates. Add a zero.Click To Tweet
So I turned my focus to single-family start-ups, authors, and e-commerce mom bloggers.
Those groups are active online, understand the need for things like email, content, and social media marketing, and are willing to invest – even though they are bootstrapping. I raised my rates to $1500–$3000 per site build, and my hourly rates went from $30/hr to $60/hr.
Key point: I increased my rates in proportion to my skillset and experience.
Today, I have a company. I have a staff, and our target market is e-commerce and enterprise-level clients.
It’s crucial to realize there are levels, and you need to set your rates to match the market you’re targeting.
The problem I see is that too many vendors set a fixed rate. They’re not willing to budge on their prices (at the expense of not finding work).
I see a lot of blogs that talk about how you can’t allow your leads to haggle on your prices, and that you should never have to reduce your rates.
Well this is good advice IF you’ve established yourself in a particular market AND have a client portfolio. But if you’re not able to sign contracts, then you need to lower your rates, build up your clientele, and get to work.
The bottom line: If your prices are too rich for your target market, then you’re going to be poor.
I was talking, just the other day, with a social media manager and he was asking whether I had some work. I asked him about his rates, and the first thing he said was, “Well that depends.” After he talked for awhile, man it felt like I was dancing with a used car salesman.
His rates are $75/hr. Next I asked him what kind of projects he is working on currently, and he said he isn’t working right now; he has full availability.
“You’re not working? Why not?”
“Well I’m still looking for the right client.”
“Why don’t you lower your rates a little?”
Oh! He got really defensive at this and said, “I’m not going to haggle on my rates; I know what I’m worth.”
“Yeah, maybe so, but you’re not working.”
“Like I said, I’m looking for the right client.”
“Ok, well, I’ll let you know if something comes up.”
See my point?
- Have clear rates you can offer, without having too many variables.
- Know the market you are trying to reach. Is it turn and burn, single business owner, or enterprise?
- Know what the market can bear, and know what you can bear.
- Prove your worth from referrals. If you don’t have them, get them.
- If you are not able to find work at your level, lower your rates and get to work!