Question from a reader:”What do you do about clients who think that you are charging too much for business rates? I know that I am reasonable for being a mechanic. I am tired of getting into arguments with people. Any advice?”
Ahhh. When it comes to charging people for your services, the Internet and the illusion of do-it-yourself and all that create the feeling that whatever it is you are charging is too high. You should do the work for free out of the goodness of your heart. Don’t you hate it when clients treat you like you are worthless? When it comes to money, people forget that the knife cuts both ways and that is why the international corporate world has laid off so many people. We all charge too much. Or do we?
It boils down to the economic cost of time. What does the value of time mean to you? I would present this scenario back to the perspective client (unless of course you are charging way above market rates and in that case, you better rethink what is going on with your competition).
I can change my own oil. I know the concept, I use to do that on my old 1968 Pontiac Executive (awesome car) and my 1974 Volkswagen Beetle (not bad of a car). The Pontiac Executive was a tight fit but I could actually get under it with the car just being up on a ramp and drain the oil and change the filter myself. The VW was pretty easy as well.
Today, I would need to get a ramp, somewhere to park the car, take the time to do it, hang onto a container to dispose of the oil, make sure I don’t violate OSHA regulations, etc, etc. I need to put aside half an hour to an hour to get everything ready and get everything done. That doesn’t include if I get dirty, oil makes too much of a mess, cleaning my clothes, etc.
I can go to a car mechanic and pay $9 to $30 and have him do it and I am in and out in half an hour if he isn’t busy. For what my time is worth an hour and for the amount of aggravation I would need to go through, this is a no-brainer.
I get the same crap from people who complain that some consulting prices I charge (and they vary) and tax preparation fees. You can buy off-the-shelf software for doing taxes, setting up a website, a database, etc and I encourage people to do that – if their needs are simple. I also encourage people to do that if they are short on money (who isn’t these days, huh?) and want to do-it-yourself. Some people though are starting from ground zero and they are trying to get years to decades of experience crammed into a couple of hours and it just won’t happen. Building that website, the database, publishing that book or preparing that tax return may stretch into weeks, months and at that point the value of time kicks in. They would have been better off paying me (or you or whoever) $350 and have their project completed accurately, professionally and to a high level of standards for a few hours of their time. Boom, they are finished and they can move on.
But people get penny wise pound foolish. How common is it that people at tune up time don’t get their brake pads replaced when they are worn thin? Ask any mechanic besides yourself and you will make an extra $300-600 when they come back with their brakes burnt off.
Everybody needs to find their own value of time and for some people you just need to let them walk away or wait for them to come back to you.
This is different than when you are exploiting somebody or dealing with their fears. If you are frightening the elderly or disabled into buying things they don’t need, the Law of Reciprocity is catching up to you and taking away some of your business. In that case, serves you right.
Some consultants can charge horrible rates because of the fear factor or that is what the market perceives is their value. I suggest reason be one’s guide in consulting practices as well. Eventually if an industry or market is too high, consumers will find reasonable alternatives. In the meantime, all the best to all the businessmen and women out there!
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Kim Isaac Greenblatt
Rates Are Too High What To Do