Moonlighting Entrepreneur: Should You Lower Your Rates Right Now?

by Trish

Someone asked me this the other day and I looked at them like they were crazy. You never lower your rates. Well, okay, just let me explain.

Your rates are not some random number you pull out of the sky, folks. These rates are what you need to make a profit, pay your taxes, pay your bills, and live on. To cut rates just because someone asks, um, that’s not business. Sure, there are times to offer promos or coupons (say when I have a blog client that buys more blog posts from me each month, he gets a better deal, because it’s a bulk deal), but you don’t cut your rates, just because you feel guilty (or because someone makes you feel guilty when you bid your project). If they can’t afford it, you move on. All this is directly related to your business plan, figuring out your rates before you’re out there bidding on projects, and your marketing plans.

For example, a friend of mine does custom eco-friendly heating and cooling systems. He charges good money for them. Some would say his prices are way too high, but if you look closely at what he’s doing, you soon realize, his prices are quite appropriate. It’s a custom job, with custom parts, labor doing custom work (that they don’t replicate often) and you think he should lower his prices? What about his suppliers, his employees? They don’t get paid what they are worth? He doesn’t get any profit at all? He doesn’t get any money to pay his own mortgage? His pricing is something he figures out beforehand. If a customer can’t afford it, is that his problem?

I just don’t get this thinking. If you’re running a professional business (moonlighting or not), you shouldn’t be haggling over pricing. If you’re an amateur and this is a hobby of yours, sure, no one should pay you anything, because you’re having fun, right? It’s your mindset that’s messing you up. If you’re a professional, you price jobs like a professional, and people pay you like a professional. Professionals charge for their expertise and their time. They don’t give out cut rates unless it benefits them AND their customer.

This may sound like me reversing on my contrarian stance. No. If you want to GET customers, you must never think of your goals first. Once they are your customers, you must make money from the work you do for them. Otherwise, they aren’t actually customers, they are baracudas and they will suck you dry.

So:

1. If you’re asked to give them a cut, say sure, but you’ll need the entire amount paid in full upfront.
Then take a small percentage off.

2. If you’re asked to give them a good deal, say sure, but they’ll need to buy more from you to get that good deal.

3. If you’re asked to do something for free, say no. Unless it’s for charity and you really do want to do it.

4. If you’re asked to do it for free, remind the person that you are a professional and run a business and you would love to do it for free if it were just your hobby. But it’s not. If they get rude and say you’re no better than just a hobbyist, you don’t want to work with them, do you?

5. If you’re asked to give a discount, say that after you and they have done business for awhile and you get to know each other, maybe, at your discretion. Volume of business is deserving of a discount; a first-time, one-time sale, is not.

And now, back to work everyone! You know it’s the entrepreneurs and businesses that will keep this country running, not bailouts. So let’s work!

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