Coaching

Why “Charge What You’re Worth” is Horrible Advice (And What to do Instead)

A lot of advice for pricing your products or services goes like this:

“You should charge premium rates!”
“You should charge what you’re worth!”
“You should find your happy price!”

And I agree – I even wrote a blog post on what it takes to charge $1,000/hour.

But there’s a twist.

When you’re trying to land your first few paying clients, charging premium rates can hurt your business.

That’s where most new freelancers, coaches and consultants get it wrong.

They read a blog post or take an online course about charging premium rates, love the idea of it (who doesn’t love the idea of making more money with the same amount of work?), and they’re all excited about charging hundreds of dollars per hours to become the next Scrooge McDuck:

And some people make it.

Every once in a while, you’ll hear this massive success story from someone who started charging $500/h and built a 6-figure business practically overnight.

But most people don’t.

The harsh reality looks more like this:

You define a product or a service you want to offer.

You find a few potential clients.

You talk to them about how you can help them.

You create one or more packages for them.

You think about pricing, and read articles online / ask other entrepreneurs about it.

Eventually, you settle on a rate you’re happy with.

You present your rate to the potential clients.

And then you either don’t hear back from them, hear them say that “they’ll think about it”, or just get a clear “this is out of my budget right now” back.

This sucks.

It sucks because this whole process usually doesn’t take a few minutes. Finding your potential clients, talking to them about what they want, preparing different packages, coming up with pricing… Can potentially take days, weeks, or even months in some cases.

And when you get to the point where you share your price and they reject it, it hurts.

You’ve spent all this time and effort landing a new client, and it was all for nothing.

You need to start again at square one.

I’ve seen this happen over and over again with my clients and friends.

Consultants, photographers, designers… You name it.

They set out to get their first few clients (or try to launch a new service), get all hyped up, then belly flop into the harsh reality and are left with no clients at all.

Here’s the problem that most experts don’t talk to you about:

You have to EARN the right to charge premium rates.

In my post about charging $1,000/hour, I talk about different ways of raising your rates, like:

Growing your knowledge, expertise, and results you can deliver to your clients
Improving the quality of your products or service you deliver to your clients
Building your reputation as a credible expert, and becoming fully booked

And when you’re starting out, you just haven’t done all the hard work to deserve charging premium rates yet.

If you don’t have a ton of client success stories and happy clients referring you to other people they know, you have no business raising your rates.

I’ll even take this a step further.

If you’re not fully booked yet, you shouldn’t be charging premium rates.

Here’s what I mean.

Let’s think of 2 aspiring designers – Jack and Tom, who both want to start a freelance business.

They both want to charge $100/h.

They both manage to find 5 clients that are interested in working with them.

They both spend plenty of time understanding their customer’s needs and come up with proposals for them.

But when they think about pricing, they take different approaches.

Jack uses the “charge what you’re worth” approach and charges $100/h.

Tom uses the “undercharge and over deliver” approach and charges $50/h.

Here’s what happens next:

Jack has high hopes and is excited to get his first paying clients, but ends up being rejected and hearing crickets.

He’s “too expensive” for the clients, and ends up with 0 clients, 0 success stories, 0 referrals, and a whole lot of time wasted.

He’s back to square one.

Tom, on the other hand, manages to land 3 of the 5 clients at $50/h. The projects aren’t huge, and they bring in around $250 per client, which is less than he ideally wanted, but it’s a start.

The flip side is that he now has his first few paying clients, and his hobby is turning into a real business.

He does amazing work for the 3 clients and receives raving testimonials from them that he can put on his website.

But that’s not all. One of the clients is so happy with the work that he decides to hire him at a bigger project for $1,000, and even agrees to pay him a higher hourly rate.

Another client doesn’t have more work for Tom but has a friend who desperately needs a designer, so he recommends Tom to them. Tom lands another project for $600 and this time charges $60/h with no pushback.

After 3 months, Jack is still in the exact same place. He’s putting in a ton of work trying to land new clients, but always gets rejected. His business doesn’t move anywhere and he’s discouraged. He doesn’t understand what he’s doing wrong and why people won’t just pay him “what he’s worth”.

On the other hand, Tom’s business is slowly but steadily growing. He has now landed over $2,500 in client work, has more work coming his way from his existing clients, as well as more clients asking to work with him because of the amazing work he has done for their friends.

As you can probably guess, Tom’s business is likely to continue growing, while Jack’s business will likely crash and burn – all because of a simple pricing mistake.

While this is a “made up” story, this exact story happens all the time, and it likely happened to you or someone you know in the past.

So many people try to charge premium rates before they already have a strong client base and end up empty-handed.

To avoid this from happening, you can follow these two simple pricing rules:

Always “undercharge and over deliver” with your first few clients
Don’t raise your rates until you’re fully booked

The second rule should be pretty straightforward – but let’s look at the first rule in more detail.

The “undercharge and over deliver” pricing strategy

If you’ve read the above story, you already have a vague idea of how this strategy works.

In essence, it’s pretty simple:

Whenever you’re launching a new product or a service (or want to get your first paying customers for a business idea), you should intentionally charge less than your “ideal” rate and focus on over-delivering for your customers.

Just how much less than your “ideal” rate should you charge?

50% is a good benchmark to start with.

If you believe your services are worth $100/h, you can charge $50/h. If you’re developing an online course that is worth $500, you can sell a “BETA” version of it for $250.

The idea here is to make the price a true “no-brainer” for your potential clients, and to make them feel like working with you was the best investment they could have ever made.

Instead of trying to make a quick buck, you’re focusing on building the foundation for a long-term, sustainable business.

As a result, you’ll be able to:

Spend more time getting paid than looking for new clients
Collect amazing case studies and testimonials that you’ll be able to use to further grow your business
Get more work from existing, happy clients
Get referrals to other potential clients
Gradually raise your rates to “what you’re worth” AND see clients happily pay them

Then, once you land the client, you do all in your power to “over deliver” and blow them away with your product or service.

This might mean:

Proactively giving your clients new ideas for what you can help them with / proactively building those ideas out for them
Sending project updates regularly, rather than waiting for your clients to check in with you
Getting feedback on how well you’re doing, and what you could be doing better

And as a result, you’ll end up with happy clients that will love recommending you to their friends.

Now to make this even more real, I want to share a few personal examples of how I used this exact strategy in my business:

Example #1 – How I built my first ever coaching business

When I started my first ever online business (productivity coaching for online poker players), I charged my first client around $50/h for a 1-hour call with me, even though other poker coaches were charging as much as $400/h.

Then, as I got more and more paying clients, I gradually raised my rates to $75/h, $100/h, $125/h, $150/h, and eventually $250/h.

Throughout this process, kept improving my services and thought about how I could serve my clients better. I thought about how I could help them with not just productivity systems, but also things like learning, nutrition and sleep.

I started writing written call summaries for them after our coaching calls with them, with clearly defined action steps. I added weekly check-ins in-between our coaching sessions to see how they were progressing. And so on and so on.

The more I improved my coaching services, the more I could raise my rates.

Example #2 – How I turned Ultimate Guides into a 6-figure online business

When I got my first 1on1 coaching client for Ultimate Guide coaching, I only charged them $500 to help them create their Ultimate Guide. This was when I was already running a successful online business, and the hourly rate for this project was horrible.

But getting the first clients at a lower rate helped me build up the confidence, create the first few success stories, and charge higher and higher rates (I later charged up to $5,000 for 1-on-1 consulting for one Ultimate Guide, which was more than I even expected I could charge).

If I tried to charge $5,000 or $3,000 right off the bat, chances are I’d get rejected by my first few clients, and think that this is a “bad business idea” that I’d never fully follow through with. I probably would have never created a 6-figure out of Ultimate Guides.

Another example is Ultimate Guide System, my premium online course on growing your online business with Ultimate Guides.

I designed this course as a 1-year program with tens of hours of live coaching calls (as well as additional hands-on coaching support through an online community), and it’s the most hands-on online program I’ve ever seen.

When I first launched the program, I charged $997 for it, and some of my customers even complained about it being “too cheap”.

I knew that and I agreed with it – but I wanted to keep the price relatively low because I wanted to get as many paying customers (and success stories) as possible for my business.

Later on (also due to the amazing success stories and testimonials that the program got), I was able to increase the price to $1497 and later on $1997, which I believe is much closer to what the program is actually worth.

If I tried to sell the program at $1997 right off the bat, I’m not sure if it would sell as well and get me so many success stories – which would make the program a lot harder to sell in the future.

Example #3 – How I launched a 5-figure coaching program

Last November I sold a group business coaching program for the first time.

It was a 6-month program that included weekly 90-minute coaching calls in a group of 5-6 entrepreneurs, which is unlike anything else you can find out there.

Especially if you consider the opening price, which was $2,500.

Now don’t get me wrong – $2,500 isn’t cheap by any means – but to get this level and frequency of coaching from someone who runs a 6-figure online business, you’d usually need to pay way more.

When I launched the program, a lot of the clients told me that the program was way too cheap, which I knew and I was aware of. I intentionally undercharged with the intention to massively over deliver.

My clients ended up absolutely loving the program, and many of them said it’s the best business investment they’ve ever made – which is why I decided to launch it again 2 months later.

As I did that, I sold out all the coaching slots within 3 days, at a higher price point. What’s interesting here is that a lot of the new students that joined the program were referrals from old students that were super happy with the program.

Now I have two groups of amazing entrepreneurs in the program that I know will become amazing case studies that will help me grow this program (and other parts of my business) in the future.

If I charged something like $5k for this program right off the bat, I might have still sold a few slots, but I don’t think the experiences (or results) would be as good as in this case, so I know this was the right decision to make.

How to apply the “undercharge and over deliver” pricing strategy to your business

Ok, we’ve looked at the common pricing mistakes that most new entrepreneurs make, we’ve looked at a strategy that you can use to get much better results with your business, as well as a few examples of how I implemented this strategy in my business.

Now let’s talk about how you can apply this strategy to your business as well.

It’s really simple:

When you’re trying to get your first few paying clients for a new product or a service, think about your ideal price point / rate and decrease it by 50%.
Focus on undercharging and over delivering so you can create amazing case studies, testimonials, success stories and referrals for your business.
Only raise your rates once you’re fully booked or when multiple people are telling you that your rates are WAY too cheap.

And once that happens, read this article on how to raise your rates to as much as $1,000/h.

That’s it!

What about you? Have you tried charging premium rates in the past (or undercharging and over delivering)? If yes, what happened?

-Primoz

What it Takes to Charge $1,000/h as a Freelancer, Consultant, or a Coach

By Primoz Bozic 8 Comments

If you’re reading this, you’re probably wondering…

What’s the best way to raise your rates?
How can you finally get paid what you’re worth?
And how can you charge more without losing clients?

I wondered about those same things too.

And over the past few years, I went from charging $25/h for coaching to as much as $1,000/h.

As I did that, I found that there were 3 bulletproof strategies that you can use for raising your rates as a freelancer, consultant or a coach.

I also realized that while most people talk about strategies #1 and #2 that I’ll share below, practically nobody talks about strategy #3.

In this post, I’m excited to share ALL of these strategies with you.

But first, let’s get an even more important question out of the way…

WHEN is the right time to raise your rates?

From my experience, there’s really just two situations when you should raise your rates:

#1 – When you’re fully booked with client work
#2 – When you KNOW you’re undercharging (and people are telling you about it)

The first situation is pretty straightforward.

If you’re completely booked out or even overbooked with client work, you’re spending every living moment serving your clients, and don’t have the time to work ON your business because you’re stuck working IN your business…

…Then you’re likely charging too little and can raise rates with your current or existing clients.

In fact, if you’re at that stage of your business, you HAVE to raise your rates, otherwise, you’ll always be stuck on a hamster wheel working with your clients for the same rates, without having the time to grow your business further.

The second situation is a little bit more subtle.

It’s when you KNOW when you’re undercharging.

So what does that actually mean?

It means:

You either just started out with your business and you intentionally undercharged to really over-deliver for your first few clients
OR, your current clients are so happy they’re outright TELLING you that you should charge more for what you’re offering to them

Having said that, there’s one situation when you SHOULDN’T raise your rates (or aim to be paid what you’re worth).

I’ve seen people try to raise their rates in this situation over and over again, and it was a huge mistake that leads to a ton of disappointment.

Can you guess what it is?

It’s trying to raise your rates when you’re STRUGGLING to get your first (or next) few paying clients.

If you don’t have people knocking on your door to work with you yet, or if you’re having a hard time even finding those first few paying clients, you have no business raising your rates.

Instead, you actually should be charging a bit less, really over delivering for your clients, and getting testimonials, case studies referrals that will help you get more work with existing clients, as well as get more paying clients to grow your business.

If you ignore this advice and try to raise your rates regardless (because you think you are worth so much more or feel entitled to charging premium rates, or simply want to make that $$$), get ready for a world of pain.

Rather than locking in your first (or next) few paying clients, you’ll likely get a lot of NOs, and often spend weeks finding clients only to be back at square one after your proposal is rejected.

In short:

Raise your rates when you have TOO MUCH, not TOO LITTLE demand for your work.

Sounds good?

Great, let’s talk about the fun stuff now – actually raising those rates, charging what you’re worth, and earning those Benjamins.

Strategy #1: The Nike Strategy

If you’ve got a ton of demand for your business or you’ve been (intentionally) under-charging for a long time, you’re in luck.

The SIMPLEST way to raise your rates is to literally “just do it” (you saw that coming, didn’t you?).

How to raise your rates with NEW clients

For new clients, that means raising the rate in the proposal / sales conversation, and seeing how they respond. For example, if you used to charge $100/h you can test charging $125/h with your next client. If they pay without blinking an eye, you can try charging your next client $150/h (and so on).

Gradually raising your rates like this will help you determine the true perceived value of your services. Eventually, you’ll hit a wall when people feel like your rate is too expensive (which is when strategies #2 and #3 come into play), but until then you can continue to raise your rates without any massive downsides.

There’s only one caveat – you should always make sure your clients continue to get amazing value from you and that they’re happy with your services for the price they’re paying. You never want to raise your rates to a level when people don’t think your work was worth the investment.

How to use raising your rates to get more new clients in a short amount of time

You could also use raising your rates as an urgency tool to generate more clients in a short amount of time. For example, you could announce to your audience (if you have one) that your coaching your rates are going up on a specific date, but that you’re taking clients at the current rate until that date.

The benefit of that strategy is that you might be able to score a few extra clients in a short amount of time that were procrastinating pulling the trigger, but there are downsides to it as well.

One of the downsides is that you’ll need to announce your rates publicly (which you might or might not want to do), while another is that you might hear crickets for a while after you do this (since most of the interested people will pay during the “sale” period). The last downside is that you won’t know if you can actually make the sale at a higher price point, and the last thing you want to do is go back to your old rates.

I’ve used this strategy when I first started my coaching business and it worked well for generating the initial income spikes, though I’ve stopped doing it once I focused on doing more high-value work with high-value clients.

How to raise your rates with EXISTING clients

As you raise your rates with your NEW clients, you don’t necessarily HAVE to raise your rates with your existing happy clients. You especially don’t want to raise your rates with them every few weeks or months, as they’ll feel like you’re just trying to milk them for money.

But after you’ve been working with them for a year or so, and when your rates are dramatically higher than they used to be and you’re not excited to work at your old rates anymore, it might be a good time to raise your rates.

You can do this by either letting them know in advance / during the renewal conversation that your rates have gone up, OR you can let them know that your rates will be going up AFTER this renewal but give them a chance to buy a bigger package at the existing rate.

The second option makes sense if you have your clients on a monthly package – doing this could incentivize them to purchase a 3-month, 6-month or 12-month package.

Strategy #2 – The First Class Strategy

Imagine walking into a first class cabin on an international flight.

You sit down in a chair that’s bigger than your chair in the office. Then, the flight attendant approaches you and politely asks you:

Which champagne would you like, sir? Krug or Dom Perignon?

They make sure that your glass is always full. They make your bed before you go to sleep. They proactively check in on you every few minutes to make sure you’re 100% taken care of.

People don’t pay thousands of dollars for first class to just get a bigger seat and better food.

They spend that kind of money because they know that the whole experience will be much better than being in the crowded economy cabin where you’re usually treated like a second-class citizen.

The unfortunate truth is that many freelancers, coaches, and consultants treat their clients like they were flying economy class.

They show up, they do the work… But that’s where it ends. They do the bare minimum they’re paid for and never go rarely and beyond for their clients, without thinking of their service as a first class service.

A great way for you to stand out from the crowd (and raise your rates) is to offer a true, proactive first-class service to your clients.

This might mean…

Sending your client updates on how the project is progressing as a freelancer (rather than waiting for the meetings or for them to check in with you)
Checking in with your clients and how they’re doing as a coach (rather than waiting to hear from them)
Proactively asking your clients what you could be doing better / how else you could help them out, or even coming up with ideas FOR them

Now don’t get me wrong – I’m not at all saying that you should turn your business into a “style over substance” type of business and focus JUST on the service without actually delivering on your promise.

But if you can combine the two together, you’ll likely be able to delight your clients more and charge higher rates than your competition.

For example, if you compare a photographer that charges $100/h (the economy photographer) and a photographer that charges $200/h (the first class photographer), their quality of their photos usually won’t be all that different.

What will be different is the level of service:

The first class photographer will take care of *everything* before, during and after a photo shoot and minimise the decisions that the client needs to make (like the shooting location, the hair & makeup, the posing, etc.)
The first class photographer will know EXACTLY what the client’s problems, desires, and concerns are and proactively anticipate them (like the turnaround time for photo editing, the number of photos they need, and how the photos should be edited)
The first class photographer will over-communicate before, during and after the photo shoot so that the client always knows all the necessary details about the photo shoot without having to ask about them (the venue address, the shooting times, the editing timeline and status, etc.

Because the first class photographer will take more time to talk to the client and truly understand their needs (then proactively address them), they’ll be able to charge double (or even higher) the rates of the economy photographer.

The same goes for a first class coach, consultant, or even an online entrepreneur.

So if you’re not doing it yet, definitely take the time about how you can go above and beyond for your clients and offer a truly first class service to them.

A word about hourly rates

The other difference you’ll notice between economy class and business / first class is this:

In economy class (especially on short-haul flights or on low-cost carriers), you have to pay for EVERYTHING – wi-fi, food, drinks, alcohol… Nothing is included.
In first class or business class, more or less everything is included in more or less unlimited quantities, without any extra charges (except for wi-fi). This means that you can have all the bottles of $200 Dom Perignon you want.

The economy class nickel-and-diming often reminds me of charging an hourly rate as a service provider.

When you charge an hourly rate, your clients have to pay for every single thing you do for them (or you end up doing a ton of unpaid extra hours).

While that’s a great approach for keeping things simple when you’re just starting out, you might want to go to a premium approach later down the line to avoid nickel-and-diming, charge higher rates and provide a better experience for your clients.

Instead of charging an hourly rate, you could offer:

Daily or weekly rates
Packages based on specific deliverables
Monthly retainers, or even 6/12 month contract

For example, if you’re a website developer and you typically charge $50/h, but you know that developing a website usually takes you 20-30 hours depending on how complex the project is, you could be charging anywhere between $1,000-$1,500 for “the whole package”, without focusing on how many hours it takes you to complete the project.

As you do this, you’ll slowly train your clients to stop comparing you to that other freelancer that charges $50/h, and you can gradually create bigger and bigger packages to charge higher and higher rates.

Or, if you’re a coach that typically charges $100/h, you could start thinking of you packages like a monthly retainer at $500/month that includes a weekly coaching call + email access to you, and then gradually raise your monthly fees from there.

Strategy #3 – The Craftsman Strategy

Ok, so we’ve talked about The Nike Strategy that you can use to instantly raise your rates, especially if you’re charging less than what you’re worth.

We also talked about The First Class Strategy that you can use to become a first-class business owner, proactively make yourself more valuable for clients and stand out from all the economy business owners.

But what do you do when you raise your rates, take extra care of your clients… but feel like you hit a ceiling?

How do you go from charging $250/h to $1,000/h or more, when just raising your rates or improving your service isn’t enough?

I’ve hit that ceiling multiple times in my entrepreneurial career and eventually managed to break through it.

But what surprised me is that almost nobody really talks about this ceiling, or how to overcome it.

So I had to figure it out on my own.

And as I did it, I realized WHY almost nobody talks about breaking this ceiling.

It’s because going from charging $250/h to $1,000/h doesn’t happen overnight, or even over 8 weeks.

It’s something that can take months or even years of hard work, that few people are willing to put in.

You see, you can’t really use hacks, strategies or tactics to go from earning $250/h to $1,000/h.

But there’s one thing you CAN do to get there.

And it’s actually insanely simple.

Do you want to know what it is?

It’s becoming a true master of your craft.

It’s learning new skills.

It’s honing your existing skills.

It’s becoming more valuable to your clients.

It’s solving more of their problems.

It’s solving their problems.

So instead of asking yourself “which other tactics can I use to raise my rates?”…

The strategy becomes as simple as asking yourself:

“How can I get better at what I do?”

While there might not be a huge difference in the skill set of someone that charges $50, $100 or even $200/h, I noticed that there is a large gap in expertise of people who charge $250/h, $1,000/h, $3,000/h or more.

If you want to charge hundreds (or thousands) of dollars per hour for your coaching, consulting or freelance services, the game becomes pretty simple:

You need to be one of the best people in the world at what you do.

You might have heard of ultra-successful entrepreneurs doing consulting for $3,000/h or more.

You might have heard of top speakers charging $25,000 (or even a lot more) to show up for a public speech.

You might have heard of copywriters charging $50,000+ for a single sales letter.

There’re a few reasons why some people can charge such insane rates:

They’re usually heavily overbooked and their time is limited
They’re one of the few people that have expertise in a certain topic
They can provide value that’s at least 5x or 10x the investment

And at the end of the day, all of those lead to one thing:

Being a true expert.

The people who spend thousands or tens of thousands of dollars on a coach or a consultant want the best of the best, and you have to be able to demonstrate your expertise to them if you want to charge that much for your services.

So if you’re stuck at a plateau and can’t seem to charge more no matter how you write your proposals or which strategy you use, the solution is simple:

You can take a step back and ask yourself questions like:

Which problems do my clients have that I’m not great at solving now?
How could I solve the problems of my clients faster and deliver even better results to them?
Can I learn a new (or master an existing) skill that’s increasingly valuable in today’s economy?

If you’re a coach, this might mean getting better at coaching around topics you’re not great at coaching, or improving your coaching skills (which few coaches do).

If you’re a software developer, that might mean learning about new technologies, platforms or programming languages that could help your clients but you’re not familiar with (OR truly mastering a valuable programming language to the extent that few people do).

If you’re a lifestyle photographer, that might mean learning new techniques for capturing incredible lifestyle shots, getting better at doing lifestyle shoots in certain environments you’re not great at (in a park, with a skyline, etc.) or deciding to become the #1 expert in engagement photography.

This process, of course, isn’t quick or easy, but it’s the exact thing that separates the people who charge the highest rates from everyone else.

While everyone else is busy finding new “strategies” for increasing their rates, they’re busy mastering their craft and becoming the best in the world at what they do.

To sum up…

If you want to charge premium rates as a freelancer, consultant or a coach, there are only 3 things that you really need to do:

Increase your rates gradually until you charge what you’re worth (The Nike Strategy)
Become more proactive on the service side of your business (The First Class Strategy)
Get better at what you do (The Craftsman Strategy)

That’s all you need.

Now I’d love to hear from you:

What’s your experience with raising your rates been like?

Share it in the comments below!

-Primoz