Why You And Your Business Are Worth More Than $50

by Tim Jahn on July 15, 2010

Yesterday, I received an email asking if I would be able to shoot a speaker presentation next week. The presentation was to last about 45 minutes, followed by a short Q+A session. About two hours total, I was told.

The hotel this was all happening at is a bit of a hike from where I live, so I’d have to factor in some travel time. The total time would probably come out to between 3 and 4 hours. Sounded good so far.

And then the bomb dropped.

I am not sure what you charge but we have a $50 budget for this, so let me know if that works.

Of course, my first reaction was: What?! Is that a joke?!

When I explained this seemingly horrible scenario to my wife at dinner last night, she suggested the person may have honestly thought that $50 was a reasonable rate for such work. Her reasoning was that the person may have figured an hourly rate of $25 or so and with the 2 projected hours, thought that $50 should cover it.

And to tell you the truth, that does make sense. So in the interest of learning from such a situation, let’s open this one up for discussion.

What are you worth anyway?

Marketing consultant Chris Brogan charges $22,000 a day for his consulting work. And obviously, his clients are willing to pay that much or Chris wouldn’t charge it. They’re not paying for 24 hours of his time (or whatever amount he might grant them). His clients are paying for his knowledge and ability to improve their marketing practices.

I think there’s often a misconception that the rate you pay for a service is for the time involved. The truth is, it’s for the knowledge. Somebody is hiring you and your services because you know how to do it better/quicker/awesomer/more efficiently/etc.

It’s the same reason I pay $20-$30 to get my car’s oil changed instead of doing it myself. I could probably learn how to do it myself, but I choose to let somebody else do it, somebody who’s more knowledgeable than me at doing it.

The oil change guys have every right to charge me $20-$30 if I’m willing to pay it. They’re providing a service that is worth that much to me because they are more experienced and knowledgeable at changing oil then I am.

As a creative entrepreneur starting your own business, deciding what to charge for your products/services is difficult. You have to find that perfect combination of what you think your products/services are worth and what your clients are willing to pay for them.

When it comes to shooting video, I feel that service of mine is worth more than $25 an hour, so I charge more than $25 an hour. But the person emailing me didn’t necessarily know this.

How do you decide how much to charge for your products/services? What’s some advice you’d give aspiring creative entrepreneurs who are setting their rates/prices for the first time?

Please share your thoughts in the comments below!

(photo credit)

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http://tdhurst.com tdhurst

Completely depends on the amount of exposure you might get, who the company is and what you'll be speaking on.

Seeing as how you're not YET a national name in the speaking circuit, weighing the goodwill and/or promotion you'll receive from the opportunity is more important than the actual money.

I once received some great advice from Peter Shankman of HARO fame (@skydiver). He told me that no matter what I charged to speak, always, always get paid. Whether that be lunch, small stipend or gift certificate, never do anything for free. It's also okay to name a fee, he mentioned $1500 for someone with my level of knowledge (which might be around yours) and then discounting from there depending on how much you liked the organization.

Until you're actually making some good coin speaking, the real line is paid versus non-paid gigs. “I was paid to speak”, regardless of actual earnings, is something you can use as a selling point on your next gig.
http://vidiseo.com vidiSEO

Great article, Tim!
I was just thinking about the oil change example the other day and think it makes perfect sense. Oil changes may be easy to do (I personally have no idea), but for me it's worth the money to have it done correctly and quickly (and have my windshield washer fluid topped off).
http://www.BeyondThePedway.com Tim Jahn

To clarify, I was asked to shoot (or in the olden days, videotape) the speaker. I was not asked to speak myself.

I definitely agree with your points though about speaking. When just starting out, the exposure and resulting potential opportunities are far greater than trying to get a million bucks from a speaking gig.

I think that's great advice from Peter. You need to communicate to whoever that you're providing value, regardless of how high or low it is at that point.

Thanks for commenting, Tyler!
http://tdhurst.com tdhurst

I obviously read that wrong. My bad!

Stupid speed reading.

Then hell no. No way in hell I'd take that gig.
http://www.BeyondThePedway.com Tim Jahn

Exactly! From what I hear, changing your own oil is actually really easy once you learn. But it's not something I wish to do on my own, so I value the services of others who can do it for me correctly and quickly, like you said.

Thanks for commenting, Matt!
ojack

I think businesspeople need to differentiate themselves from the competition by explaining why there is value added to your service or product. In your case you need to explain why you should cost more than say a kid from the local high school AV class who would might gladly take $50. You have to explain your value with your experience, professionalism, equipment, professionalism, etc.

All beginning business owners should to sit down and write out the advantages a client/customer would gain by using your service as opposed to a competitor. From there you can derive your value and, more importantly, communicate this value to a customer.
ojack

I think businesspeople need to differentiate themselves from the competition by explaining why there is value added to your service or product. In your case you need to explain why you should cost more than say a kid from the local high school AV class who would might gladly take $50. You have to explain your value with your experience, professionalism, equipment, professionalism, etc.

All beginning business owners should to sit down and write out the advantages a client/customer would gain by using your service as opposed to a competitor. From there you can derive your value and, more importantly, communicate this value to a customer.
ojack

I think businesspeople need to differentiate themselves from the competition by explaining why there is value added to your service or product. In your case you need to explain why you should cost more than say a kid from the local high school AV class who would might gladly take $50. You have to explain your value with your experience, professionalism, equipment, professionalism, etc.

All beginning business owners should to sit down and write out the advantages a client/customer would gain by using your service as opposed to a competitor. From there you can derive your value and, more importantly, communicate this value to a customer.

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