Archive for 2007

After you’ve attracted customers and they’re ready to hire you, what do you charge them? How do you price your products and services? Here is a quick and simple formula.

1) Let’s say your ideal working life would mean you take off three months every year for vacation. Wouldn’t that be wonderful? 52 weeks a year minus 12 weeks vacation = 40 working weeks.

2) Now let’s say you want to work 30 billable hours per week. 40 working weeks X 30 working hours per week = 1,200 working hours per year.

3) Have you decided how much annual income you want to generate? I always keep talking about a six-figure income. Would that be all right with you? Let’s use $150,000 as an example. $150,000 income per year divided by 1,200 working hours per year = $125/hour. That’s what you charge.

“But, Monikah,” you might say, “I don’t bill by the hour, I sell products.” Well, let’s use a similar formula for products:

As an example, we’ll say you want to create your very own information product. This is a set of 4 CD’s and a printed manual that comes bundled together.

1) Four audio CD’s of recorded material.

Estimated development cost (editing, packaging, etc.):  $200 – $500

Estimated development time: 9-14 days

2) One 100 page manual, including diagrams, checklists, etc.

Estimated development cost : $300 using freelancers from www.elance.com

Estimated development time : 4 – 5 weeks

3) Put up a 3-page website to sell your product, including the back-office shopping cart to handle payments, email confirmations, autoresponders, etc.

Estimated development cost: $300 – $500 using Monikah’s favorite webdesigner company, Media Moguls.

Estimated set up cost: $0 using the 30-day free trial from Professional Cart Solutions.

Estimated development time: 3- 4 weeks.

Total upfront cost (conservatively): $1,300

Cost of first production run of 100 units: 100 X $30/unit = $3,000

Total production time = 5 – 6 weeks

From start to finish, to produce 100 units of your product, it will cost about $4,300. Let’s add a 50% profit margin and you must generate at least $6,450 in selling these 100 units, so you price them at $64.50 a piece.

While you’re in the five to six weeks of production (in other words, your product is not even finished yet), you conduct a pre-launch sale to your customers, letting them pre-order your product at $64.50 because when you launch in 30 – 45 days, the price will go up to, say, $97. You can create urgency by limiting the special price to the first 100 people (therefore covering your costs, and guaranteeing your 50% profit margin), or by a certain deadline date. It’s up to you.

Of course, you must keep in mind what the market will bear, so you do not price yourself out of your market by going too high (consumer questions its affordability) or too low (consumer questions its value).

A friend of mine once called me to let me know he was starting his own business. I congratulated him and said that if he ever needed any support from me to give me a shout. I hadn’t heard from him in several weeks so I emailed him to find out how everything was going. He wrote back,

“I’ve recently completed my website (of course, it’s a work in progress) and I just don’t know where to go from here. I feel like I’m preparing to no end; but have not had one client to date. How can I really get the ball rolling? E-mail blasts, mailings, registering on the various search engines; I’m just not sure which road to take.”

I wrote back a lengthy email with plenty of ideas. In the days that followed, we talked at length about his strategy. Here are a few bullet points from that dialog:

1)  Get out there. You really have to put yourself out there and get ‘face-time with people so they get to know, like and trust you. Building relationships is the main thing. You want people to be able to know you well enough, trust you deeply enough and think of your professionalism high enough to not only do business with you, but also refer you to their friends, colleagues and loved ones.

2)  Follow Up. It is often said that it takes prospects an average of 7 – 9 contacts with you before you even get on their radar screen, let alone be the chosen solution for the problem they are seeking to solve. So implement a follow up system that will allow your prospects to have your contact information handy and keep on you on top of mind when they need your services and/or come across a referral.

3)  Start in your own backyard. Did you ever read that classic book, Acres of Diamonds? The character in that book sells his field and wonders the world in search of treasures. When he returns to his town an abject failure, he finds out that his field had a diamond mine. He was sitting on a fortune all along! So with us, usually, we think we need to have a global strategy before we master a local strategy. I am a huge proponent of thinking big, but you need to start somewhere. Make a list of everyone you know and contact them to let them know you are available and what services and products you offer. If they’re not in the market for your services, ask them for three referrals each. And repeat the process until you’ve reached your sales objective.

4) Specialize. It’s tempting to offer a ton of services and cast as wide a net as possible. But that actually hurts your business in the long run. People who try to be everything to all people usually tend to be perceived as a novice. Or worse,  your prospects may think you are very likely to be low-balled in your prices because there’s nothing you do extraordinarily well, so you’ve become a commodity in their eyes where the only thing to separate you from the competition is how low you’re willing to go. Also, people tend to think that if you do one thing, you do it well and command the credibility and prices you deserve.

5) If you can’t beat ‘em, join ‘em. Your competition could very well be a hidden treasure trove of client referrals. Make a list of 5-10 businesses that have a similar offer as you do, and approach them to become a referral partner. They may be overloaded with work and can give you the overflow, or perhaps they have the same offering, but for a different target market than yours. Take advantage of those subtle differences by serving each other’s customers. Both you and your competition will look like winners in your prospects’ eyes.

If you are struggling to drum up business right now, then you need to be spending 80-90% of your time marketing your business. I like to call it “rain making.” You can take very specific action to plant seeds in the beginning of your business (I go over them in detail in the Mastermind Coaching Gym). That way, when it’s time to make it rain, you’ve already done the preliminary work and just watch your work bloom.

As a business coach, I often use a lot of sports analogies, mostly because people can relate to them, and it makes the world of business a bit more “approachable”. But the one pervasive myth that I still haven’t been able to debunk is that solopreneurs (one-person businesses) work alone. You are not alone! Just because you are in business FOR yourself doesn’t mean you are in business BY yourself. So what can you do to create a powerful team of professionals that support your business growth? Here are five helpful tips:

1) Leave your ego out of your business. You can either be right and broke, or be humble and successful. Pick one. Don’t become the ceiling to your business’s success. Your business deserves to soar, and you deserve to profit from it, and to do that, you may need to get out of your own way. Be open to new ideas, new ways of doing things. This doesn’t mean jumping from one opportunity to another, but when you are open to learning from others and from your own journey, you can create explosive growth.

2)    Figure out your core strengths and weaknesses. Let’s face it: You may not be an organized person. And that’s FINE! Stop making yourself wrong about it. Instead, create a system to organize yourself that doesn’t depend on you, for example hiring an assistant to come into your office once or twice a week to help with filing or bookkeeping. Or if one of your strengths is connecting with people and as soon as they meet you they want to buy from you, then stop hiding behind your desk. Go out there and make a difference for people!

3) Figure out the revenue-generating activities of your business – and DO THEM! As much as we love color-coded files and a perfectly balanced checkbook, these are activities that, while they are necessary to the smooth running of your business, are not what bring in the money. Take one hour of your day and do some strategic thinking: What activities do you do in your business that generate revenue? What activities don’t? Then figure out a schedule to complete those activities, and make a list of the kind of person that would handle the non-revenue items, or the name of the person if you already have someone in mind.

4) Assign your list of activities (the ones that generate revenue, and the ones that don’t necessarily generate revenue but must be done) to your Dream Team. But wait, you don’t have a team yet!? Well, what your mind can conceive it can achieve! So write down who would be ideal to handle each activity, whether it’s administrative, bookkeeping, sales, marketing, etc.

5)    Create Your Team! Now, check your resources. Ask for support from those in your network. Hire a college student or a stay at home mom as an intern or part time help. Let’s say for example your time is worth $300 an hour… wouldn’t you rather pay $15/hr to someone to handle non-revenue tasks, and who could probably do it (imagine this!) better than you (see Step 1)!

Do you need to finish that business plan? Finally buckle down and hire your business coach? Make the commitment and connect to a Mastermind Team that will support you every step of the way? Whatever it is for you, declare it, create a game plan, then get to work. The be