How valuable is your service?

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IMG-20150405-00380These days small businesses rely on other small businesses, freelancers or solopreneurs to provide them with services so they can grow their business.

Pricing your service and estimating the time that it will take are crucial elements in any offer you make.

Shrewd business owners in this economy want to put you on a retainer rather than accept your offer to price jobs or projects separately. The reason for this is simply that they can sqeeze as much out of you as possible for a fixed price.

This is why a service agreement is so important. In a service agreement you need to be clear about exactly what you are offering and set boundaries. An open-ended contract, whether formal or informal, must have limits or boundaries.

As soon as you feel exploited, it’s time to re-evaluate and reassess whether it’s worthwhile working for any business owner for that matter. By exploitation I mean you have a fixed retainer but the customer starts to demand more and more work for you with the fixed price retainer and starts to impose unrealistic deadlines.

When you go into a retainer, you must have a clear idea of how much time it is going to take you to, for example, produce original work. If you have basic templates and a service that can be easily replicated, then it’s another story.

But if you’ve got to do original research and create new content for a customer, then you must be pretty sure of how much time and effort is involved.

When clients keep demanding more and more from you, then you rapidly approach a point of diminishing returns. Even if you have theoretically set an hourly rate for your service, you will find that your hourly rate quickly gets lower and lower and lower. You’re basically on a hiding to nothing.

Knowing your work, the value that you create, pricing work and estimating the time it takes to get jobs or projects done, is crucial for small business owners, entrepreneurs and solopreneurs in this economy. Business owners want to get high value but at minimal cost.

If you find that a potential customer is not playing ball and is just out to suck you dry, then it’s time to seriously think about letting go.

Instead, it’s better to move on and find clients or customers that value your time, don’t set unrealistic demands and pay you promptly.

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