I read somewhere a long time ago that what you are selling is only worth what someone else is willing to pay. Some people might only want to pay $50/hr for your video production services, while others will be perfectly happy paying $250/hr or more for the same service. Of course, the customer has to perceive that they are getting great value for their dollar.
When I was in the wedding video production business, I chose to target affluent families. They were willing to pay upwards of $3000 to $5000 per video whereas the middle income families were typically not willing to pay any more than $1500 for the same services. There was literally zero difference between the amount of hours or the quality of our product. (I of course felt our videos were always worth the $5000. I just had to find the right customer that saw the value the same way I did.)
In the corporate video business, large companies will typically pay several thousand or tens of thousands more for the same services as smaller businesses. Small businesses will micro-manage every penny and not want to pay more for anything, where larger businesses will typically increase the scope of a project while you are working on the project, resulting in a more profitable project and overall relationship.
I think ultimately it boils down to your level of confidence with your abilities and the value you can create for a client. Those of you who are wanting to thrive in the future instead of just surviving, try raising your rates across the board by 10%, 20% or even as much as 35%. Are you worth it? I think so.
In most cases, clients won't even notice the difference. The one's who do will understand if you position the rate increase by saying "in order for me to better serve you, I need to increase our rates. New equipment, technologies, labor, etc. are making it necessary to raise rates."
Whatever or however you position it, just make sure it makes legitimate business sense as to why you are raising your rates. You might lose a few clients, but the one's you keep plus the new business you'll get under your new rate structure will make you far more money with less effort overall. Go ahead, raise your rates on all upcoming projects. Once you have success doing so, you'll never look back.
Another way to start off on the right track is to adjust your payment terms. A few years back, I had trouble getting clients to pay on large projects in a reasonable amount of time. The result was that I was broke with around $50k in receivables that never seemed to come in when I needed it. The remedy: Our contracts now call for a 50% deposit at the beginning of every project with the balance due upon completion and delivery.
This has drastically improved my monthly cash flow and all but a few clients have adapted to my terms with no problems. The key is to realize that your clients expect you to tell them how to purchase your services. Not the other way around. We can't walk into Wal-Mart and tell them that we'll pay them net 45 but that we need the coffee maker today can we? Why should we be responsible for financing 100% of a client's project until it is complete, then until they want to pay?
Some larger businesses have accounts payable policies that you can't get around no matter what, but my experience has been that even the largest of accounts can pass your invoice through quickly if necessary. The trick is to make sure they understand that "this is your policy on projects greater than $3000" or whatever amount you want to set.
When you start projects with half the money in your pocket, you feel good about working on the account, the client gets better service and they are motivated to finish quickly because they are already invested. If they drag their feet, who cares? You already have a good portion of the money in your pocket. Just be sure to manage it properly in case your client drags their feet for months or even over a year.
Also, make sure you hang on to money that you haven't used in project hours if/when your contract states they can pull the plug at any time as long as they give you ample notice. Usually, your contract will state that they must pay you for work completed so it's always in your best interest to do as much on their project as you can early.
We have a few clients that get excited, pay us a bunch of money up front, then cool off for 6 months or more. It's almost comical but I have my production manager contact them once a week reminding them that we need to get started on their project. We charge the time it takes to do this to their account. They'll get around to us sooner or later but meanwhile, they understand that we have to charge them for any activity we have to take to keep their project moving.
Related : Cheap Clothing Optional Galleries Store Cheap Handbags4u
0 comments:
Post a Comment