Ready For A Raise? I Thought So.
We all want a raise – and after the last year, I think we all deserve one! But figuring out how to give yourself one isn’t always easy.
So why is it important for entrepreneurs to think about how to give themselves a raise? Well…you gotta pay your bills somehow and the only way to do that is pay yourself.
But giving yourself a raise is something that is often neglected because it can be an overwhelming thing to think about. People don’t understand that unless you’re going to cut expenses or have the confidence to increase your rates, a raise is off the table.
I get it – you want to get your pricing right so you’re not missing out on clients, but you also don’t want to be pricing yourself too low so that you’re not making money, or spending too much time on certain projects for no reward.
This all goes back to my previous blog post about number fear and getting a clear picture of where your money is coming from and going to, so you can price yourself in order to get paid.
So What Do You Need To Figure Out How To Make It Happen?
To get going, you need to know how much you’re REALLY making right now and how much you want to make in the future.
This goes back to that concept I keep driving home of getting the clear picture of all your numbers, because without it you won’t be leveling up to pay yourself more. (Side note – these steps are geared towards service-based business owners.)
The nice thing about numbers is they are black and white – so once you have all the information, you can make clear, calculated, informed decisions about where you can go to get the money from in order to pay yourself more.
How Much Are You Really Making And Where Is Your Time Going?
I always tell clients they need to figure out how much they’re really making when going through the process of giving yourself a raise.
When I talk about figuring out how much you’re really making, I don’t just mean your hourly rate. I’m talking about how much time you’re really spending to bring home that hourly rate and if you’re being compensated enough for the real amount of time you’re spending on each client.
A lot of the time when I meet with clients, they tell me that they don’t account for the time that they spend doing things like initial call and research, preparing the quote and contract, follow-up emails, or onboarding in their pricing structure. Let alone the administrative time they spend running their business above and beyond client work.
Those things all take time and need to be factored into your hourly rate – otherwise, you’re undercharging for your services. Most of the time, this is when clients realize they are not making as much money as they thought because all of that time wasn’t factored into their pricing.
There are tons of apps out there that can help you track your time, and even doing it for 7 days can give you a really solid idea of where your hours are really going.
Next, you’re going to divide your time into your service offerings and see where you’re bringing in the bucks and which revenue streams are time sucks.
You also want to understand where your revenue streams are coming from, what your overhead expenses REALLY are (I’m talking every dollar you’re spending to keep the lights on) who your big-ticket clients are and what you have in terms of upcoming projects.
All of this seems like a lot, right? Don’t worry. Number Nerd can help. Keep reading; there is something special to help you.
Raising Your Rates To Get The Raise You Want
Next, you want to consider how much of a raise you want to give yourself too. Think about your personal life outside of your business; are there any expenses you need to account for in the new year (i.e.: a new car, buying a home, after care, vacation)? Reviewing your revenue and time, and expenses, are only part of the equation. Once these components are all factored together you will be confident in knowing and understanding the true meaning of your numbers. Then, you can clearly and easily raise your prices accordingly and focus on the money-making streams of your business to make that happen.
Clients often tell me that they are worried about losing clients if they raise their rates. I get it and it’s a valid and big fear for a lot of people. And I’ll be honest, you might lose a few clients if you raise your rates…which is scary right off the bat.
But it’s not the end of the world and remember you bring enough value with the services that you provide to still keep clients and attract new ones with prices that really reflect what you’re worth.
Trust me, clients will pay for services they find value in, so don’t be afraid.
I know you have services that you pay a premium for because you can’t live without them. They add value to your life. The services you provide your clients are no different, so shifting the mindset to own the value you’re bringing to the table will help you feel confident in raising your prices. Analyzing your numbers and actual time spent are key here. Once you see, how much money you are really making or lack thereof, can help you feel confident in raising your rates.
And if you’re really worried about pulling the trigger when it comes to raising your rates, you have options! You can start small, raise rates for new clients and keep your existing pricing for the clients you already have, or go in steps.
Remember – you are an entrepreneur now with business expenses and your own personal bills to look after. You need to be paid like a business, not paid like an employee. Really think about what your time is worth when you go into this process.
I know you’re probably still asking if there are ways to give yourself a raise that don’t involve raising your rates at all.
You can. It means cutting your expenses because the money has to come from somewhere. So that’s going to mean maybe cutting back on subscriptions, staffing or any other overhead costs.
You can also revamp your service offerings so you’re giving clients smaller offerings for the same price.
Finally, I want you to remember that giving yourself a raise isn’t a 20-minute exercise. It’s going to take time but you can do it! Let this analysis be your catalyst for change.
I know this is a lot to digest, so bookmark this post, come back and read it again in a few days. My best wishes to you. Be sure to sign up for the challenge below to help you work through your future price increase. It will help you pull all of the details together.
Clarity Kickstart To a Financial Fresh Start Challenge
I know all of this is challenging (and sometimes frustrating). I want to lend a hand when it comes to giving you some help getting some of that number clarity I’ve been talking about in this post.
I’ve got a 5-day Clarity Kickstart To a Financial Fresh Start challenge that starts on February 8. It will help you…
- Get your numbers organized and wrap your brain around them so you have a clear picture of them
- Analyze your finances so well that you can practically do them with one hand tied behind your back
- Get your pricing and expenses figured out so you CAN give yourself that raise
- Figure out how much money you’re actually making
So that’s it all I’ve got for you today….I’ll let you take that in and think it over for a bit. I hope you found this helpful and you get the confidence to give yourself a raise. And I can’t wait to see you in the challenge!