How do I increase my service fees...

25 replies
Hi guys

Some of you may know me, but for those who don't, I have spent a good part of 7-years in the direct response web design / branding field and worked with many entrepreneurs, companies and celebrities.

Problem is lately, I have seemed to be attracting alot of prospects who are after discounted services / low fees. Because of the increase in offshore talent charging alot less - Im finding it difficult to pass on these smaller jobs.

I've harnessed advice and consulting but still finding it difficult to get in front of the right audience and educating / selling them. Any ideas welcome.
#branding #fees #increase #service #web design
  • Profile picture of the author Owen Lee
    Well, your obvious advantage over those who charge less
    is that you have lots of high-profile clients. I suppose you
    need to turn that into a UNIQUE selling proposition where
    you say to the effect of "wanna join the big boys? use my
    service!"

    And perhaps you could try to use the analogy of good expensive
    copywriter vs. cheap but low cost-effectiveness copywriter to
    illustrate the idea that "you get your money's worth".
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  • Profile picture of the author Jason Kanigan
    Simply announce your increase.

    Your valuable clients will tell you, "You should have done this a long time ago."

    The clients who should be cut anyway will go.

    Estimate the numbers beforehand so you can make the same amount of money serving fewer clients.
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    • Profile picture of the author Aaron Doud
      Originally Posted by Jason Kanigan View Post

      Simply announce your increase.

      Your valuable clients will tell you, "You should have done this a long time ago."

      The clients who should be cut anyway will go.

      Estimate the numbers beforehand so you can make the same amount of money serving fewer clients.
      QFT If you can make a truly honest estimate this will be a positive for your business.
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  • Profile picture of the author Liz Morgan
    Not sure if the site in your signature is the one you promote your services with lately, but based on that, I have several suggestions.

    1. Your site is catering to the IM crowd, with all those guru testimonials, etc. This market is probably the most familiar with the ability to cut expenses by offshoring of any. Change your audience/market.

    2. Your site design is very 2008, with the HTML sales page, animated/character headshot, etc going on.

    3. Your name DesignGuruRyan (DGR throughout your site) is weak and doesn't inspire. Go look at some naming company websites and read their blogs, etc.

    Lastly, look at what the design houses that charge 5 - 10 times more than you are doing and emulate them.
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    • Profile picture of the author ed22
      Hey. just started a thread about this - "how to raise prices while keeping your customers happy'. Let me know if it was of use to you ;-)
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      • Profile picture of the author ed22
        Ah - Ryan - jsut checked out the link in your sig

        The website displays terribly in Firefox I'm afraid. I'd suggest that you sort that out pronto!
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        “If you don’t know what port you are sailing to, no wind is favourable” Seneca 4BC-AD65, Roman philosopher and poet
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  • Profile picture of the author designgururyan
    thanks guys for feedback - yeh that site hasnt been updated in years, i dont actively promote it anymore - have been focussing more on the corporate sector
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  • Profile picture of the author misterme
    Originally Posted by designgururyan View Post

    I have seemed to be attracting alot of prospects who are after discounted services / low fees.
    You may want to try changing how you present your prices. What would happen, for example, if you presented your clients first with a high a la carte rate... and then suggest some sort of bundling of services you could do at a more favorable rate for them? Or tell them when they purchase "A" from you, then they can get "B" at half price for three months. Ideas like that. This could raise your sales averages.
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    • Profile picture of the author Claude Whitacre
      Originally Posted by misterme View Post

      You may want to try changing how you present your prices. What would happen, for example, if you presented your clients first with a high a la carte rate... and then suggest some sort of bundling of services you could do at a more favorable rate for them? Or tell them when they purchase "A" from you, then they can get "B" at half price for three months. Ideas like that. This could raise your sales averages.
      This is what I was thinking. I would add that you can increase your prices by bundling (this justifies increased price, and hides a price increase)
      You can then eventually unbundle, with higher prices.

      My favorite example is the fast food business. Hamburgers used to cost 50 cents (I'm old). So the sandwiches got bigger, then they bundled them with fries and a drink. We got used to paying $5 for a meal. Now you can unbundle the sandwich and it's only $5. We don't complain because we were conditioned to the higher price.

      Another way to increase fees is to announce a huge fee increase. Make it outrageous. Give reasons for the increase (They have to be reasons beyond your control. "I want paid more" never sounds good to a client)

      And then, when you are going to increase fees, increase them by far less than you told everyone before. Now you are the hero.

      I've used both ideas, online, in my store, and with clients. They both work.
      The "bundle & then unbundle" idea causes less drama and is easier to do.
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  • Profile picture of the author stuartmike4
    This is a core question for anyone in the service business, but more than that, it's really a fundamental question for any business. Sometimes your price is set by your competition (think gas prices at the local gas station, where they're always within a few cents of the adjacent gas stations, and it's the lone station that has the freedom to add a few extra cents to its prices) but usually it's the business owner that decides the price, and the market reacts to it (e.g. hires you or not), not vice versa.
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  • Profile picture of the author DaniMc
    Originally Posted by designgururyan View Post

    worked with many entrepreneurs, companies and celebrities.

    I have seemed to be attracting alot of prospects who are after discounted services / low fees.
    These two points above scream to me of a conflict. The conflict probably lies in your marketing funnel. You are attracting the types of prospects based on how they hear about you.

    Look at your best paying clients...how did you find them? Do more of that.

    Look at where these cheapskates are coming from. Do less of that.

    Obviously without knowing your full funnel and real details of what you offer and how you present it is difficult to diagnose where the problem lies.

    This is where tracking the origin of every lead is important and can tell you a lot. Perhaps some good prospects are mixed in with your flood of poor prospects? If so, a series of qualifying questions can sort them out.

    Another suggestion is to find a few people who are attracting the types of clients you want and reverse engineer their funnels. Sign up for everything they do. Buy a few products. Map out exactly what they are doing and then copy it with your own spin.

    For raising your rates, don't make a subtle shift. If you only raise by a little it will seem as if you are just doing it for no real reason.

    If you make a dramatic jump in rates, it will be easy to say that you are much too busy and need to raise them by a large margin. This will enable you to make a x2 jump in rates AND increase the perceived value among your existing clients who are either grandfathered in or whose rates are only raised by 50%.

    Either way, they feel special.
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  • Profile picture of the author DABK
    They are putting you in the same bucket with the offshore talent. And so are you.
    Get out of that bucket. Add something, remove something. Or just make believe you've done so, but you can't stand apart if you're like all of them.

    You used to get the clients you liked, and you could charge them. What, besides the offshore talent, changed?

    Because the offshore talent's appearance is not the source but a consequence.

    I get my hair cut at the same place I've done it since 1996. Except, in 1996, I was down the block from them. Now I drive 14 miles to get a hair cut. And pay $22. I pass a ton of cheaper places.

    What's my point? They did not give me reason to consider any of their competitors. I get what I want (hair cut and fun conversation between the 4 barbers, and a clean place, and... the quality of the hair cut is good but not very... The rest makes it worth while.

    When you started to think the cheaper offshore talent is your competition... what changed? Did you start to compete with them?

    You win big by not competing... You don't compete if you're the orange to their apple... to mangle a saying.

    Originally Posted by designgururyan View Post


    Because of the increase in offshore talent charging alot less - Im finding it difficult to pass on these smaller jobs.
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  • Profile picture of the author hayfj2
    What is The VALUE you offer clients?

    What KNOWLEDGE do you offer? What SKILLS do you offer?

    What is the PAIN from the past, you help them to avoid in the future.
    What is the cost or impact of that pain? How do you evaluate it?

    What is the PAIN now, you help them to avoid now.

    What is the cost or impact of that pain? How do you evaluate it?

    What is the PAIN in the future, you help them to avoid in the future.

    What is the cost or impact of that pain? How do you evaluate it?

    Focus on what you offer and its value and how you help them to avoid their pain

    If your solution is less than the cost of their pain, you're more than half way there.

    Consider how, then calculate & prove how you can SAVE them time in the PRESENT
    and the FUTURE.

    Now some of the copywriters on here will tell you think about how you can add extra
    VALUE in terms of what you can package in with your offering, for example - extra digital products, extra support, extra services etc that customers would ordinarily pay for.

    Add all of that together and explain to your customers why you're doing what you're doing and you could have a very powerful offering at your new price.

    hope that gets you thinking...
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    • Profile picture of the author Julius Minor
      You should delete the default "hello world" Wordpress Post ASAP
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  • Profile picture of the author Tjpiper
    Always sell your prospects on the value of your product compared to others that are less expensive or comparable. You can charge as much as you want to as long as you can justify the price of your services.

    Don't be scared to present the price to your prospects, simply sell them on why your service is the best option for them and that the price they pay will produce better results than going with competitors.
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  • Profile picture of the author misterme
    What I hear you saying is you used to attract a better clientele but now not so much. And these days you're feeling the squeeze from lower price competition and you're taking on jobs from lower budget clients, who continually press to pay less.

    My previous comment notwithstanding, as that was aimed at maximizing sales from that latter group, maybe what you want to do is create a small team who'll handle that work under your supervision, and for which you can charge less.

    In the meantime, access to you personally handling a project is reserved for those paying a higher fee.

    What changed that the upper end no longer call? Has your access to that market changed? Did you ease off promoting yourself? What's different these days that accounts for them not calling?
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    • Profile picture of the author designgururyan
      Thanks for all the extremely helpful advice.

      I think as the demand for designers has shifted in IM to offshore or lower-priced freelancers, because design is somewhat treated as a commodity, not an asset or conversion trigger.

      Hence I need to focus on an alternative market - thats what I believe anyhow.
      I merely can't compete with lower priced fees, when clients try to haggle me down. They really don't value Direct Response Design - they are more focused on the short-terms cost than the potential ROI.
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      • Profile picture of the author Irish Intuition
        What amazes me is that we who have a service business
        are so afraid to ever raise prices. Yet everything else on
        the planet goes up in price.

        If your clients do not want to pay for a justifiable increase,
        let them go. They will destroy you in the end.
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      • Profile picture of the author DABK
        Though design may be treated as a commodity, yours doesn't have to be. Not by all, anyway.

        But it's up to you to position yourself differently. And, perhaps, you being seen the expert in web design + something else is the way to go.

        But you have to position yourself differently than most of the others. And you have to accept that not everybody will want the better product you produce.

        If they're not interested in ROI, it must mean that they don't see it. That others have convinced them that a website is a website is a website. And you have not shown them differently.

        Do you have case studies that show how people get better ROI with your sites?

        Originally Posted by designgururyan View Post

        I think as the demand for designers has shifted in IM to offshore or lower-priced freelancers, because design is somewhat treated as a commodity, not an asset or conversion trigger.

        Hence I need to focus on an alternative market - thats what I believe anyhow.
        I merely can't compete with lower priced fees, when clients try to haggle me down. They really don't value Direct Response Design - they are more focused on the short-terms cost than the potential ROI.
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      • Profile picture of the author Jason Kanigan
        OMG! Stop looking at what you think the market is doing or thinking!

        99% of what happens in sales is what's going on in your own head.

        NOT what is going on in the market.

        So what you're doing now is going into every conversation with a prospect with the doubt in your mind that you're worth it to them.

        They pick up on that. You say and do things that give off signals of your discomfort. You've beaten yourself before you start.

        If you would go in without any doubt that you're worth it, they would pick up on that.

        There are two types of people:

        1. Those who will want the lowest price, and don't mind outsourcing to a distant contractor

        and

        2. Those who don't care about price nearly as much as exactly who they are using as a contractor. The people who "know in their gut" who their guy is.

        Your job is to separate type 2 from type 1, and have conversations with type 2.

        Originally Posted by designgururyan View Post

        Thanks for all the extremely helpful advice.

        I think as the demand for designers has shifted in IM to offshore or lower-priced freelancers, because design is somewhat treated as a commodity, not an asset or conversion trigger.

        Hence I need to focus on an alternative market - thats what I believe anyhow.
        I merely can't compete with lower priced fees, when clients try to haggle me down. They really don't value Direct Response Design - they are more focused on the short-terms cost than the potential ROI.
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        • Profile picture of the author umc
          Originally Posted by Jason Kanigan View Post


          So what you're doing now is going into every conversation with a prospect with the doubt in your mind that you're worth it to them.

          They pick up on that. You say and do things that give off signals of your discomfort. You've beaten yourself before you start.

          If you would go in without any doubt that you're worth it, they would pick up on that.
          Hey Jason, great points. Do you have any books on such a mindset, or more particularly overcoming such a mindset, that you recommend? I've personally always battled my own head and heart over pricing. I grew up poor, and have a somewhat distorted view of the value of things, typically undervaluing what I provide because I would have never paid for such things growing up, nor would anyone that I knew. I've moved on, but my psyche is still back there sometimes.
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          • Profile picture of the author Jason Kanigan
            Originally Posted by umc View Post

            Hey Jason, great points. Do you have any books on such a mindset, or more particularly overcoming such a mindset, that you recommend? I've personally always battled my own head and heart over pricing. I grew up poor, and have a somewhat distorted view of the value of things, typically undervaluing what I provide because I would have never paid for such things growing up, nor would anyone that I knew. I've moved on, but my psyche is still back there sometimes.
            I believe the first thing you must do is realize you offer tremendous value to your customers.

            If you don't truly believe this, then you need to pick another product/service, or go get a job.

            Consider this:

            Business owners could possibly do what you do, if they have the technical skill. But because they are owners, they delegate...they don't want to do the work themselves! So you are giving them great value, because you are doing what they will not.

            And if they don't have the skill, you are doing what they cannot.

            View yourself as giving value to every situation you encounter, whether the other person shakes your hand or slaps it away.

            You can google "How to think rich" and see a lot of free articles. Plus you can go get yourself a copy of Think and Grow Rich, probably for free. That book is a great foundation.
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            • Profile picture of the author ewenmack
              When advertising for new business, you may want to seriously
              use this ad method which puts you as being
              in a class of your own.

              I'd post the link here to the ad and all the physcology behind it
              if I was on a PC.

              Use the search function for this...

              "Warning: Don't Buy Web Design Until You Get Answers To These 5 Questions!"

              This ad targets offline biz owners.

              For one web design guy it brought in 25k
              of annualized income in 2 days.

              Different market and right positioning
              all rolled into one for you.

              Best,
              Ewen
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  • Profile picture of the author DennisM
    Hi Ryan,

    You do awesome work and it's a shame that it's getting harder every day to prove that.

    You may be doing this already but I'd build an opt-in list of marketers in really any niche that could use your services. We all know the IM crowd is tough but don't give up on this niche either.

    When selling a service you're always chasing the next deal. It's hard to sustain. Focus on repeat business. Maybe change your pricing model where it's full price on the first order and then discounted for repeat business. This way, you get paid full rate on a one and done and you're rewarding a paying customer with a discount.

    Think about partnering with someone that does video or learn video yourself. With your top of the line design skills and video sprinkled in you could stand out.

    Another option is to offer the work for FREE as a joint venture deal. You could do the JV for 1/3rd or 1/2 of all sales by helping in other ways such as promoting, etc. You also have some skin in the game. You'll have to be careful here but partnering on mini launches could be more lucrative then getting paid on a one off sale for design services.

    As mentioned already here in the thread you'll need to clean up your website. I like your website and it's more than acceptable but it screams that you're a one man band. If you want that corporate business look then get your website looking more business like. Get it all on there such as a toll free number, proper e-mail addresses such as sales@xyz.com, etc.

    Finally, I remember you a few years back and you were all over the web with some of the biggest IM launches. Somehow you disappeared as you stated you were going more corporate. I get that but I feel you gave up that momentum you had.

    Welcome back to the forum and I hope we see you around here more. Run a WSO or something! Also, Merry Christmas!

    Dennis
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  • Profile picture of the author davidreese
    I've increased prices for both of my businesses in the past year and the fall out has been minimal. I have found finding a name for a service can help you sell it at a much higher price.

    Rather than design package you coud come up with a unique name that would appeal to someone use to a higher price point.

    The Mercedes Design Package. Executive Design Services or something along those lines. Then you could have the basic service for the other folks.

    I have people that will use my services at full price without blinking and others that do the nickel and dime thing. The ones that nickel and dime you often are more work.

    As one of the other posters said, the price is really something in your head. Many of your potential customers aren't looking for the lowest price but the person that can do the job well. They don't want to worry.

    Much of any business is about trust. Can I trust you if I give you my money.
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