The Cost of Your Services should always be related to your growth strategy. Early on, you may want to just collect great relationships with clients and get great work. That is an excellent growth strategy for somebody starting out. That is, keep your rates low to get access to robust opportunities and make just enough to keep the lights on in your office. As you build a track record of success, your growth strategy will likely shift into a phase of reinvestment. This means, returning profit back into the company to build a stronger overall company. However, you cannot start reinvesting in the company in any significant way, without increasing your rates. Otherwise, you are creating the need for more work at the same rate, to pay for the increased need for capital. That’s a tough situation to grow a company within as it requires more employees, more work, and margins for stalled projects, or inconsistent payments from clients, will likely be thin. And so in both cases, the Cost of Your Services are tied to growth strategy.
When do you make the shift to reinvestment, and your company starts to grow, so does the need for more revenue. And at this point, your rates aren’t directly tied to your individual goals as a company but rather the industry as a whole. You are now growing into a competing force, and the Prices of Your Services should be tied to standard industry rates. It’s a question that entrepreneurs, especially those that love what they do, struggle with knowing when to make that shift. And it comes down to a fundamental question: how much am I worth? Not how much do I see myself as being able to charge, but what are you worth within the outside world of supply and demand, free-market capitalism.
We kept our rates too low, and for too long, and while we stayed busy with some amazing projects, we never really gained a proper economic foothold. At the end of day, we were worth to the world of free-market capitalism way more. And so, in 2024, we raised our rates in some sectors. This is allowing us to stabilize the company and standardize growth into a predictable model. Reinvesting in the company and hiring great talent is no longer a game of attrition…it’s a process of nourishment that is able to be financed. That’s the way it should be. If a current client really values you, they will pay the new rate as long as it is aligned with current market conditions. And future clients, will know prior to getting into business with you, what your new rates are and pay them.
The exciting part of this is that with more revenue, comes a better operating company. Money, invested strategically, allows you to expand your overhead with more and better employees, benefit packages, and better equipment. In the end, your rates may have been raised and you may cost more, but the client gets a better level of service as a result. And that’s the exciting part of entrepreneurship.
This is part of our Stewardship Series where we give insight into our industry for aspiring professionals and business owners alike.
