A colleague of mine recently drew my attention to Underearners Anonymous, a “Twelve Step Fellowship of men and women who have come together to help themselves and one another recover from underearning.”
The website identifies 12 Symptoms of Underearning, many of which are recurring themes for the clients I work with. A few of these symptoms fit ME perfectly, as well.
I want to focus on one of them today:
Undervaluing and Under-pricing—We undervalue our abilities and services and fear asking for increases in compensation or for what the market will bear.
After three years in practice, Nora, a therapist, was still charging her clients the same amount she had charged when she first started.
Nora’s issue was not about what people could afford—it was about not understanding the great value her clients received by working with someone as empathetic and insightful as she. So I offered her a way to quickly double her income…I told her to double her fees for all incoming clients.
Having convinced herself that the issue of fees was about the market, Nora protested. “If I raise my fees,” she complained, “No one will work with me.”
I finally convinced Nora to try raising rates slightly for existing clients and increasing her fees to one-and-half times the old rate for new ones. She called me after her first meeting with a new prospect.
“They didn’t even flinch when I told them about my [new] fee schedule!” she exclaimed.
Nora also informed me that none of her existing clients had complained about the small increase she implemented with them.
Last November, Brett, a financial planner who invests and manages his clients’ portfolios in exchange for an annual percentage, was still charging a fee way below those of many advisors who had half his experience and skill.
“I believe that those guys are grossly overcharging their clients,” he told me.
“But their clients are happy to pay their fees, because the cost is still a very small percentage of the assets being managed,” I replied.
“And,” I continued, “considering your training and expertise, YOUR services are worth at least as much as theirs are.”
I got Brett to agree to have two conversations: 1) To tell existing clients that the fee he has been charging them is much less than most investors are paying; 2) To charge new clients a significantly higher fee.
Last week, Brett and I figured out that this small change had added 30% to his income for 2012. And none of his new clients had raised any question about the cost of his services.