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Wanna raise your rates but too scared to do it? Channel your inner heroine, learn how to charge what you deserve, and see your business thrive by taking FMC video course #30, Charging More Is Your SUPERPOWER!
In this course, Cathy Derus — great leader of Brightwater Accounting and Brightwater Financial — helps us to understand how to get our biz finances under control so that we can become accounting goddesses (or maybe just stop worrying so much about our finances.) Like we saw in the last FMC course, we entrepreneurs become so overwhelmed by our finances that we don’t look at the details. To make money, you should really look at the details.
Cathy’s got solid gold tips for us. First, you want to keep a separate bank account. Sounds easy, right? But a lot of entrepreneurs don’t do that, and it becomes harder to keep track of your expenses.
About that expenses thing…TRACK THEM. As an entrepreneur, you want to see how much money you have going in and out. Which means you’ll want to keep a record of your income and your expenses. If you’ve never done it before, take a deep breath, and then use Excel or even just a piece of paper and pencil and write everything down for a week. See where your money is going. Do you have recurring expenses? What subscriptions do you use? Is it $10/month or $1000/year? These are all good things to have in mind when it comes to knowing how much you should be charging.
Once you have that list, use it to analyze and forecast for your business. If you’re not bringing in enough money, there are are a couple of things you can do: you can cut expenses, raise your prices, or offer more services. If there is a certain area where you’re spending a lot of money but you’re not getting too much of a return on that investment, it’s worth it to be critical and consider cutting back. On the same list, you’ll want to also write down how much time certain things take you; this will be helpful in determining your hourly rate. If you’re undercharging, this will be a great time to fix that!
On the other hand, if you’re making a profit, you should be paying yourself for your efforts! You can start with a small percentage, something like 5%, but you can also work backward and calculate how much money you can pay yourself. Derus recommends always setting aside at least 25% net income for taxes. The other 75% can be split according to your business needs. You may want to pay yourself and you may want to put some of it back into the business.
Lastly (and maybe most importantly) don’t forget to pay those taxes! It’s a good idea to get into the habit of paying quarterly so that you don’t have to face late payment penalties at a later date.
If you’re still not sure how to raise your prices, don’t worry. Cathy breaks down her magical formula to determine exactly what you need to do in order to figure out your hourly rate based on how many hours you actually want to work.
Jill knows you can do it. Cathy knows how you can do it.
Don’t miss this wildly helpful video course, Charging More Is Your Superpower. And after you’ve watched the video, tell us some of your suggestions in our forum!
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