If it seems that we're working harder and longer hours and bringing home less, you may not be wrong. According to Pew Research Center, despite the strong labor market, wage growth has lagged economists' expectations. Even worse, today's real average wage has about the same purchasing power as it did 40 years ago. Just like in order to lose weight you have to reduce your calories, either by eating less or working out more, in order to increase your bottom line, you have to either increase your revenue or cut expenses.
Increasing your productivity using time-saving hacks is one way to increase revenue. In a recent piece, I shared 19 mobile apps that can help in the productivity department. Being mindful of how we spend our time is also important. Still, depending on the type of work you do, there are three other ways you can increase your bottom line faster and that don't require you to increase the time you work. As a consultant who works with clients on their marketing and communications needs, I've tried each of these with success this past year and I plan to continue to implement them on a regular basis.
Raise your rates and reduce the hours you work.
Most clients have a general idea of what they want to pay for services and you might either be in-line with those rates or too high. Whenever I am in discussions with a new client who might be unclear about my rates, I always ask for their budget.
Absent a budget, I share my rate and if I'm too high for what they were hoping to pay, we negotiate other terms such as how many hours I can allocate their project. The reality is almost every client has a budget. It's either a firm budget or one that has wiggle room because they'll be taking funds from another line item. Whatever the case may be, I'm usually reluctant to reduce my fee because that sets a precedent. I'd rather reduce the hours I commit to a project, which then frees up my time to work on other client projects at my rate. Clients seem comfortable with this option because it allows them to stay within their budget and I don't have to walk away from a project because I'm not being paid accordingly.
Fire your least profitable client.
It's important to consider what makes this client your least profitable one because it may not be a financial decision at first blush. It may be that you're being paid handsomely but when you take into account unexpected revisions or an abusive client, then you have to re-evaluate whether this client is worth keeping on. In other cases, it might very well be that you're being paid too low for the work involved. Hard as it might be to let go of a client, doing so opens up your time to work with someone who values your work and also saves your mental bandwidth since you won't feel fried by the end of the day.
Charge by the project rather than by the hour.
If you have a general idea of what a project fee would be to cover your time, charge a flat fee it. It'll be easier for the client who knows what the project will cost and you can take as much or as little time as you need to complete it. If you know the material well and can knock it out quickly, you may end up doubling or tripling your hourly rate by charging a flat project rate.
Knowing your hourly rate is key to making sure you're hitting your financial goals this year. Divide your financial goal by how many hours you work per week and that's your hourly goal. If your fee is too high per hour, you'll either need to adjust your annual financial goal or how many hours you work.