Everyone’s results will differ but I’ll show you how I did. This will show you what might be possible for you too.
Turning every $1 into $20
As I have said elsewhere on the site, every dollar I spent on advertising brought in about $20 in business. However, as time went on and my prices increased, this figure fell. Don’t be over concerned about this as it is to be expected.
While you get fewer customers from each advert, you will receive a higher hourly rate, which helps compensate. To still give yourself a full diary you just place more adverts. The advert cost is so cheap that you can place them everywhere and still make a decent profit.
If you are getting more than $2 to $3 for each dollar you spend on ads then you’re doing fine. Keep ploughing your money into ads and you will get more business than you can handle.
My advertising results when I first started
In January 1996, I earn’t close on $800. Remember that I had one advert out that didn’t appear until 10 days or so into the month.
In February 1996, my monthly take was approaching $4,000 -not bad from a standing start!
12 months later
After 12 months, I had some weeks where I was earning over $1,600 pw. I worked for approximately 42 hours averaging $40 per hour. What a contrast to the pittance I was earning the previous year as a mortgage broker, where in 1995 my income was less than $6,500.
15 years later
My pricing totally changed by this point. I charged by the project or by the day where possible.
Typically, my software development work was at $720 per day + expenses. My training rate was $640 per day for the first delegate and $80 per additional delegate. Web marketing consultancy was $128 per hour. Note that these rates are almost 10 years old!
When you “come of age” and get some maturity in your skills and knowledge, you realise you can pretty much charge what you like. I regularly review my pricing structure and changing my attitude towards what I can charge. There is a ceiling to what the market can bear but believe me when I say the main mistake people make is not charging enough.
A lot of the time people perceive your skill level by what you charge. The higher the charge the higher your perceived skill. Also, the more you charge the more respect your client gives you as a consultant. You are no longer the office lackey but a skilled consultant whose time is highly valued.
The mindset of someone who has been running a computer consultancy for some 5 months goes like this:
“I’ll slowly increase my charge but not too fast otherwise I will lose a lot of business and I need that business for immediate cash flow and revenue.”
Rubbish. Just charge a rate just below your market average if you have 5 months experience. After 5 months I was charging a pitiful $32 per hour, sometimes $40. With hindsight, it was way too low. Had I known then what I know now, I would have charged $48 to $65 per hour for my area of expertise. This ignorance and poorly conceived mindset cost me dearly. I ended up working longer hours for less pay. What an idiot I was!
What you should aim for in the future
You will find that over time you will be more selective in the work you take on. This frees up your time so you can devote more attention to your best revenue producing clients. The 80/20 rule often works here with 20% of your clients giving 80% of the business.
Additionally, you should aim to include more “packaged” deals for clients where you offer add-ons for an additional fee. For example, if you offer to create a database system for a company costing $8,000, you also offer them the following:
System written documentation: 5% of project cost = $320
One year support contract: 15% of project cost = $1,200
Video tutorials of system: 5% of project cost = $320 (just use a screen recording software for this)
As you can see, add-ons can seriously bump up the amount of business from one client. And for those who want rock-bottom price you can exclude the add-ons. Let the client chose.
The direction in which you can steer your business is practically endless. You can aim for the most lucrative course of action or stay with a market you feel comfortable with. When you own your own business, it is YOU who controls the rudder and not some boss who’s been telling you what to do.
Over time, you may find you can generate additional income by creating your own products or material for clients. You own the copyright and can therefore sell them to clients with no additional work. Examples can be software which you have created and can use out of the box or modified for the clients specific needs; training material for your niche applications; video tutorials and so on.