Happy Career Formula with Jette Stubbs

21. How to Charge What You're Worth (Set Your Price & Salary Negotiation)

July 07, 2021 Jette Stubbs Season 1 Episode 21
21. How to Charge What You're Worth (Set Your Price & Salary Negotiation)
Happy Career Formula with Jette Stubbs
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Happy Career Formula with Jette Stubbs
21. How to Charge What You're Worth (Set Your Price & Salary Negotiation)
Jul 07, 2021 Season 1 Episode 21
Jette Stubbs

When it comes to thinking about how to set price or how to negotiate salary. The real question that you're asking yourself is how do I charge what I'm worth? And that's what we're going to be talking about today. The tips, the tricks, the tools, the strategies that you can use to start to up level the amount that you can charge for what you do (or what you want to do in the future).

Take the quiz: https://www.jettestubbs.com/quiz
Want to see what progress killers are slowing down your professional growth?
See the top 3 progress killers based on your stage of professional growth, whether it's a job, freelance service or business. 

Show Notes Transcript

When it comes to thinking about how to set price or how to negotiate salary. The real question that you're asking yourself is how do I charge what I'm worth? And that's what we're going to be talking about today. The tips, the tricks, the tools, the strategies that you can use to start to up level the amount that you can charge for what you do (or what you want to do in the future).

Take the quiz: https://www.jettestubbs.com/quiz
Want to see what progress killers are slowing down your professional growth?
See the top 3 progress killers based on your stage of professional growth, whether it's a job, freelance service or business. 

21. How to Charge What You're Worth - Set Your Prices or Negotiate Your Salary

Jette Stubbs: [00:00:00] When it comes to thinking about how to set your price or how to negotiate your salary. The real question that you're asking yourself is how do I charge what I'm worth? And that's what we're going to be talking about today. The tips, the tricks, the tools, the strategies that you can use to start to. Up level the amount that you can charge for what you do.

[00:00:28] And I'm not going to give you tools and strategies where you need 10 plus years of experience, or you need all of this different knowledge or skills. I'm going to use tools and strategies that you can  put in place today, even if you're just starting out. 

[00:00:44]You're listening to the happy career formula with Jette Stubbs where we talk about how to find what you love to do and turn it into ways to make money, whether that's a job, freelance service or a business, so you can live life on your own terms. 

[00:00:59]So when it comes to thinking about how to price, what you're worth, whether that's setting your price for your products or services within your freelance service or business, or if that. Negotiating your salary. When you have one main client, your employer, there are a few key principles that you need to understand.

[00:01:21] There are three key factors at play that will help you decide whether you are charging your worth and receiving your value. So most people mix up the idea of price and value. So you could be making less than what you think you are worth right now. You could be making less money than you'd ideally like to make, which means you are making less, your price is lower than your value.

[00:01:54] You were being undervalued right now. So what I want to help you do is help you shift so that you are making what you want, what you're worth, and you're making what you'd like to be made.

[00:02:04]There are three factors that are at play value, price and expenses. And often we get value and price super mixed up. So you could be making less money than you'd like to make. Ideally right now, the amount of money you're making is the price that you've set for yourself. This is what you've negotiated with employers or with your clients within your practice, your freelance service or your business.

[00:02:28] And. If you think you should be making more, that means you think your value is higher than your current price that you are charging and what you're making. So when you go into  a shoe store and you do a buy one, get one off, you feel like you are getting two shoes for the price of.  So you feel like you're walking away with double the value to shoes for the price of one.

[00:02:54] When you go to the grocery store and you see a sale and it's something that you usually paid five or $6 for, but it's on sale for $2, you feel like, oh  I can get three of these for the price of one, or I can pay a third of the price that I usually pay, or a fifth of the price that I usually pay.  Oh, I'm going to stock up on these and buy a bunch of.

[00:03:15] You're still paying money. You're still giving up hard, earned time and effort through the money that you have received, which is a resource that you have to help you achieve the life that you want. But you feel like, oh, this money that I have, that's a resource that I have to achieve the life that I want can go so much further.

[00:03:35] If I get all of these deals and I get more bang for my buck. Whenever we say things like bang for my buck. Oh, I feel like they got a really good deal or a great deal. It was a steal of a deal. Things like that. We're saying we feel like we walked away with more value than we expected for the price. So the price is the number amount that you've set to it.

[00:03:59] Value can be so much higher. So when you go to a doctor's office and the doctor is helping you move away from illness and they help save your life, or they help you get rid of cancer.  That's a life changing experience. It goes beyond the amount of money that you're paying for it to being able to save and prolong your life.

[00:04:19] So we look at it as priceless and we're willing to put exorbitant amounts of money toward it if you don't have free healthcare. So when you're thinking about how you are setting your pot price with clients or employers, you need to be thinking about how can you increase your value. So that you can charge a higher price and how can you keep your expenses, your living expenses.

[00:04:47] If you have a freelance service or a business, your business expenses lower than your price or the money that you have coming in. So the gap between your price and your expenses is your profit. That's how much money you have. If you just have a job, that's your disposable income? How much money can you put towards savings?

[00:05:09] How much money can you put towards retirement? If you have a business, the gap between your price and your expenses is your profit and a portion of that profit should go towards your income. Not all of it. Okay. I'm hoping you're following me so far. And I want to talk to you about ways that you can increase the value of what you're doing.

[00:05:30] So  we talked about the three factors, value needs to be greater than price, which should be greater than your expenses. And if you want to increase your value, there are a few different approaches that you can take. One is you can solve more valuable problems. So I've talked about when you are working as a cashier or a barista  a wage.

[00:05:54] Things like this, you are doing jobs that require lots of manual labor. You're being paid by the hour that you're working there and you're being paid in the w in the case of a waitress, you're also being paid in tips.  So let's leave the waitress out of it for now. Let's think of  a cashier or barista when a cashier or barista is doing their job.

[00:06:17] It requires manuals instruction. You're told what to do, where to be.  There's an expectation of what you should do. And when you're going and applying for minimum wage jobs, these jobs are often jobs where you're being told what to do, and you're not given a lot of autonomy over your work.  You're not out there actively problem solving.

[00:06:41] Typically your manager or supervisor, isn't constantly coming to you with new problems that you need to solve. They set up systems inventory.  Scanners pricing, and then you just  scan and follow the steps to get the job done and answer any client questions along the way. So typically when people are going out and getting these types of jobs, these minimum wage jobs what's happening is you're writing a resume that says, this is the history of tasks that I've done in the past.

[00:07:09] Now tell me what I can do to help your organization and what that tells the employers is I don't really know how. I can help your organization. So I need you to tell me what to do and the employer's responses.  If you don't really know how you can help me, I don't have the time to figure this out with you.

[00:07:30] So instead of taking a risk on your potential and giving you a higher earning salary, I'm going to stick you in a minimum wage job and give you specific tests, tasks that you can do over and over again. In a repetitive manner. So because I need these tasks done within my business, I can give you manuals and instructions and steps to get the job done.

[00:07:52] When you're moving up to a managerial level supervisor level, or even just a higher earning job, what is happening is there's a shift that's being made and your resume is going to shift into saying, here are a list of the things that I've done in the past to  here's my history of meeting people's needs. So this is a history of me solving similar problems to the one that you need to solve or using transferable skills that I've gained from my degrees and my experience to help you get where you want to.

[00:08:26]It's really important to understand that when you're making the shift from tell me what to do to this is how I help, the more complex the problem, or the more important the problem is to the organization. The more they're going to be willing to pay you. A lot of people get frustrated because with entry-level jobs, they can be super cool.

[00:08:47] They have no real job description. Sometimes you don't know what you're supposed to be doing. And so it's really hard to apply to those jobs. And then the higher you get up, the more you climb that ladder into that managerial or a VP level role, the more you're going to want to see that employee. Really care about the problems that you're going to be solving.

[00:09:08] Those job descriptions are going to become a lot more specific because if somebody is giving you a hundred thousand dollars, they want to know what they're going to be getting back in return. Versus if somebody's giving you $20,000  for a company that's not as much money,  think about it like this.

[00:09:29] If you're handing somebody $5, you'd probably pay $5 for a drink. You'd pay $5 for a little arm bracelet. You may even donate $5 when you're walking across the street. You don't think too much when you're giving away a dollar to $5. That's not something that you're going to hesitate and normally on. So instead think about if you're going to give away a hundred dollars, a thousand.

[00:09:54] Two $3,000. That's when you're really going to want to know, Hey, what am I getting in return for this? That's when you're going to hesitate before pulling out your wallet or your credit card, because  oh, this is, I worked really hard for this money. Do I want to just spend this so easily? So the truth is it's the same thing for an employer.

[00:10:16] If an employer is handing out minimum wage, the government is saying, this is the minimum amount that you're allowed to pay somebody. The employer, isn't thinking too much about it. They're going to give you a set of tasks that you can do. They just want to know that you can follow instructions and that you can listen well, and you're not going to misrepresent them.

[00:10:35] And then typically you can get the job if it's a competitive market where a lot of people are competing for jobs, and there are too few jobs and the employers may get ridiculous or picky and say, oh, even for this entry level job, that's just falling basic insurance. We want a university degree or something like that, because the truth is if you had the option and you were paying a dollar to $5 for something, and you had one that had all of these fancy bonuses, what did you pay for?

[00:11:04] The thing that had to find two bonuses?  It's not any different the way we think about paying for things doesn't really change substantially.  It's just that we need to think like an employer or think as though the employer was a person making it. And we don't like thinking of ourselves, like we have this floating cloud, that's a number above our head that seeing this is how much value I can add it.

[00:11:28] And part of the reason is we don't like the way I'm going to say we I'm assuming you're with me on this. That we don't like the way society is structured. We don't like the fact that instead of focusing on the things that matter in life, our lives become focused. I'm making enough money to survive. If you're not privileged enough to come from the families or the communities or the networks that can pool the resources for you to make you successful enough.

[00:11:56]And that bothers us. Okay. So when we're trying to make the shift to making more money, when we're trying to increase our value, The first thing that I want you to think about is how can you shift from saying, I want to say I help. How can you shift to solving more valuable problems, more complex problems or problems that the company cares about more, and you don't need to know how did you, everything.

[00:12:21] You just need to show them that you can understand the problem that you can ask the right questions. And once you get your foot into the door within the company, You can increase your price or increase how much you're charging over time by showing them that you have a track record of delivering results, or you can bring in your transferable skills to show how you can deliver results.

[00:12:40] The other thing that you can do when you're trying to increase value is to help people who are struggling more with a problem. So let's say you're selling nutrition services. Are you going to sell nutrition services to a healthy 20 year old, or are you going to sell nutrition services? To a 50 year old with diabetes or pre-diabetic who you can help extend their life by five or 10 years, the healthy 20 year old.

[00:13:09] Yeah. They may like the nutrition services, but first of all, does the healthy 20 year olds have the disposable income to pay for nutrition services or are they just trying to get by and eat the food out of the university or college cafeteria? If they're going to university. The 50 year old has now worked.

[00:13:28] Let's assume they have some savings. They have some money set aside, and now you're saying you can help extend their life. Helping the person who is hurting more is going to add more value to them, especially if they have more income. So that's the second piece, helping people who hurt more and helping people who have more money.

[00:13:46] So there's three components that I talked about for adding more. Solving problems that are more complex, more important to the person or that they care about more right. Shifting her. I want, I hope helping people who are hurting more with the problem where companies were hurting more with the problem.

[00:14:04] And then the third one is helping those who have more money. So even working with an, a new company, that's just starting out that doesn't have the disposable income or the extra cash. Versus working with an established company like working with a Google or an Amazon, these companies have more money to pay for things.

[00:14:22] They are not cash strapped, so they can afford to pay you more. They can afford to attract better talent because they have the money. I need to do that. The second big thing after increasing your value is I want you to think about how you can start to serve more people. So when you have a job, you have one client, one core client, your employer, and that employer is paying you a salary.

[00:14:46] And when you lose that money, you lose all of your income. You have everything's at risk. You have one source of income, but  when you shift out to have it. Multiple jobs or starting a freelance service or starting a business.

[00:15:01] One of the things that happens is you start to have multiple people paying you. So when you lose one job, you will have multiple other sources of income already coming in. So there's not much at risk. You just lose a portion of your income, which maybe you can cover with some of your savings or potentially some debt.

[00:15:22] If you don't have any savings. And there's just less at risk. You're not in this emergency mode because you were living paycheck to paycheck off of one paycheck. And you want to start to make that shift over time and you'll start to see if you're listening to multiple podcasts. If you're getting into the business space, if you're starting to follow the financial independence retire early, which is the fire movement.

[00:15:48] So financial independence retire early move. If you're starting to follow these things, you'll hear people talk about multiple income streams, and this is where that comes in. So you're not putting so much at risk by relying on one employer. So you are having multiple clients, multiple options. This is when you're starting to serve more people, because think about it.

[00:16:10] If you have a hundred dollars and 10 of your friends have a hundred dollars, but somebody chooses just to work with you. They're limited to making that a hundred dollar. But if they choose to work with your 10 friends as well, right? That means they can make over a thousand dollars. It helps when you can work with and serve more people.

[00:16:30] But how do you do that without stressing yourself out without creating burnout, without feeling like there is no end to your work and you're working weekends and working long hours.  This is where it comes into attaching your time from. Making. So you wanted to attach your time from how you make money.

[00:16:52] And when I say that, think about a job contract that you may assigned within the last couple of years or any sort of work that you've done, especially if it's work that you did throughout college, things like that.  You probably did sign a contract that said you will be paid X amount per hour of work.

[00:17:12]And what that means is if you're not working for that hour, unless you have benefits like paid time off. If you go beyond your pay time off, that means you will no longer be paid for the hour. Or if you're doing contract work with no benefits, you're no longer paid for the hour. So you are now at risk because if you are not physically well, If life goes wrong, which is one of the core themes about the happy career formula and why I do what I do when life goes wrong, we still need a way to make money.

[00:17:50] And it, that's why it's extremely useful. If you can find ways to detach your income from your hourly earnings, so ways that you can do this is by selling a product or a service, having an online. Ways that people can buy from you or purchase from you and you can serve them, ideally when you're not there.

[00:18:08] And this is where you'll see a bunch of Facebook ads or Instagram ads and a bunch of ads of people trying to sell you services to help you build out that life where you can sell it something online on repeat, without having to worry about it. But the truth is there are so many steps. True success doesn't happen overnight.

[00:18:29] Typically it happens. As a buildup of your hard work and efforts. So if you want to make this shift into having a more flexible or nomadic lifestyle, something where you can travel more, even something where you can be exactly where you are with your family or with your loved ones, but just not have to stress as much or where the money is coming from or how you were going to be needing the next bit.

[00:18:55] Then you want to start to learn how to create multiple streams of income. So you're serving more people without selling each one of those people, your time for money. So the time that you spend working at your nine to five job is usually compensated by the hour, even though they pay you by weekly or monthly.

[00:19:18]It just so happens that typically if you have benefits, they have agreed to pay you, even when you're not there and give you vacation and give you a set amount based on a standard expected amount of hours that you're supposed to work.  Because a lot of times we'll work a nine to five, which is supposed to be like 35, 40 hours a week.

[00:19:37] But in the end, we end up working 50, 60 hours, but we're not paid for those extra 10 or 20 hours per. So you need to look at what is your actual hourly rate that you're making as well? How many hours are you actually working and then divide your salary based on that. So if you're making $3,000 a month and you're supposed to be working 40 hours per week, that's 160 hours per week, right?

[00:20:10] And I'm pulling up a calculator. This is not mental man. So 3000 divided by 160, you're making about $19 an hour. But if you are actually working 50 to 60 hours per week, let's say you're working 50 hours times by four that's, 200 hours. So if you do that 3000 divided by 200 hours. You're actually only making $15 an hour.

[00:20:41] Do you see how that drops so quickly? And as you want to increase your income, you want to be aware of how much time are you actually putting in to doing this work so that you can accurately estimate how much you'd like to charge per hour. Okay. The next thing that I want you to think about.


[00:21:00]The next thing that I want you to think of when it comes to adding value is how you can bundle things together. So I gave you the example of buying two shoes for the price of one.  There's also the example of bundling. So think about when you buy your internet service, you bundle a bunch of services together,  get your internet, get your home phone, get your cell phone all on one bill and.

[00:21:26] You are doing this so that you can pay less because the company is rewarding you for having everything's staffed under one bundle. This is really helpful when you're doing freelance surveys or when you're building out your business to be able to bundle things is very helpful, but it can also help when you are negotiating salary with the company.

[00:21:47] So instead of negotiating salary, based on hours, you're going to shift to negotiate salary based on the problems that you're solving for that organization. So you want to identify in the salary negotiation process?  What are the key performance indicators for this job? What would you like to achieve?

[00:22:06] If I'm hired, if there's within this organization, what would you like me to achieve within the first six months? Within the first year? And let's say they're saying, okay, yes, we're going to pay you five or $10,000 more and you want to make 20 or $30,000 more.  Then you could say, okay, I'll accept this.

[00:22:21] Then you'll say I accept this $10,000 more, and what I'd like to do is if I hit these three key performance indicators in my first year, I would say. It in my contract that I can get the extra $10,000 that I'm asking for. If I can continue to hit those performance indicators for my first six months of my first year, something like that, you can negotiate it.

[00:22:50] And it varies the way you'll structure that will vary based on your contract, based on the length of it, based on how excited and eager you are to work for this employer. But just because you're excited to work with them, doesn't mean they're not excited to work with you. That excitement can be mutual.

[00:23:03]Limit how you negotiate for yourself and your own value. And you're going to hear from some marketing experts factoring fall and Mike Lander within the next two episodes. So listening as they give you advice on how you think about these negotiations the third thing that I want you to think about as you work, reading your pricing, or as you're thinking about how do you set your price is marketing now. So many people get caught up, oh, how much is this person charging? How much is that person charging?

[00:23:36] And it's not a bad thing to do. So for example, if you're working within an organization, there's often, especially if it's not unionized gap, but employment gap between the amount of money men are waking and the amount of money women are making, there are multiple reasons for that, including the fact that women tend to negotiate their salaries less.

[00:23:54] They tend to negotiate their worthless and they tend to estimate what they should be making. At a lower amount. If you want to avoid these things, market analysis, to see what your competitors are making or what they're selling their products and services for can be useful.

[00:24:10] You can do market analysis by going to LinkedIn and looking at the amount that other companies are listing on there.

[00:24:22] Job boards were similar roles to yours. You can go to salary.com, payscale.com and do some market research. You can type in the title of your job and the word salary, and then see what salaries are popping up.

[00:24:36] You should make it location specific. Salaries within Ontario or salaries within Alberta or salaries within California or Los Angeles city specific. So these tips will help you start to see what are other people making within your area. Based on your years of experience, this is where definitely sites like PayScale or salary.com become helpful.

[00:25:02]  So that's how you do market analysis. If you are doing it for a job now, let's say you're trying to start a freelance service or a business.  Then you look at what are other competitors charging. Look at freelancers is, are businesses offering similar services within your area?

[00:25:18] And then. Look at the prices that they're charging and what are they offering for those prices? What are the benefits that they are selling for those prices? Make a note like make an Excel spreadsheet, make a Google doc where you are just listing out the different prices, the price points, the websites, and links with information.

[00:25:40] What this is going to help you do is going to help you see. What people are offering for those prices. If you have companies that have been in business for years and years, those companies, they have people paying those prices. Those price points are real. People are paying that money. It's a good sign that you have a good business idea that people are willing to pay for it.

[00:26:01] Don't get intimidated by competitors. The same thing applies for a job. Don't get intimidated by company. Look at what your competitors are offering, what skills do they have? What qualifications do they have? What experience do they have? What are they selling as the core benefits of working with them?

[00:26:17] And then start to incorporate those core benefits into how you talk about yourself. And if you don't have everything that you need to offer that to somebody or to sell those benefits to our organization, then what's, you're going to do. Is, you're going to build out a plan to build out your skills, your education, and your training, so that you can do that in the future or to improve or expand out or phase out ideally your product of service so that you can build that out in the future.

[00:26:44]Now, how do you actually go about setting your price? You've got this comparison information  the difference between value and price and expenses. You started to analyze what your living expenses are, what your business expenses are. And now you're trying to say, okay, How do I know this is what I should actually charge.

[00:27:04] I'm scared as a charge this much. How do I know people will actually pay me for this? How do I know I can actually charge my work? How do we know I'll hit my income goal? And this is where I will tell you, tip number four, what you should price based on benefits, but two, you can charge what you want.

[00:27:28] Because you can actually build out something that is valued at whatever price you want. So let's say, let's think about this. If you had $10,000 right now, and I said, buy this pencil for a $10,000  would you want to buy a pencil? Probably not.  But if I said, this is the, a pencil that was used by Albert Einstein, Michael Jordan.

[00:27:54] Gold plated with platinum on the inside and in Crested in $10 million worth of diamonds. And you can pay $10,000 for this pencil because the retail or the resale value of this pencil is 50 million. All of a sudden this pencil. Super duper valuable. Am I right? And you've made the fighting people to buy this pencil.

[00:28:24]What I'm trying to show to you or illustrate to you is you can change and shift the value of what you're offering. You can say, okay. I want to know. $4,000 per month, then make a game plan that says, okay, that means I need four people to pay me $4,000, or I have $2,000 of expenses.

[00:28:53] So for me to make $4,000 per month in like cash that I can play with, I need to make $6,000. So I need six people to pay me a thousand bucks. Or I need 12 people to pay me $500 per month. And then you start to build out a plan. Okay. For me to get 12 people to pay me $500 a month, what can I sell? That brings in my skills, my qualifications, my experience that people are willing to pay $500 a month for, and then you start to reach out to more and more people.

[00:29:26] See it. The next thing that we'll do is we'll get devastated when the first person says, yes, But maybe that person, isn't the person who will benefit most. Remember, listen to this from the beginning. Once you start to think about that and write that down and price that out for yourself, how can you start to replace your income and have more flexibility or helping you top up or double your income over time by building this out and setting this goal for yourself?

[00:29:55] Because if you want to share. From a job to a business. You don't want to quit your job and then go searching for clients. You want to build out an audience while you are working so that when you are ready to start selling and making money already testing your idea, and you're validating your idea and you're leaving or quitting your job when you become too busy.

[00:30:18]In your side  gig and your side hustle and your freelance service and your business to fully get the work done because your nine to five is distracting you or you've replaced your income in a stable way for several months, ideally. And you've got a game plan to make that happen. Moving forward. You don't want to just make randomly, you don't want to make the big.

[00:30:41] And if you want support in how you can build it out,  listen to episode number four, where I helped Brittany replace her income in 60 days when she lost her, when she quit her job with pandemic, do not quit your job and come to me and then say, help me replace my income.  I don't want you to do that, but you can build out a strategy.

[00:31:00] Okay. This is  these are my tips for you for thinking about how. Set your price and charge your worth. There's a lot of money mindset stuff that goes into thinking about how you set your price. Who am I to do this?  How can I charge that much? Who will really play, pay me? Are people going to laugh at me?

[00:31:21] And this is where the conversations that you're about to listen to with Fatu Fall from TeamRora.com. Mike Lander from Piscari are going to be super helpful because you're going to be listening to negotiation experts, talking to you about how you can start to think about charging your worth. And they're coming at it from two different angles.

[00:31:43] So stay tuned listening in, and I'm just so excited. I hope this Wednesday is not a hump day for you.

[00:31:52]You're listening to the happy career formula with Jette Stubbs where we talk about how to find what you love to do and turn it into ways to make money, whether that's a job, freelance service or a business, so you can live life on your own terms. 

[00:32:07]this is a career and business podcast, but my two main goals for what I want to offer you are: one  the tools to build a career that aligns with who you are.

[00:32:18] So you can make money in a way that funds your life goals and the lifestyle that you want to build for yourself. Two, to have healthier relationships with yourself and others. 

[00:32:29] Because I think that if you have your financial resources together and you have good people around you, you can live a happier life.

[00:32:38] Subscribe and leave a review if you are enjoying the podcast.

[00:32:42] if you know somebody who you think may find this useful, please feel free to share it, with a friend.

[00:32:47]Next, we'll be speaking with Fatu Fall.   So if you have ever wondered, how do I negotiate a better salary? How do I show employers? I can do more. How do I earn more so I can charge my worth and live the lifestyle that I want.

[00:33:02] Then this conversation with Fatu Fall is going to be right up your alley. We're going to be speaking on negotiations. So stay tuned and listen in.