Tuesday, September 20, 2011

There Is No Business Manual For The Aspiring Tech

There are a bunch of smart people who are really into technology of all sorts. Some are computer techs. Some are developers. Some are network specialists. Some are engineers. Others just love technology and have a high aptitude for it. Unfortunately, there isn't a manual that tells you how to make a living from technology.

Everybody who is into computers in some way gets asked to fix a computer for a friend or family member. Things like that, you are a bit shy to price. You're doing them a favor, right?

Once you get a referral to somebody else, you are shy about charging what tech shops or the geeks at a big box store charge just to show up. Obviously, if the person wanted to pay through the nose they'd have gone to one of those places. So, you charge a lower rate.

Perhaps you don't have any certifications or degrees in the field. Maybe you feel you aren't as proficient as others in the technology field. Perhaps you looked at Craigslist and saw that some fools are charging $20 an hour or some ridiculous flat fee for a job that takes many hours.

For whatever reason, you are not charging your clients enough.

The Problems With Not Charging Market Rate

There are a few problems that arise from being shy about charging the market rate, which currently ranges between $80 to $120 per hour.

The first problem with not charging the market rate is that you're seen as a pushover. You're obviously not as confident about your work, so you're willing to charge less to make up for it. Some businesses, the ones you really want as clients, won't hire you if you charge too little. There is obviously something wrong with your skills, they think.

The second problem with not charging market rate is that you end up going from job to job barely making ends meet. You're basically stuck working to pay for going to work. That's not a business, that's slavery.

The third problem with charging too little is that YOU DON'T SCALE. If two or more of your customers have problems at the same time, you can't be at both places. In addition, you don't earn enough to hire somebody to help you out.

The fourth problem with charging too little is that you are stuck with crappy clients. You have to keep working to earn a living and don't have enough money or leisure time to market your services to better clients.

The fifth problem with charging too little is that there is no padding for administrative work. You end up using your family time to catch up on paperwork or accounting.

You'll Eventually Figure It Out

You'll eventually figure out that there is a reason why computer shops and other tech companies charge so much. They need to pay employees, taxes, marketing, training, travel, equipment, insurance, rent, benefits, and on top of that make a profit. Although you as a solopreneur don't have all those expenses, it also means that there are some jobs that are beyond your reach when you charge too little. You can't afford the necessary training to do the jobs.

What it means, ultimately, is that you don't really have a business, you have a job. A business runs whether you show up to work or not. You can get somebody to fill in for you if you're sick or have to take some time off. When you are the only employee, if you don't work, you don't eat.

You should at the very least charge market rate so that you can live off the extra cash on the day or two you don't feel like working. You can't really do that if you are charging too little.

Other Professionals Charge Market Rates

Do you know why attorneys charge $100 per hour or more? They spend a lot of time meeting potential clients who probably don't have a case. They have to pay for all that lost time they spend qualifying customers. They are not afraid to turn people down. Some cases would be a waste of their time and the client's money.

Electricians charge around $60 per hour. Plumbers charge about $80 per hour. They have skills; so do you.

Underselling Yourself

One of the things that well-meaning people will tell you is that you should not sell yourself short. They phrase it in a self-esteem kind of way, that you should value yourself more. They are missing the point. Nobody cares about your feelings.

Providing your services for too little is numerically unwinnable. Forget your stupid self-esteem. You're in this to get ahead in life, to live a decent life. By providing cheap services, you'll only attract cheap customers. Once you're on that train, you can only provide second rate services; you can't afford to awe the customer because they will question all your recommendations and talk you down to band-aid solutions.

That type of customer will pay the market rate without question if their back is against the wall. All you have to do is wait. Plumbers can provide preventive maintenance or inspections; but how much can you charge for just checking things that may or may not have problems? On the other hand, if a pipe bursts and is flooding the building, that same customer is even willing to pay extra for emergency service.



Undefined Services

Another problem with being an aspiring tech provider is that your services are nebulous to the average person. At best you can say that you fix computers or do computer networking. Anything beyond that gets you a glassy-eyed stare. You need defined products to sell.

For example, you can sell automated backup services. Create a one-page flyer that scares the crap out of your prospects with respect to losing all their business files. Offer a defined solution with pricing. Go around selling that one thing. If anybody asks, you say "I provide automated file backup services. Are your files protected? Here's my flyer and my card."

You can turn any of your preferred services into a product. Just be sure that it's something people want first. Don't bother with the low profit service products, even if they demand it. Service products have several benefits.

  • They provide you with a straightforward sales pitch. 
  • They allow you to hire people to provide just that one service. You only have to train new hires to do the one thing.
  • There is little haggling over price. It's a product; it costs a given amount OR MORE. 
  • You can hire somebody to go out and sell the product
  • You are no longer selling your life by the hour, you're selling units. 
  • It makes scheduling so much easier when you do the same thing over and over. You can accurately guess how long a job will take. 
  • Avoid quagmires. You know exactly what the scope of your work is every single time. There are no surprises. 
  • You'll always be profitable unless you break something (and have to fix it or pay for it). 
  • Makes it easy to say, "No, we do not provide that service. We are experts at X, not Y."
  • Simplifies your accounting.
  • Makes it easier for people to remember what you do.
This is called finding your niche. It is a mistake to be a general technology practitioner. You end up selling your life by the hour that way, like an employee. With products, you can sell a bunch of them and then buy somebody else's life by the hour to execute the work.

In the End, You're a Sales Person

No matter what your certifications, diplomas, and degrees, in the end  you'll have to be a sales person. If you are in business, you are a sales person. Otherwise, you're an employee. If you don't want to sell, what the hell are you doing trying to freelance? Go get a job. 

As a sales person, you want to sell as much product as possible for the lowest cost to you. Pick a few tech services, 5 or less, and sell the hell out of them. Do not veer away from the path. If your clients keep asking for the same thing, drop a product and replace it with what your clients are demanding. They already bought your service product, all you have to do is stock it. 

These are the things you don't learn in tech school. These are the things nobody tells you. These are the sorts of things some people figure out by instinct and build a business around; then you wonder how they got so lucky. The facts are, they weren't lucky. They charged what the work was worth, they hired people to do the work, and they focus on what they do best. 

Automate

Tech work does not have to be rocket science. When it comes to rocket science, engineers spend countless hours inventing things from scratch, countless hours testing and retesting, and countless hours practicing. If you want to succeed at tech work, you just have to make it into assembly work. Get the parts and put them together, tab A in slot B. Repeat. 

You don't have to design computer chips, memory chips, motherboards, power supplies, and other components for every tech job, right? You don't have to start from scratch with every client either. With your limited service products, you can systematize much of your work. Create standard forms, checklists, and procedures for each aspect of the job. Make it as Paint-by-Numbers as possible. This keeps your jobs on track. It also comforts your clients to know that you know what you're doing every step of the way.

It's late and I'm running out of steam. I hope I gave you some things to think about. Good luck on your business. 
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