Yes, you can earn more by expanding more slowly and working fewer hours! How? Charge more! But balance your rate to optimise your revenue. There is no point in upping your rates so high that no one takes you up on your services!

Better, slowly increase your prices over time so the quality of new clients is raised. In an ideal world, you could keep raising prices and growth would remain constant. Being realistic, increasing your prices will slow your growth. Put them too high and your customer base will shrink and go elsewhere!

The fear in increasing your rates is that you will loose some existing clients. Efficient consultancies should be regularly shedding the bottom 20% of clients and replacing them with more profitable, better quality ones. Trying to hang on to clients paying low rates will hold you back. When you get really busy, that is the time to either up their rates or cull them. You have no choice or you will be turning down high paying business to service low paying business. That would be folly in the extreme.

Also, it is an opportunity for you to eliminate bad payers. Price them off your books.

Benefits of growing more slowly but higher pricing

You will increase the quality of your client base. They pay more per hour, give you less trouble and you don’t burn yourself out working all the hours just to break even.

While the critical goal of business is profit, you might as well enjoy yourself along the way. Earning an excellent hourly rate goes a long way towards giving you a feel good factor in your business. There are lots of benefits of going it alone, but more money in less time is one of them!

When to adopt a slower growth strategy

There will come a point where you cannot handle any more appointments, do your administration and follow up on your marketing at the same time. I remember when it happened to me. To my astonishment, it was only my 7th week since starting. I did 70 hours that week. I was working every day of the week and nearly all day. I was so excited by the whole situation, as only 8 weeks previously I was broke with no future to speak of. Yet I knew I couldn’t carry on at that rate. Something had to give.

It is at this point – when you are at near full capacity – that I recommend you switch strategies. Let us be clear on one point: when I say “switch” I don’t necessarily mean a sudden change. It can be gradual, over a period of time.

For example, let us say you charge $20 per hour for a very fast start, with the prevailing market rate at $45 per hour. After 2 months you may be snowed under with work. Then, every 2 weeks you up your rate by $5 per hour. It goes from $20 to $40 per hour over a 2-month period. This safe route reduces the chances of you pricing yourself out of business while growing your client bank. And this is a step you have to take as you will never earn good money charging a low hourly rate.

The situation differs slightly if you have previous experience working on longer-term contracts, for example as an IT programmer. Here, one contract may tie up all your time for a 3-month period. Clearly, a different approach is required. Instead, I suggest you price at below the market rate but not so cheap that everybody tries to snap you up. At the end of your contract, you can go for an ever-increasing rate. Whoever hired you before may ask you back so you have some insurance should it take longer to find new contracts at your higher rate.