Ep. 27: All Things Money — How to Charge and Manage Your Cash

As nice as it would be to go into business solely because you love what you’re doing, I’m gonna go out on a limb and say you’re probably trying to make a living, too.

This week on The Gutsy Podcast, we’re going to talk about All Things Money: How to charge clients, how to track your money, how to get credit card payments—I mean ALL the nitty gritty things you don’t even realize you have to figure out until you’re knee-deep in it like, “Shit! How do I do this?”

Who Am I to Charge That Number?

Most of us feel bad for charging for something that comes so easy to us. This is probably one of the biggest reasons most small businesses financially struggle because they continuously undersell their services, lower their prices, and play on a lower level than where they belong.

How many times have you been in this scenario:

You have a product or service, you’re ready to sell it, and someone is interested in buying it and they say, “How much does that cost?” And a number pops up in your head and you’re thinking, Yep, that’s the number. But what comes out of your mouth is usually 10 to 30% lower than what you just told them?

Sometimes you might even cut that number in half—and why? Because it feels scary. It feels scary to ask for the number you feel your business, your services, or your products are actually worth. You’re probably thinking, who am I to charge that number? It’s like our knee jerk reaction to automatically lower prices no matter what it is we are doing. Because it seems easy to us.

I was working through this exercise with one of our business coaches, Whitney Hahn (who we have nicknamed The Wizard) and she said, “You know what, Laura, do you know why it’s easy to you? Because you have the education you went to, you have the training, you have the experience, you have figured out what works and what doesn’t work, you know who to work with and who not to work with, you’ve troubleshooted it, you’ve done all these things to figure out how to make it the best and the easiest for your client—It’s easy because you’re an expert.”

How Do I Set Prices?

So now let’s get into some of the nitty gritty details. The number one question always around money is how do I set my prices? Now, I’m sure there’s some sort of magical calculator out on the interweb somewhere, but you know what? There really isn’t a quick solution to this.

It’s a really great idea to have at least an overarching knowledge of what other people in like-minded industries are charging in your area. Now, you don’t have to go to everyone’s website and make a bunch of calls and act like you’re some Ninja in the night trying to find out what their costs are. You don’t have to know the nitty-gritty of all the details they’re offering, but get a general feel of other businesses like yours. What are they charging?

Know Your Target

And in the same respect, you have to also know your target audience. These are your customers; the people who will buy your services.

So branding is pretty important here, if you think about. Let’s say you want to go buy a watch. There are different targets and different brands that service a lot of different people in different areas of their lives. For instance, Rolex has no problem selling their watches for $8,000 and in the same respect, Walmart has no issue selling their watches for 29.97. Now, you may say, “Oh my gosh, that’s really expensive” or “Oh my gosh, that’s really cheap,” but guess what? The power of branding and positioning comes into play with your pricing. You have to know who you want to buy your products so you know how to price it accordingly.

Here’s the funny thing about money and charging: Every time we’ve increased our prices, we have gotten more quality clients. Now when you go to up your price, it can be scary as hell. You think, oh, everyone’s going to jump ship and be mad at me. But we have found that every time we increase, we’re actually raising our vibration level to resonate closer to our core target audience.

Know Your Area

I also want you to take into consideration the area you’re servicing. And this is a bit of a twofold because if you are located in one geographic area, I want you to really pay attention and understand, am I servicing my surrounding areas or am I based here but servicing areas outside of my own?

For instance, you could be based in the smallest town of your entire state and yet you’re servicing clients and some of the largest cities around the world because that’s where they are. In this scenario, you wouldn’t necessarily set your pricing to match your zip code. You would match your target audience in the locations they are in.

So look at your geographic area and ask yourself, am I servicing locally, regionally, nationally, or worldwide?

Know Your Business Costs

It’s also really important to know what your costs are to do business. It’s especially true when we’re first starting out. We just kind of pull a number out of a hat, something that feels right to us, but the more in depth you get you understand there is actually a lot that goes into running a business. Dues and subscriptions, maybe you have rent or utilities, maybe you’re even at a point where you’re paying payroll and payroll taxes. There are so many little ins and outs.

So what I did was create a fancy spreadsheet.

I’m not an excel girl, but I have learned it can really be beneficial when you’re figuring out your numbers. And I broke down all of my monthly costs. One of the things we as people love to do is hide behind our numbers. If we don’t look at it, it’s not true. If we don’t look at the bank statement, it’s not negative. And guys, I will take front row seat into the ‘I have done that on a regular basis’ show. It’s easier to accept what we don’t know exists. So if we just turned a blind eye and pretend like it’s not there, then we don’t actually have to deal with it.

But here’s the thing: If you don’t know what it costs to do business, then you’ll never be able to figure out how to effectively charge for your services.

I want you to really break down into the cost of the goods you have to purchase to be able to make or do the thing, your expenses, what it costs you to actually be able to do those things, the time you put into it, and the quality you put into it. Know your numbers. Know your profit margins.

QuickBooks to The Rescue

So, my favorite program to use for managing my money is QuickBooks.

This tool has been a lifesaver because before QuickBooks, okay, ready for this? I was managing the ins and outs of money through handmaking invoices and Adobe illustrator, then keeping a spreadsheet on who owed what and what I owed where. Now, if you’re hand-making your own invoices on a program like excel, Illustrator, or Word—you know it’s complicated, right?

Quickbooks online has been monumental for us because it has taken all that crap and streamlined it into one place.

I can access my financial files from any computer with my login. I have an app on my phone that I can see what’s going on. I get notifications when we get online payments. I mean, it’s just really truly a beautiful system. It’s going to allow you to make invoices and estimates so you can manage your money better. There’s custom forms so we can custom brand things (and you guys know how I feel about branding invoices, estimates, and any form in there to look like our company).

There are just so many reasons why I love it (so tune in to hear them all!). In fact, there’s a referral link here that will give you 50% off QuickBooks Online or 50% off QuickBooks Self-Employed for the next six months. That’s some cash to save, so I highly recommend heading over to the link, saving some cash, and streamlining the way you look at money.

How Do I Accept Credit Cards?

There are several different formats and programs. A few we have found that work really well are Square, PayPal, and (again) QuickBooks. Now if you’re already using QuickBooks or are about to because you just grabbed that link there, they integrate it beautifully to allow you to send out invoices where people can just literally click on the button and pay with their credit card. You don’t have to manage any of that information.

Square is also really nice, especially if you need a platform for inventory and a lot of different products. It’s going to allow you to put in that information and accept a credit card either by swiping or manually entering them.

And then PayPal. Paypal has become kind of a universal way of paying for things online. PayPal was introduced awhile ago, so it’s something people feel very safe with and especially if you’re doing online purchases. If there’s the option to enter your credit card or enter your PayPal, most of the time people are going to go with a PayPal option.

Again, you really want to think about what you need to use these platforms for and what the rates and fees are.

Capital Money

One of my mentors once told me it takes money to make money—and that is so true.

I absolutely encourage you to create a great relationship with a local bank. They have the power and ability to make decisions on your behalf versus always having to go up the corporate ladder. A line of credit is a really great way to have flex money in the background. It’s there if you need it, but if not, it’s a safety net.

And if you’re looking for some quick cash—smaller amounts you’re looking to pay off quickly—Square and PayPal both have short-term capital loans that can get you some cash flow (often within 24 hours).

Now, I also want to preface with this: You really have to read all the details because these options are not always the best. Some of them are high interest weekly payments until you pay it back off and it can get you in a situation where you’re really strapped from week to week. But if you know there’s a big order coming in and it’s not really gonna effect you, this could be a really great solution to get the products, services, or equipment you need to get to that point.

The Budgetnista

So a few weeks ago I was listening to The Goal Digger Podcast and The Budgetnista was on. She had this concept I found just absolutely fascinating, and that is unexpected money.

Imagine this: You’re going into Target and find a dress you absolutely love. The price tag says 49.99. You go to the counter and it rings up at only 39.99. In your mind, you had already spent that 50 bucks. But now that it’s only $30—there’s a $20 difference which falls into this category of unexpected money.

So, if you were going to purchase something and find out it costs less—maybe the couple sitting next to you at the restaurant gave you a coupon for 20% off your meal or you find out it was buy one get one free—take that extra money, that unexpected money you were already going to spend, and put it towards something immediately.

It’s a really beautiful way to start chipping away at some things and to make that extra money floating around in your life go towards better inititiatives.

‘Til Next Time

I know money can seem overwhelming. I know there are ins and outs. Hey, no one is doing it perfectly. But the more knowledge you put under your belt, the more focus you put into knowing your numbers, and the more time you put into getting a plan together—you’re going to set yourself up for some really incredible success.

Join me for this week’s Powerback. As we talk about Finding Your Power Source—I’m talking about the one thing that helps you snap back into “Oh hell yes” mode.

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