Hourly rates that you charge your clients are very closely related to the ultimate success or failure of your business. Your hourly rates must be high enough to sustain your income needs and not so high that you drive away your sweet spot, small business, target client.
The most common mistake people make early on is setting an hourly rate that it too low. You have to get your small business clients used to paying a certain hourly rate up front. It is very difficult to raise your rates up to where they should be after the fact. Increase of 5 - 15% overtime are ok but if you need your hourly rate to jump form $5 to $85, you will likely lose all of your current customers.
Setting a low hourly rate in the hopes of attracting new clients is a poor strategy. These clients expect low rates in the long term and you can't afford to give permanently discounted hourly rates. By charging too little you may have to effectively dump your whole client list and start over. This could put you out of business real fast.
If you want to attract a few clients fast, you can do a grand opening special. Offer a low hourly rate for one type of service or for a one-month contract. This will bring customers in the door but does not set up an expectation that your rates will stay low forever.
The Bottom Line on Hourly Rates
If your hourly rates are too low you will have a hard time scaling up your business. You want to attract customers that will be long-term regular clients. If the hourly rates you use to secure those customers are not sustainable long term then your relationship with these clients will not be long term either: lack of long term clients spells lack of business success!
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