Today I had, yet another, conversation about how to establish a price for some contract work. As always, in my world of nice folks who didn't grow up in the business world, I found the conversation filled with fear about asking too much.

Despite having been told that the job was already bid out at a price probably twice what they would ask for the job . . . the doubts about losing the work, fearing the customer to think they were trying to take advantage of them if they asked too much, and a lack of information about creating a fee structure . . . was driving the price down to the point I questioned if it was really worth doing.

Once again, I found myself talking about the costs of Labor and Overhead, the risks of underpricing and never becoming a real viable business, explaining how a profit margin is like insurance for the business protecting it against risk, and encouraging, consoling, directing, these nice young people into charging the full value of what they were providing.

"Don't cheat yourself," I said. "Develop a real price structure that can give you the confidence that what you are asking for is fair and then stick with it." "Don't give in to fear."

Afterwards, I though to myself, "I should have told them to take a picture of their newborn and post it on the computer" where they were writing their proposal. I should have asked them, "Is it fair to your son to give away your labor and give away the future support you can provide for him?" Too many good people sacrifice in this way.

I think original advice is what they really need . . . a well-thought out price structure to boost their confidence and ward against the "push back" of customers wanting to get a "deal." But until then, maybe it's time to post those pictures next to the computer.

Bryan

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