You’re not getting paid what you’re worth.
You feel under-appreciated, and no one takes you seriously.
Your income comes in fits and starts, if at all… and it never adds up to enough.
Here you are, trying to get your business off the ground, and it’s such a struggle that you’re almost tempted to throw in the towel!
Why is it so frustrating and so interminably hard?Why Starting a Business is Like Getting Into HarvardClick To Tweet
Why Starting a Business Is Like Getting Into Harvard
A total of 39,506 people applied to attend Harvard last year. Only 2,037 (just over 5%) were admitted. Not good odds for the hopeful!
Of those 2,037, though, Harvard expects 1,687 to graduate—that’s a full 82.8%. In other words, if you get accepted, your odds of graduating are pretty good. It’s actually getting in that’s the hard part!
Starting a business is very similar. Once you’re making a little bit of money, it’s not that hard to keep on going. But making that first $1,000… that’s the really hard part.
There are good reasons for this: enormous forces and pressures work against you.
In your own mind, you’ll struggle with confidence and competence issues, fear of rejection, and a plethora of other things that keep you from even trying to move forward.
And in the minds of your prospects are another set of obstacles: concerns and doubts over your competence and credibility. After all, if nobody has ever paid you to do this before, why should they take the risk and be the first?
These dynamics pose challenges on multiple levels, and you must face those challenges without any of the business skills or strategies you’ll learn and amass as you progress on your entrepreneurial journey.
It’s not easy, but you have to do it if you want a fighting chance at making your business a success….
What It Really Takes to Make Your First $1,000
When it comes to making your first $1,000, there’s good news and bad news.When it comes to making your first $1,000, there’s good news and bad news.Click To Tweet
The good news is that, in the grand scheme of things, it really isn’t that complicated: if you have enough conversations, put yourself out there in enough contexts… it’s bound to happen.
The bad news, though, is that those are difficult things to do!
We’ve come to think of confidence as a skill or trait you can build, in a way that’s disconnected from actual expertise, abilities, or results. We use exercises to “build our confidence” enough to be able to do difficult things because we think that somehow the difficulty will decrease.
Well, unfortunately, that isn’t going to happen. Courage isn’t about making the fear go away; it’s about acting in the face of fear. As Susan Jeffers put it, “feel the fear and do it anyway.”
Of course, the confidence will eventually come… but only after you’ve begun to build the skills and track record to justify it. And that’s a good thing. Confidence that isn’t based on real experience or results is foolhardiness, plain and simple.
So how do you make your first $1,000?
Simply put, you bite the bullet, put yourself out there, fall on your face a few times, and eventually, it’ll happen… $50 here, four hours of your time there… it really doesn’t take long to reach that first milestone of $1,000.
There’s only one problem, though. As soon as you hit that $1,000 goal post, something strange happens: the goal moves on you!
And you feel like you’re right back at square one….
The Challenge of the First $1,000… Revisited
The first $1,000 milestone actually comes up twice.
When you’re just starting out, it’s about earning a cumulative $1,000, over however long it takes. This isn’t easy, but it’s neither is it that hard. With enough stick-to-it-iveness and elbow grease, it’s only a matter of time before you get there.
But then the challenge returns, and this time it’s about the first time that you earn $1,000— in one shot.
This is a very, very important (and, unfortunately, under-appreciated) milestone for any service business. The first cumulative $1,000 is about proof of concept, essentially answering the question of “will anyone pay me money for this?”
But selling your time in tiny increments of 1, 2, 4, or even more hours, billed at $40, $70, or even $100/hour or more… it’s just too piecemeal to ever add up to a meaningful income.Are you trading hours for dollars? Why this isn't a sustainable business.Click To Tweet
So as long as you’re in that game of literally trading small increments of time for small increments of cash, you don’t have a sustainable business.
Why? It’s because of the little-understood problem of transactional overhead….
Transactional Overhead: The Silent Killer of Service Businesses
Consider Bob (not his real name), a coach who sells his time for $75/hour. He’s been in business for a couple of years and is happy about his hourly rate. After all, $75 x a standard 40-hour week works out to a tidy annual income of $150,000.
Except, things haven’t played out that way.
Bob has never had trouble attracting clients, but he finds that for every hour he spends with a client, he puts in another 5-10 hours of preparation, research, and support… not to mention the marketing and logistical work of attracting the client and keeping the business running.
Because of all this, he can only see 5-10 clients per week, even though he’s working far more hours than he’d like to. That adds up to an annual income of just about $26,000, which is barely over minimum wage.
The silent killer dooming Bob’s business to failure is transactional overhead—the extra time, energy, and costs associated with every single sale, no matter how big or small.
To illustrate the point, let’s assume that the transactional overhead on each sale is 5 hours of your time. If you sell your time in single hour increments, that means that, at best, you can only be paid for one-sixth of the time you work.
But if you sell your time in blocks of 15 hours, it means then you can get paid for three-quarters of your working time.
That’s why the first time you earn $1,000 in one shot is such an important milestone in your business: essentially, what you’ll have done is packaged up a large (or, at least, larger) block of your time and sold it in a single transaction.
In other words, you’ll have proven that not only are people willing to pay for what you’re offering, but also that you can package it in a structure that works for you!
The only question is, how do you go from selling a single hour of your time to selling packages for $1,000 or more?
The answer is simple: take a page out of the restaurant industry’s playbook….
Sell the Meal, Not the Ingredients!
At first blush, restaurants would seem to be unlikely places to learn how to sell $1,000+ packages. After all, when was the last time you dropped a cool grand for a meal?
But if you look closer, you’ll find a big difference between the way a restaurant sells and the way you probably do.
Restaurants charge whatever prices they do, based on two factors:
- The meal you’re getting and how delicious, nutritious, and/or enjoyable it will be
- The ambiance and experience through which you enjoy said meal
I’ve never seen a menu that lists all the ingredients, with a price point for each, and totals it up to arrive at the cost of the meal—the very idea is absurd.
And yet, that’s exactly what most newbie service entrepreneurs do!
Your hours are the ingredients and, however many of them go into the process, that’s what you charge your clients for—even though they couldn’t care less about the ingredients or precise amounts of time.
What they want is the outcome and the experience that delivers it to them. So that’s what you need to sell. And if you do, you’ll find more clients happily paying higher prices!
Quick Example: What’s Better Than Charging $1,000/Hour? 😉
As a quick case in point, consider my own coaching services.
Working hourly isn’t a good idea, for all the reasons I just mentioned. That said, I do offer the occasional 30-minute SOS call for a $500 investment, so my effective rate is $1,000/hour. That’s a pretty big number, which most people aren’t eager to pay on an hourly basis.
So it’s a good thing I don’t charge by the hour! My typical mandate runs 4 months, which is long enough for us to accomplish something profound, but not so long that we’re married. And while this sort of mandate is occasionally open-ended, it’s usually focused on a very specific project the client is working on.
Throughout the mandate, my clients get unlimited* access to me (*the asterisk is for the rare instances when that gets abused, in which case I terminate the relationship). Sometimes it works out to more, and sometimes less—but on balance, it’s something like 2-3 calls per month with email support in between.
And the investment to work with me at this level? It’s in the range of $25,000-$30,000. Doing some quick math, you can see that this is more than my working rate of $1,000/hour—and more people are happy to pay it!
Here’s how to leverage this same logic to package your own services….
3 Steps to Creating Your $1K+ Expert Offer
There are three steps involved in packaging your services to bring in $1,000 or more with a single sale: first you choose the outcome, then you land on the mode of delivery, and finally, you set the price.
Let’s explore these three steps, one by one:
Step 1: Outcome
This is both the easiest and the hardest part.
It’s easy because you already know what results you claim and believe you can deliver…
…and it’s hard because it takes courage to step into owning it.
Whenever I coach someone on this process, the conversation goes something like this:
ME: “What is the outcome your clients come to you to achieve?”
THEM: [describes the outcome]
ME: “And you’re confident that you can deliver on this?”
ME: “So are you comfortable promising to your clients that they will achieve this outcome? Maybe even guarantee it in some way?”
It’s not hard, so much as it is scary—because it requires you to take more responsibility for the success of your clients than you may have been taking so far. But here’s the thing: if you want to create a meaningfully successful business, that’s exactly what it takes.
And don’t worry about stuff like “I don’t know how long it will take,” or “what if this challenge comes up….” We cover that in the next step.
For now, just think (boldly, courageously, and also realistically) about what outcome you believe you can deliver.
Step 2: Delivery
Once you know what outcome people want that you can deliver, you have to decide how you’ll actually go about delivering it.
This is partially about what format people would like, but more so about what you truly believe is necessary for you to be confident that the outcome you’re promising will materialize.
This is the secret sauce that makes it possible to promise a meaningful outcome and justify a substantial price. As long as you’re selling your time in small or single-hour increments, you don’t have enough of a commitment or control over the process to promise something meaningful.'This is the secret sauce that makes it possible to promise a meaningful outcome and justify a substantial price.'Click To Tweet
So what structure would you need to actually deliver on the promises you’d like to make?
Do you need a day with them? Three months of work? Something else?
Step 3: Price
Last, comes the price, and this part is easy.
You’ve already decided how you’re going to deliver, so you can do the back-of-the-napkin math to see how many hours of your time it will take.
Start with that number, and add a margin for error. Depending on your comfort level, that margin could be anywhere from 20% to 100%.
(Important note: these calculations are for you only… they never need to be shared with clients!)
Then take that number of hours, multiply it by your hourly rate, and voila—you’ve got your package price!
Finally, do a quick gut check of “is the outcome worth this much money?” If it is, you’re good to go, and if not, iterate until you’re comfortable.
Onward to Your First (or Next) $1,000!
We’ve explored some big ideas in this article:
- Why making your first consecutive $1,000 feels so hard, and also why the challenges are mostly in your head
- Why the real challenge is making your first $1,000 on a single transaction, and that you probably don’t have a real business until you’ve done it
- What it takes to package up your expert offer, to overcome the transactional overhead challenge and break into the success you need
You now have all the ingredients, except for one: action.
It’s time to start moving forward. Determine the outcome, delivery, and price of your Expert Offer, and start making those sales!