Niche selection: Assessing your rate-setting comfort level

Here’s a lesson I’ve learned the hard way: Select a niche in which you feel comfortable charging an attractive fee for your work.

My own freelance niche is writing and market research in the insurance and asset management industries. Over the years I’ve tried several other niches. I’ll discuss two here that did not pan out because I could not bring myself to charge a fair rate consistently. Though my line of work may be far different from yours, you may wish to see if there are similarities between my general situation and yours.

The first problem niche was writing resumes.

There’s a great need out there, but unfortunately, many of the people who need resumes also need hours of career consulting and confidence building. Furthermore, it takes a lot of interviewing, conceptualizing, wordsmithing and proofreading to write a good resume.

So the central challenge in resume writing is how much to charge clients so you will earn sufficient income for your expertise and time.

An online information publisher sells a product that teaches resume writing. The sales page claims that resume writing is a great way to make money fast. You’ll be deluged with work because so many people are looking for a job.

So take your fee, multiply by the number of resumes you can write per day (which they allow you to believe is a substantial number), multiply that by the number of days in a week, multiply that by the number of weeks in a year … well, you can see the pattern. Simple mathematical equations that build upon themselves will make you a millionaire, just as Jesus would be a billionaire today if only he had invested a penny in a passbook savings account.

Some professional resume writers (yes, there are credentials for resume writers) sell an expensive package that includes substantial coaching.

Others write the resume for a predetermined fee. If the client then needs help on what to do with this resume, they sell an additional coaching service separately. If the client doesn’t pay for the add-on, he gets the resume itself but no advice.

Then there’s the Girl Scouts. They advise away, justifying an enormous expenditure of unpaid time as “customer service.” They hope this wonderful customer service will cause the client to refer others, who in turn will also get much more time and wisdom from the resume writer than they have paid for.

I discovered my inner Girl Scout. I realized I would need to completely change my way of thinking and billing to succeed in this business. Rather than make this change, I refocused on insurance and financial writing.

I have also worked on websites and other marketing materials for entrepreneurs.

You may notice a pattern here. Resume clients and entrepreneurs are both looking for work but may not have any paying work at this time. Both present fascinating marketing challenges that can fuel hours of fact-finding and discussion. But if you don’t have the guts to demand payment for all the hours you work, you’re a Girl Scout.

I was guilty as charged.

Even when I had an agreement to be paid by the hour, I’d find myself whittling down records of actual time spent so I would not feel uncomfortable sending the invoice.

Now I am convinced that insurance and financial services are my industries. They are right for me because I am comfortable charging an adequate fee.

Still, I sometimes experience sticker shock as I prepare an estimate. Then I ask myself a simple question: What do I think is the annual salary of the individual at the insurance company who is contracting for my work? (Please note that I work with payroll employees of insurance companies, rarely with commission-only sales agents.)

I assume that someone who has the authority to contract with me makes at least $50,000 a year, and I suspect that many of my clients earn in the six figures. Ah, that puts it all in perspective.

In summary, if you are a Girl Scout at heart (and for purposes of this discussion, boys can certainly be Girl Scouts), don’t select “building campfires” as your niche.

From March 10, 2009 newsletter

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7 responses to “Niche selection: Assessing your rate-setting comfort level

  1. Diana,

    You nailed me. I confess, I’m a girl scout. I’ll leave the campfire building to someone else.

    Thanks for the nudge.

  2. Diana,

    This is a great way to look at figuring out the niche you want to work with. I see so many biz owners who select a particular niche and service because it’s appealing in some vague way. But when they get down to it, they’re overworked, not making enough money, and, sadly, blaming themselves because they’re not smart enough, good enough, or some other “enough.”

    Often the problem comes down to having a good process to evaluate opportunities based on effort versus payout.

    Consider submitting this article to some of the article submission sites. This is a good one!

  3. Hi this is a really useful blog. I’ll be back soon to read some more.

  4. Judy and Judith, thanks. I’ve had a long learning curve on this one!

    -Diana

  5. Diana,
    You’re welcome. I can identify with the learning curve. Boy, can I.

  6. I am a recovering Girl Scout.

    After years of minimum wage jobs, I find it breathtaking to think of what to charge for a realistic income that reflects the value of my time and capabilities. Not to mention allowing for FICA, self-employment tax, insurance, supplies….

    It’s getting easier the more I do, though.

  7. Diana,

    Good article! The trick I’ve found in resume writing is calculating the time/hours spent on each client for resume writing and any interview skills counseling or coaching done…second part of the trick -> time yourself so you don’t go over the alloted number of hours, then you won’t shortchange yourself.

    Be as concise as possible and be happy with your hourly wage (which is what it comes down to for yourself). A timer works very well in this instance. I used to do this when interviewing candidates as a recruiter. Very helpful so you don’t waste your time and end up making $5/hr. versus $50/hr.

    Once I did this, I was no longer a Girl Scout. That and I’ve stopped volunteering my services. **smack forehead** I allow myself a certain number of pro bono cases per year and then I stop. I learned to put value on my time, efforts and expertise and I feel much better for it!

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