Transcription by Otter.ai. Please forgive any typos!
Welcome to the Causey Consulting Podcast. You can find us online anytime at CauseyConsultingLLC.com, and now here's your host, Sara Causey.
Hello, hello, and thanks for tuning in. In today's episode, I want to talk about minimum charge situations. It's something that I'm encountering more and more, not only as a small business owner, but also as an ordinary private citizen, a consumer, someone on planet earth who periodically has to buy things in order to survive. And I'm wondering, is this minimum charge thing a good idea? Is it tacky? Does it turn too many people off? Are you actually helping yourself by doing that, or are you causing more harm? At the beginning of this month, over on the job market journal, I published the article, America is full of flakes. Because, let's face it, some days it definitely seems that we are a flaky. Lot of people. In this post I wrote, America is a nation of flakes. I see it every day in my HR work, and even in my personal life, I've needed someone to come to the farm for tractor work. I called and texted a variety of people in the area, and frankly, it was a damn nightmare, irrespective of the age of the business owner, excuses we heard. I parked my tractor in the mud. I don't feel like doing it today. I forgot what day it was when I agreed to come down. I don't feel like going to the gas station today. I'll call you in a few days and let you know. Then nothing. I hate flakes too. I never behave that way. It's so tacky. Then nothing. Fortunately, after a lot of trial and error and being ghosted and waiting around for people that no showed no show no call. We found a guy to come out and do what needed to be done. Thank God. It was like glory be in hallelujah. There's one person left on this planet who's still willing to show up and work instead of making lame o excuses to us or just leaving us hanging. Yeah, I'll be there today at four o'clock, crickets, tumbleweeds, one big nothing burger. And one of the things that I encountered in this process were people who would say, I've got a minimum charge. The job that we needed done was small, and we knew that, and I was very willing to pay a minimum charge in order to get somebody out to just simply do the damn work I was willing to do that. I think for me, what I personally found abrasive about it was the delivery, not necessarily the concept, because in order for somebody to load up a tractor to pay for the fuel, to drive to somebody else's property, to do the work, to get the tractor loaded back up and then go back to the next job, or go on to the house, wherever it is they're going next that takes money. It takes time, and it takes money. I get that. I think for me, it was the delivery. Well, I mean, I got a minimum charge. I'm not gonna do it for less than 200 bucks. It's gotta be worth my time, right? Leaving, really? And is it, Kevin, can you not are you not capable of putting in any nicer than that if you are intending to build a business, and that's how you're coming across to people. I don't personally find that to be the best rule of thumb. Maybe I'm the odd man out on and I don't know, but I just found that super annoying, and it led me to this question like, Okay, do you need to telegraph that you have a minimum charge? Why wouldn't you just present it as here's my bid to do the job, take it or leave it. But do you need to present it as like, my time is so valuable and I'm so far above you that I need to charge you an exorbitant amount of money, or otherwise I'll just stay home, and then, how are these people making it? That's something else that I wondered. There are people on the job market languishing months, sometimes even a year or more, desperate for work. And then you have some of these other people that are like, Well, I mean, gotta make a lot of money, otherwise I'm not coming. Well, so what if nobody's offering you that amount of money for that day you just stay home and do nothing. What? How are these people making it? I have so many more questions than answers, I think. Anyway, I digress. Is this idea of issuing a minimum charge and then telling the prospect, yeah, I'll do it, but only if I make enough money is that the way to go. I. On Claire Cox translations, she's written a blog post about this same question. She says that, yes, she does charge a minimum fee. She says something very interesting, though, in the last paragraph, and for me, it was like, ding, ding, ding, ding. Even with minimum charges, you're sure to find that your income will not be as much as if you were working on a longer text. If nothing else, a minimum charge may serve as a means of putting off a client when you'd really rather not do the job in the first place, although just saying no is definitely the easier option. End quote, I think so too. If you don't want to work on somebody's project, if you think it's not going to be worth your time, you're not going to make enough make enough money, or you just simply don't feel like doing it, whatever the case may be, I would much rather deal with somebody saying I don't have the bandwidth. I'm not available right now. Thank you for thinking of me, but this is not the type of work that I do. A polite rejection to me, comes across less likely to burn a bridge than somebody simply saying, Well, I mean, I'll go, I guess, but I'm gonna have to feel like it, and I'm gonna have to make enough money, otherwise I'll just stay at home. Okay? On construction programs and results. Michael Stone writes, My big issue is that you need to know and charge at least the minimum price for your jobs if you want to stay in business, you'll get your financial house in order when you charge a price on every job that allows you to cover all your job costs, cover your overhead expenses, and make a fair profit in quote, and that's a good point. There's nothing unreasonable, in my opinion, about what he's saying there. And it's true if you don't know how to value your time, your skills, your labor, and then if you're going to have to deal with a subcontractor or paying employees of your own, you've got to be able to understand, here's a loss, here's break even, here's profit margin, and then how much of a profit do I think make sense on this job? All of that is logical. Again, I think I'm struggling with this from a perspective of what are you communicating to the client or the prospective client? I still personally find it super tacky for somebody to say, I have to make a particular amount of money, otherwise I won't do it. Why would you not simply say, Here's my bid for the job? Take it or leave it on nolo.com they talk about determining your billable hours like think about a salary, which this is something that helped me a lot when I stepped away from corporate America and went into business for myself, if I were doing similar work as an employee or as a manager inside A company, what would I expect to be paid on salary? What do I feel like is competitive? It's not an overreach, it's not crazy, but it's not an undervaluation either. And from there, you can also figure out what your time is worth, what your effort is worth. And then, as you get more and more experience, you can look at billable hours. You can look at a project and say, this is going to take me five hours, or this will take me 10 hours. This will take me 40 hours. This is something long term. This is probably one or 200 hours worth of work, etc. You'll just get better and better as you have that experience. It is tricky on the front end, but there are ways to communicate this information to the client, whether that's here's my bid. I'm going to put a bid in for a particular dollar amount, or I'm going to tell you up front a very firm estimate of time is 50 hours. At the 50 hour mark, we can hit pause and see how far the project has gotten, and if it's moving to everyone's satisfaction, if it gets wrapped up sooner than that, that's terrific, but we will at least evaluate at the 50 hour mark and see how progress is being made, or if there's anything that needs to be changed before we go on to the next leg of this journey. But I myself would never get on the phone or on the email with a client or a prospective new client and say I'm willing to do this, I guess, but I would have to make X amount of dollars or more. I would never pose it to the other person as in order to get out of bed I have to make a certain amount of money. Otherwise, I just won't do it for one thing that's not anybody else's business. The amount of money that you want or need to make in order to get out of bed for that day and be product. Of I don't I don't even think in those terms. And I don't have anything against making money. I run a for profit business. I'm not out here doing a charity and hoping for the best. I'm not Kevin O'Leary. The other night, I was watching Shark Tank, and he said, I'm the parasite. I want to get in a business and be the parasite. I laughed out loud.
We get in business to make money. We have bills to pay, we have families to feed, we have obligations that we have to meet. So there's nothing wrong with wanting to make enough money to have a good, comfortable life, but I don't think in those terms of like, well, I have to make a certain amount of money today, or I'll just stay in bed. What the hell kind of life is that I'll stay in bed. I'll sit around and play video games. I'll watch stupid bull crap on the internet or on streaming. I'm just not wired that way. I enjoy the work that I do, whether we're talking about my day job in HR work, or the content creation, the blogs that I write, the content I generate here or on my nighttime podcast, the people I get to talk to. One cool thing about running the conspiracy theories that I really didn't think about ahead of time I did it as an extension of my personality a truly a nighttime Hangout, a place where I could express other opinions and get into topics that are off the beaten path from something business related. I knew as I was getting interested in JFK and dag hammer like people are not coming to this daytime podcast to talk about that somebody that's interested in Should I do a minimum charge for my business, and then, if so, do I really need to telegraph that to the client? Or is it tacky as hell they're not worried about who killed Dag hammersholl, typically. But one of the cool fringe benefits of having that nighttime podcast is that I have gotten to meet some truly interesting people and correspond with some truly interesting people, and learn things from a different perspective, see the world through a different set of eyes, and that that's really cool to me. I enjoy it. Stuff like that turns me on and gets my juices flowing. So the idea of, well, I gotta make a certain amount of money, or I'm just not going to bother with it. I'm not wired that way. Yes, I have to make a particular amount of money on each project in order to not take a loss. If you're all the time taking ills, you're not going to be in business for very long. I also learned that the hard way in my first iteration of self employment that failed when you're doing contingency based work and you're working and you're working and you're working and the deals are not closing, people don't respect you. They don't respect the gig. They don't respect what you do. You're just another dime a dozen poo poo staffing agency to them, you're going to sit and slowly go broke, no matter how much money you have saved up, if you're not replenishing that supply, if you're always taking from the savings account and never putting anything back into it, eventually it's going to run dry, and that is a nightmare situation to be in. So here's my opinion, and it could be wrong, fair, fair and full disclosure, it could be wrong. Do you need to make a minimum amount of money for each project? Yes, of course you do. The way in which you express that information to your client or to your prospective clients matters. You don't have to be tacky and you don't have to be hateful about it. In my opinion, the right way to go about it is to simply do your calculations and then make your bid without telegraphing to the client. I will refuse to do this if I don't feel like you're worth my time. We do live in such a highly transactional, flaky society, such are the times in which we live. Technology has made this worse. AI is making it worse still, and yet you never know if you're burning a bridge with somebody by being unnecessarily rude and hateful that could come back to bite you in the behind to me, you set your parameters. Here's what I can and cannot do. You do your calculations. The client does not need to be privy to all of that back of house private information. You make your bid, and if it's more than that person is willing to pay you can politely part ways, but you don't have to go about it in a way that seems hostile and combative. Just my two cents. Stay safe and stay sane and I will see you in the next episode.
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