Strictly For Newbies
The Pricing Game

Copyright 1997 - 2004 by Cynthia Ann Lewis
No part of this article may be reproduced or distributed
without my written permission

"What should I charge my clients?" is every newbie's crucial question.

But do  you know that this issue can seriously affect the newbie's career, as well as
other transcriptionists' income in the service area?

Two temptations attack Nan Newbie as she considers her pricing strategy:

The first temptation is desperation as she sees doors shut firmly in her face
for lack of actual job experience. Maybe, she thinks, she can get that
business by charging less than anyone else. After all, she really needs the
experience.

The second temptation is the urge to test career waters with one nervous toe:
"I'll start out by charging so little that if I really can't do this work
after all, my first client won't be out too much money."

NEWBIES, RESIST THESE TEMPTATIONS!

Follow this real-life scenario, and see what happens:

Nan Newbie is ready to go. She's finished her training, stocked her reference
library, hung up her business license, and she's preparing to market her
skills to the medical community. She's surveyed her service area so she knows
the rates charged by other transcriptionists - let's say they range from $0.13
to 0.15/line, depending on turnaround time and delivery service.

Then Nan gets cold feet. She lets those (temptation) doubts of "can I really
do this job" cloud her thinking. She decides to lower her rate to $.08/line -
38.5% BELOW THE CURRENT MARKET.

Or, she's been marketing for a few weeks with no nibbles, so (temptation) she
slashes her rate to $.08/line, figuring that any work at any price is better
than none.

As soon as her flyers hit the mail she gets a query from a doctor whose own
income has been reduced by aggressive health care cost-cutting measures. He
feels he HAS to save money - and here's a great opportunity to save 38.5% on
his transcription charges. He hires Nan.

Wow! Nan has her first job and she's thrilled. The doctor is thrilled because
he's saving 38.5% on transcription fees. Everything seems wonderful - but what
has really happened here?

The market in Nan's area has supported the range of $0.13-0.15/line for
several years. Other transcriptionists rely on that base for their income.
Other medical offices and institutions are accustomed to paying that rate for
professional work. But the doctor who hired Nan will NEVER AGAIN pay the going
rate - not when he can get good work done for 38.5% less. He will look upon
the "standard rate" as far overpriced, and a fee which he can no longer
afford.

The transcriptionist who lost her account to Nan was displaced not because of
shoddy work or by failing to meet deadlines or client demands, but by an
outrageous overnight drop in the market rate. She had no time to prepare a
counteroffer or to resell to her client the values that she brought to him.
Loyalty often disintegrates when faced with a drastic variance in price.

Nan then realizes that she can't possibly pay her bills charging her
ridiculous rate and tries to raise her rates, but her client threatens to
switch services. So, Nan uses the fatal attraction of her cheap rates to get
six more clients, all of whom will pay 38.5% less. She ends up overworked,
underpaid, disillusioned with her new career....and wonders where she went
wrong.

It's too bad for bargain-basement Nan, but worse, her action has drastically
impacted every transcriptionist's current and potential income. Very soon, no
one will be able to raise their rates - not when Nan's Doctors One through
Seven are all paying 38.5% less than what the stable rate has been. It's even
likely that the area's transcriptionists will be forced to lower their rates
to meet Nan's competition.

We see this same scenario with homegrown retail stores every time one of the
giants enters a market area and with their significantly cheaper prices lowers
everyone's scale. The consumer or end-user is always the winner - and the
established provider loses market share and profit margin every time.

Early in my MT career I lost a client in the exact situation above to a cut-rate newbie.  
It is my opinion that it is appropriate for newcomers to set
his or her rates at the lower end of the established rate scale - but it's not
okay to emulate Nan.

Let's face it - if you don't feel you're good enough to be charging the going rate
for your work, perhaps it's not quite time for you to begin soliciting clients.

If your area's range is $0.13-0.15/line, start  out at $0.13. You still have room to grow as
your experience and depth of specialty knowledge increases, or as you offer more
unique services to your clients - but you are not undercutting established transcriptionists,
nor skewing the rate structure in your service area. In marketing at the
established rate level, you not only present a professional and consistent
image to your potential clients, you protect the rate structure for everyone.

If you need marketing advantages to get work, stress instead those
extra services (which translate to extra value for your clients) available
only from you. These values may impact your individual cost of doing business
but bringing a client "new and improved" services is what healthy business
competition is all about. Unhealthy competition rides the rate roller coaster
piloted by Nan Newbie.

If you are truly jittery about your capabilities, don't test them on your
hard-won client. Practice, practice, practice until you are comfortable with
the skills you offer the marketplace. We are ALL nervous as we start out in
this field, but we have to have skills and confidence to charge professional
rates for professional work.

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