Does your sliding scale service model really work?
3rd in our series on business model fairy-tales, this post has a look at the trouble with the sliding scale model – and why it may not serve you at all …
The Scale that Slides 1-Way
The Fairy Tale of the Sliding Scale is oh-so-seductive! The myth behind it goes something like this: you believe you’re giving clients the power to pay what they can afford. It’s a noble notion, without doubt. Unfortunately, most of the time, it really doesn’t work. Here’s why …
The less you value your service, the less others will, too!
When you offer your services on a sliding-scale basis, what you’re actually doing is the exact opposite of empowering others. With this model, you are basically saying: “I am butting my nose in my clients’ financial affairs and pre-determining what they can and can’t afford.”
Get your nose out of other folks business and back into your own. Your prices should be based on the value you offer, relative to the expenses of running the business and supporting yourself. And just like with “Love Offerings”, when was the last time you got to buy your groceries, pay your rent or get your car fixed based on a sliding scale and your income?
A Little Math
For argument’s sake, let’s say your overhead is $2000 per month. Add to that another $2000 for monthly living expenses. That’s $4000 bucks of basic monthly expenses.
Now, let’s say you provide your services for 100 hours per month … Your prices should reflect a monthly income of at least $4000 per month. Can a sliding scale do that for you? If it can’t you have 2 choices: change immediately or spiral into debt and business failure.
When you have a client who is genuinely struggling, you can offer a discount, a set number of pro-bona sessions per year, or a payment plan. But otherwise?