Listen to “043:Why you should quit undercharging in your business” on Spreaker.
Over the years, I’ve learned why it’s so important to quit undercharging in my business. Many of you who’ve followed me over the years have seen my prices fluctuate. I’ll be honest with you, the prices change right along with my self-view. I’ve found that my confidence level is directly correlated to my pricing strategy.
I’ve learned that when I quit undercharging, and I charge premium prices, I get the results I’m looking for in business. I want to help mompreneurs understand how important it is to change your mindset and allow yourself the option of charging more.
Here are three steps to help you…
Honor your offerings and stop undercharging.
Others will treat you the way you treat yourself. Be sure to value yourself- your services and products. Believe that what you offer is valuable and needed. If you don’t believe in what you offer, neither will your clients.
What this means is that if your prices are too low, now’s the time to stop undercharging. Whatever your pricing model was six months ago, consider raising those prices.
Recently my husband challenged me to seriously consider my bottom line when I had planned to help a few folks with tech consulting services for either free or extremely discounted. I don’t do pro bono often, but on occasion I will pitch in and help someone out who just needs the service and can’t afford it. This habit, however, has trained me in some way to let down my guard and be more willing to give a “yes” to discounted services- even when the client could actually afford to pay full price. I think what my husband wanted to protect me from is the habit of helping and giving and pouring out so much that I lose focus on why I started my business in the first place: to make money.
It’s important to have boundaries in business, and we start forming boundaries by respecting our offerings and insisting that clients honor them as well.
Discounts don’t necessarily mean business.
If there’s anything I’ve learned is that you don’t always get the best business just because you’re offering a sale.
For example, when I run extremely steep discounts on my tech services, I often end up attracting clients that are either unclear on their goals or don’t respect the results of their coaching with me. What this results in is an end product that isn’t worth my time. In cases like this, sometimes the customer will completely discount the project altogether, backing out off before a project is complete (in which case you would need clear stipulations in place about what happens in situations like these).
It’s worth evaluating whether or not you want to risk a steep discount if you’re unsure whether your time and energy will be compensated properly. Remember, this all goes back to honoring your offerings.
Also, this also just goes to prove that it’s equally important to know your boundaries and to keep it in writing.
Attract premium clients
If you want to sustain a profitable service-based business that you actually enjoy working every day, then attracting premium clients should be at the top of your to-do list. You’ll want to make sure that your business attracts those who are able to afford your fees and are willing to have a conversation about your services without freaking out over your pricing model.
Premium clients will not only pay what you charge, but they’re your best clients because they respect your work, are committed to taking action and seeing results on their actions, they usually pay on time, and will be happy to refer you to others.
We can safely conclude that undercharging gets you nowhere in business, and attracting premium clients will give you the business success you’re going after. So, I encourage you to start charging what you believe you’re worth!
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What about working for free?
In my ten years of working with clients on different web projects, I’ve noticed a trend. The more I charge, the more my time and services are respected. The less I charge, the worst treatment I receive. That’s not to say that I haven’t done pro bono work for the sake of helping others out without a “thank you”. Most people are typically nice enough to give you the courtesy of a “thanks”. What I’m referring to is the overall treatment you might find yourself receiving as a result of constantly undercharging.
Here are some tips you’ll want to remember in working as an online business.
Giving back is great, but be careful not to burn out on pro bono work.
I love to give back. But it’s cost me a lot of time, effort, and money to get where I’m going today. I’m talking years of research, learning css or html in between my kids’ nap times, taking online design classes, paying successful online marketers to teach me what they know so that I can succeed as well. I didn’t always have the money and sometimes I borrowed money to take a class, and paid back with interest. I worked part time jobs, sweat through graduate school while raising an active toddler and learning to work an online business. People who want to get somewhere tend to go after it and make the sacrifices necessary to achieve their goals.
People who learn from others who have forged the way might call you a mentor for being that leader. People who want what you have but don’t want to put in the time and effort to learn from you or get where you are- well, they’re called freeloaders. I’ve experienced both.
In my career as a work at home mom, I have given back whenever I see a need that should be met but the client doesn’t have the funds although they have the vision. Sometimes they come to me for help, or I approach them and offer the help. Whatever the case, I love being of help and I don’t mind not charging in those particular circumstances- which are few and far between. But I’ve noticed a trend resulting from my “free” services, which I would normally charge in the upper hundreds for. When I do these things for free, there are only a few responses I tend to receive:
a.) “Thank you so much, I really appreciate it.” And with that, the client happily uses the product or service I’ve provided for months and years to come.
b.) “Thank you, it’s perfect.” And with that, the client uses the product or service for a few weeks or months, then changes their mind and decides to use something else.
c.) “Um…I don’t like it at all. Can you change it?” And with that, the client proceeds to request a series of edits that you are now left having to decide on how much to charge for the extra labor it will cost you (after you’ve agreed to do pro bono work).
There are several lessons to learn from this. One is: always have agreements in writing and stipulations in place about how you will handle any work you do- both paid and free. It’s absolutely okay to help others out on the occasion when you know giving back is something you should do for someone. But keep the communication lines open and clear. And the other: be very selective about who you give back to.
The first case is optimal. Provided you’ve listened to your client and done exactly what she wants, you’re going to have a happy camper. She could help you by spreading the word of your business or providing a testimonial for your website or Linkedin. She could send customers to you in the future.
In the second case, you’re left confused- and hurt. You spent the time, energy, tears, and sweat to provide her a valuable service or product, and she said she was happy with it- even thanked you publicly a number of times, validating how pleased she was with your service. But at the end of a few weeks or months she changes her mind about it. If it’s a product, she might no longer use it-shoving it to the back of her drawer. But let’s just say it’s a service. Maybe you designed an ebook cover that she seemed absolutely ecstatic about. Then three months down the road, your client ditches the cover and redesigns it herself (without saying a word to you, of course.) A bit confusing, eh? Of course, she can do whatever she wants- it’s her ebook. And if she had paid you for the cover, you wouldn’t feel so stung…but because you gifted her, maybe you expected a longer shelf-life. So it can leave you feeling shattered or even wondering if your help was truly appreciated.
Again- it’s business, and it’s all relative. We always say to never take things personally- it’s business. But when there was no business transacted, it becomes personal. So be careful.
In the third case, you promise you’ll never do anything for free ever again. This is the worst case scenario- with a “client” who acts as if she’s actually paying you. In these cases, be firm but gently remind them that you will do the “extras” for a fee. Beware of these situations also, by careful screening. You should be able to pick out the ones who may cause you some trouble down the road right from the beginning. In those situations, charging your full fee from the beginning will help you to avoid this altogether.
Is pro bono work worth it?
It can be. If you play your cards right-find people who really need your help who are also willing to help you in return by promoting your business, and find those who are willing to pay you even just a little- then, yes, it is worth it. If the client totally cannot pay you monetarily, they may be able to “pay” you by promoting your business and sending others your way.
Not all “free” work ends up in a bad situation. Just knowing that what you’re doing for them is giving them a leg up should be reward enough. It’s when you get taken advantage of that sucks. And always, if anyone is ever using your skills or products without properly crediting you- then know that you’ve been had. Learn from the situation and don’t repeat it.
Have you experienced this before? How about you- do you offer pro bono work? If so, what are the guidelines and policies you have in place to protect yourself and your business?