Fact: The vast majority of small business owners struggle with pricing.
More specifically, the vast majority of small business owners undercharge for their services.
Common statements I hear on a daily basis from my coaching clients go something like this…
“My clients can’t afford to pay more than they do now…”
“I won’t get any new clients if I charge more than I do now…”
“People will think I’m taking advantage of them if I charge more…”
While I could talk all day (literally) about charging what you’re worth, I need to be fairly brief here, so here are the 3 biggest reasons most people undercharge, and how to make sure you don’t:
- When anyone starts out in business and needs to know how to set their fees, they look around to see what everyone else is charging.
Or maybe they look at what their own trainer or coach or mentor charges.
This is a BAD idea.
The vast majority of people who have their own business undercharge.
So if they’re undercharging and you’re looking to them as an example to base your fees on, you’re going to undercharge too!
What’s worse is, because you see that they’ve been in business longer than you, they’ve had more clients than you, have more testimonials than you – you set your fees lower than theirs.
Or maybe you go the other way and think “Well, I’ve got a qualification that they don’t have and I’ve created a better website so I’ll charge a bit more than them.”
But guess what? You’re still undercharging – because you started from a low base.
Instead, I teach my clients to a) work backwards from the amount they want to earn each year and b) make sure they create packages that are worth at least the amount they need to charge to meet their goals.
- Fear of not getting any business.
Fact: Low fees do not necessarily mean you’ll get more clients – in fact very often the opposite’s true.
Think about it…what are you saying about your services if you undercharge?
You’re telling potential clients that you don’t really believe in what you do. You don’t believe your services are as good as someone who charges more than you.
Is that really how you feel?
Instead of having low fees to get more clients, you can create a smaller package that’s more limited in scope than your main offer, but that gives potential clients a lower entry point to experience working with you.
- Fear of what other people think.
There’s just something buried deep inside us as human beings (and women are more prone to this than men, interestingly) that wants to be liked.
I can totally relate to that…but this feeling could well be sabotaging your financial future.
As someone who has made a career of helping people get set up in business with little or no money, help them make better money decisions and work their way out of debt, believe me, I have faced this dilemma myself on more than one occasion.
And it’s part of the reason why my first business failed. Overcoming it is one of the reasons my second business is a completely different animal.
It’s incredibly common for small business owners to be held back because of concern about what someone else might think – maybe it’s a partner or a spouse or a colleague or a current client.
And at the end of the day you have to
- recognise it for what it is
- make a decision
Are you going to accept it and let that fear determine how your business pans out or are you going to address that fear so you can free yourself to charge what you’re really worth and earn more money?
And that’s something only you can decide.
Here are the 4 biggest pricing mistakes I see people making in their businesses and how you can avoid them:
- Losing control of when you discuss/reveal your fees
This is incredibly important, and it’s one of the reasons I suggest you don’t show your fees on your website IF customers are not buying online.
There’s only one good time to tell someone what you charge, and that’s after you’ve had an in-depth conversation with them about the problem they’re experiencing.
It’s important to clarify if and how you can help them first of all but, most importantly, what it’s really worth to them to solve this problem.
If you quote your fee before you’ve had this discussion, you (and they) are just guessing what they need and how you can help them.
Quoting your fee too early can lead to you being judged as being too expensive or not enough value – and quite often at this point clients will try to put their own package together to suit the fee they had in mind!
And that serves no-one.
- Doubting Your Fees
If you doubt your fees then you’re probably focusing on the processes and features of the service you provide, rather than the benefits or results that clients get from working with you.
This is you if you’re inclined to start telling them
- about the different kinds of products you use
- what qualifications you have
- the broad range of skills you have
- what awards you’ve won
This is a big turn-off for potential clients because until they’ve decided they really want to work with you all they’re thinking is “Nice…But how does that help me solve my problem?”
Switch your focus instead to the benefits they’ll get from working with you so your client hears what’s important to them which is ‘what is the change that’s going to happen for me and what are the results of that change?’.
- Apologising, over-explaining or justifying your fee.
Now, from experience, I can tell you that this often happens in conjunction with pricing mistake number 1.
It also tends to show up if you’re feeling doubtful or guilty or just not confident that they’ll say yes – it’s very tempting to start explaining your fee but it is crucial that you don’t do that.
And the only way I found to combat that to start with, if this happens to you, is to say your fee then to force yourself to say nothing.
Stop talking and sit back while your client then deals with whatever’s coming up for them.
Let them lead the conversation from there.
- The 4th pricing mistake is charging by the hour (or session) instead of creating packages.
I’ve been there and done the hourly pricing thing and I can tell you, if you’re charging by the hour or session you are causing yourself 2 problems you don’t need to have:
- There is potential for clients to compare your hourly rate to someone else’s (even though your expertise, your knowledge and your expertise differ greatly)
- There is potential for clients to question the number of hours or sessions it takes you to complete the service you’re providing
Each of these can lead to you feeling like you have to justify what you’re charging or even revising your fees down if someone challenges you.
Creating a fixed price package and agreeing the pricing in advance completely eliminates this problem. It also makes your cash flow easier to forecast and is a proven way to help your clients achieve better results.
The far-reaching results you provide for your clients are, in reality, priceless.
Help maintain your own credibility and reputation, and that of your profession/industry as a whole, by making sure you charge what you’re really worth.
You can do that with me (as a part of building a unique, authentic business that you LOVE) in my Ignite “6-Steps To 6-Figures” Mastermind Programme.
I run it 4 times a year and you can read more and register for the latest intake now at email@example.com