Ideally, every small business owners could charge what they really want – what they’re really worth – but that doesn’t always happen. Our main challenges come down to four areas: price, comparisons, time, and confidence.
This is the most quoted and least understood reason why a client will or will not accept your work. Many times, the potential client throws this out as a first reason (regardless of accuracy), because they found another way to get their need met or didn’t really want to get it done. The waiting lines at Starbucks say that people are willing to pay for what they really want.
Undercutting others’ prices is a temporary way of outbidding the competition. If price is your only differentiator, you’ll lose future contracts when others use this method against you. If your business gets defined by low prices, either you’ll end up using shortcuts, or your clients will assume they’re being given low-quality work along with low prices. “You get what you pay for” is a habit of perception that’s hard to overcome.
This is the real kicker. You have bills to pay, employees to pay, the government to pay – and a global economy to navigate. Unless they also are freelancers or business owners, your client often don’t understand that the balancing act between what everyone wants out of you, and what you can offer that will get your own needs met.
- Global Con: Your competitors are enthusiastically muscling in for elbow room, willing to take on jobs they’re often (a) neither qualified for nor (b) able to complete. Goal – show you can do both.
- Global Pro: Your pool of potential workers has also exploded. Goal – find room for profit between others’ real skill level, and the prices you can afford to offer.
- Complete Con – Your mental comparisons to others that ‘convince’ you that your offering is neither unique nor valuable. Goal – find the value in what you offer, and promote it.
SMB owners quote ‘time’ as an excuse like our clients quote ‘price’ as a reason not to buy. Our real time challenge is that we often don’t charge enough for what’s truly valuable, while overcharging for things that people really don’t need. According to the Profitable Firm, accountants often lose out financially by confusing the difference between Good and Cheap, doing free work that clients think will ‘only take a minute’, or underestimate their expertise. See Stacy Kildal‘s helpful tips on deciding whether or not it’s a billable question.
For freelancers, an hourly rate doesn’t take into account the mental loops and research needed to do quality work, emails and scrapped ideas, or the frustration of unrealistic deadlines. Just because machines can do a job instantaneously, doesn’t mean that a human has the same ability. I now charge 50% more for a one-day turnaround, because it forces me to shift around my daily plan to accommodate someone else’s panic.
This can be the biggest one. Again, to quote the Profitable Firm, accountants often don’t know that their years of reviewing business financials gives them a valuable amount of consultancy knowledge. Clients need to know how their businesses should be run better, more than they need to get their taxes done. You don’t get a tax break for what you could have charged, only on what you did charge.
Undercutting a reasonable price range often happens when you feel that no one will pay good rates, and the frustration of having proposals rejected. It’s doubly frustrating to find out that others are bidding for – and getting – twice your quoted amount. If you can’t link the issue to your marketing, personality, or quality of work – maybe the potential clients are mirroring your lack of confidence in your offerings.
Make sure that you know why you’re worth decent prices, and don’t take ‘discount’ as an answer.