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As a new business owner, it is very easy to undervalue yourself and the services you offer. Whether due to lack of market research or in effort to build a client base, you may bid extremely low on projects and find yourself working for close to nothing. The good news is, your fees are not set in stone, and you are able to adjust your pricing from one client to the next.
Following are three signs you’re undercharging for your services:
- Your (potential) client asks, “Why are you charging so little?” Yes, this is an obvious indicator, however it happened to us. Because we initially started our business to earn a little bit of extra income, we did not charge full asking value. We went in low with our proposals and captured a lot of attention.
- You’re treated as an employee rather than an expert. You started your business because you have knowledge in a field and clients are willing to pay for your expertise. This is no different than going to the doctor with an ailment and paying for his expertise. But what would happen if the doctor only charged you minimum wage for his services rather than hundreds of dollars a visit? Chances are you wouldn’t hold his diagnosis and treatment recommendations as highly as you do now. You might also find yourself treating him, and thus speaking to him, more as an employee and with less respect.
Again, this happened to us. The same client who asked why we were charging so little quickly began treating us as employees. Our office hours went out the window, and her attitude over the phone and email because increasingly condescending with each passing day. Our work performance and ethic had remained the same, however we had given up our expert status and treatment when we cut our fees.
- You get hired without an interview… Repeatedly… Imagine yourself requesting quotes for a house cleaner or lawn service and receiving a stack from prospective contractors. Among the proposals is a great looking proposal from a contractor with a clean background and a five-star client review. And to top it off, their price is half what the other companies want.
What would you do? Rather than miss out on a great opportunity, a lot of us would hire that contractor on the spot.
Ultimately, however, the interview process is as important to the client as it should be to you. Just because you submitted a proposal and a client is willing to hire you, doesn’t mean you know all the details about the project or will want to work with the client once you know more. In today’s electronic age, much of the personal interaction that used to take place before a proposal was submitted has been eliminated. In the midst of a busy day, you might find yourself sending out your standard price sheet in response to a quote request, rather than asking for more information about the project.
Take advantage of your lunch break for the next few weeks and investigate what your competitors are charging for the same services you are offering. How? Create an alias and call or write for a quote. Chances are, they are as busy as you and will toss their standard price sheet your way.
Kim Sutton is the Managing Partner and Chief Everything Officer of The Sutton Companies, including Sutton Strategic Solutions and Sutton Creative Studios. She is a graduate of The School of the Art Institute of Chicago where she earned her Bachelor’s Degree in Interior Architecture. In her free-time, Kim cherishes the time she gets to spend with her husband, Dave (her business partner), and five children. She also enjoys reading, knitting and writing.
Get a copy of Kim’s FREE guide, “Top 10 Tools for Small Businesses” by clicking here.