Are You Charging Too Little?

Basically, price comes down to value. If you take nothing else away from this post, remember that price is about value.

For example, if someone offered to sell you a hamburger for $100, you would never buy it. To you the hamburger isn’t worth $100 of value. However, if you were offered you that same hamburger for $100 while you or your families were starving to death, you would quickly reach for your wallet. Pricing is all about value to the buyer.

Value is what makes your clients decide to buy.

How much to charge is one of the biggest challenges most self employed professionals face. Your fees can determine whether your business is a success or failure. It’s stressful teetering on the pricing tight rope. If you charge too much you must increase the value you provide and if you charge to little you barely make enough to sustain your expenses!

Starting my first business wasn’t easy. I set my prices based on what I thought I should charge. I didn’t really know how to figure out what I needed to charge to be successful. I ended up pricing myself WAY to low.

I had these two clients. Nightmare clients. One called me all hours of the day and night. He once called me at 2 am on a Saturday. The other called me and talked to me about his dog, his wife, his life. I gave both clients a ton of (free) suggestions, and neither valued my suggestions.. but they kept calling. The problem was they didn’t VALUE me.

Why didn’t they value me? Because I devalued my offerings with my pricing and my willingness to GIVE away so much of my time, for free. I didn’t bill for the time that the talker was talking about his wife, dog and life. I answered the phone at 2 am. I let them ask me a quick 5 minute question for free over and over again.

My solution? I told both clients that I loved talking to them and working with them, but that my time was getting very tight and this was the last time I could give them a free 5 minutes. Then I charged them a retainer fee upfront, so when they called to chat or ask a quick 5 minute question, I could just take time off their retainer.