Why do Entrepreneurs Undercharge?I see two reasons for undercharging. First, we recognize that we are here to serve our niche and we don’t want to exclude anyone from our offerings. So we charge a rate we’re sure everyone can manage.
The second reason is fear. We may fear that if we charge too much, people will not purchase from us. Or worse, they’ll say nasty things like “Geez, where does she get off charging that amount??”
Setting your prices is easy to do on the physical level. You just put a price on your offerings. But, it is not that easy on an emotional level. You’re putting yourself out there, telling everyone what your offering is worth, and hoping they agree.
Under-charging is a bad idea on a few levels. First, not getting what your offering is worth will make you resent the fact that you put a lot of time and hard work into your business and you’re not getting a fair return for it. Second, if you set your prices too low, it may be difficult to raise them in the future. Third, not setting a fair price sends a message to your inner being and your clients that you may not truly believe in your work.
If you lose money, you’re not going to be able to sustain your business. If you have to close your business, you can no longer pursue your passion and serve your niche. Plus, making money is essential so that you can reach even more people in your niche and serve them too.
Setting Fair PricesHow do we fix this – how do we set prices that are fair to our clients and us?
A really good first step when setting your prices is, take a look at what other people in your field are doing. Follow their example. If they are getting a certain rate, chances are really good, you can get the same rate.
You also want to take into consideration your time. The time you spend with clients, the time it takes to create your offerings, and the time you spend learning about your business should all be accounted for. Time spent in your business adds to your expertise, and to the value of the offerings you produce.
Next, you want to look at things you’ve spent money on in your business like overhead, supplies and inventory.
Intuitive PricingAnother tool to use when setting your prices is your intuition. When you think about your offering, what price feels right to you? Take a minute and think about your offering. Now, attach the lowest price possible – how does that feel to you? You may be surprised to feel that it can go higher. Try adding on a few dollars. Now, how do you feel? Keep doing that until the price feels right – til it makes you smile!
A very successful strategy is to create several different offerings at different price-points to accommodate many budgets. This way, you can charge what you are worth, while being able to reach many more people.
Pricing your products in a way that is fair to your clients and also fair to you is important. Take some time to determine what a fair price is, and don’t be afraid to charge it. You are here to serve your niche, under-charging truly doesn’t serve anyone in the long run.