You’re working more, but it seems like you have less to show for it. You started your own business to find a better work/life balance, yet you have less free time to do the things you love than you did before. You need to sell more or gain more clients…or do you? Maybe you just need to ask yourself one simple question. Are you charging enough?
Sadly, a large number of home businesses aren’t. In fact, undervaluing our services and products is one of the most common contributors to failed businesses.
It’s not surprising really when you consider how hard it is to find good information on how to price goods and services. There’s a lot of mixed information from researching what your competitors are charging to figuring out how much it costs to produce an item and marking up slightly. And while it’s good to know these things, there is a problem with setting your prices based on them.
First, your competitors may also be undervaluing their offerings. They also may not have the same level of expertise or quality of work that you do. You can see why using them as the measuring stick for pricing your own offers is problematic.
Second, production costs don’t figure in your skills and abilities. They don’t figure in the quality of the end product. And they don’t figure in what your own time is worth.
But why is it such a big problem if you aren’t charging enough?
When you don’t charge enough you are going to have to work more or create more products in order to make a profit. That means less time to do the important things like invoicing and marketing for your own business. It also means that dream of work/life balance gets thrown out the window.
Before you know it, you’re dreading working in your own business. And that’s just sad.
Undercharging leads to overworking which leads to burnout and ultimately throwing in the towel on your home business.
Another reason not charging enough hurts your business is perceived value. Fair or not, people see low prices as an indicator that the service or product lacks quality. So when you set your prices with the goal of being affordable, you’re actually hurting how potential buyers view the quality of your services or products.
Worried that people won’t pay more? Think about it. A flavored iced latte at Dunkin’ is around $3.99. A comparable iced latte at Starbucks? $5.15. I don’t see the lines at Starbucks getting any shorter do you? People are willing to pay for Starbucks because they equate the brand with a higher quality coffee. That same type of branding works for your home business too.
Does that mean that there aren’t customers out there that will choose Dunkin’ over Starbucks based solely on price? Of course not. But those customers are also likely to abandon Dunkin’ if another coffee shop opens with a lower-priced latte. Customers who choose based on price alone have no loyalty and are always looking for a better deal. These are not the type of customers or clients that you want. That is unless you like losing clients suddenly because they found what you offer cheaper somewhere else.
While your intention may be good when you set prices with affordability in mind, the results can be disastrous. If your business is struggling or you’re feeling overworked in your own business maybe you need to consider…are you charging enough?
One of my most popular coaching subjects is now available in a self-study course!
The frustration level associated with setting rates is what has made my system for setting prices based on value the most popular topic in my coaching business. So much so, that I began offering it as a stand-alone session. It’s also what has led me to offer the same system in this self-study coaching course.
This is a six-week course that will take you step by step through finding exactly what your value is, teaching you how to set your rates and prices accordingly. Each lesson is delivered weekly right to your email inbox with access to worksheets and a private chat group where you’ll have direct access to me.