When I first moved to the U.S. a couple of years ago and had to relaunch my business online, I wasn’t sure about what to charge. Sure, I had over 9 years of experience working in branding, but still the pricing was different in my country and I had little to no point of reference.
I started researching only to feel deflated because I would see sites like fiverr or Upwork with people charging really low for design. Eventually, I came to realize that if I was going to get in a race for pricing, it was one that would take me straight to the bottom. Why? Because NO MATTER what it is that you do, whether you are a Doctor, a coach, or a consultant, there are always going to be thousands of people that charge less than you.
You basically have a choice to make: you can either get mad and complain about how these people are bringing the industry down, or, simply change your competition.
Here’s the thing, for every cheap person out there getting pennies for their time, there are also a TON of people that are charging a whole lot more.
Personally, I made a choice to get out of that race and completely change the way I was positioning myself in order to bring in the right people to my business. Period.
So, how is undercharging for your products or services hurting your business? Keep on reading to find out. Also, if you want to look at different branding and website mistakes you could be making that are keeping you at low prices, I created this guide that covers the most common business #fails I see repeat again and again.
price is perception
A few months into my newly relaunched business, I started working with a client who was pretty amazing at what she did. I was still in a point where my mind had a little bit of scarcity (more on that topic here), and pretty much desperately wanted her to hire me. I lowered my prices even more and offered her a discount to work with me. She super gladly accepted it and we started working together.
To my surprise, when we finished the work, she told me how baffled she was when she had heard my prices. She literally told me “My partner and I were really surprised at how cheap you were, specially since a few months before we had paid 10 times as much to have someone do something not even close to your level of work for something else.”
You can imagine my face and what I was thinking at this point.
Price is always a matter of perception. To someone $1,000 might seem extremely expensive, while to someone else it’s literally pocket change. There are people dropping thousands of dollars right this very moment in a key chain. Just think back to when you were in college, you thought that maybe going to a Cheesecake Factory was a luxury, whereas now, you probably don’t think it over twice if you are hungry and at a mall.
It’s all about where you are in life right now and the type of value you are looking for.
And while there is always going to be a market for really low prices, there is also a huge market of people that will be more than willing to pay what you want — and deserve. There’s always someone out there that wants the Bentley instead of the Honda, and that is precisely the kind of quality that they want as well. Plus, the mind is funny sometimes. Whether it’s true or not, we tend to judge based on price.
How many times have you chosen the most expensive option at a store, just because you thought it was better? Or bought a Michael Kors bag, paying $500 for it instead of a $50 Nine West one when they might both have the exact same leather and style? The reason why this happens is that we are connecting price to value.
When we pay more, we are expecting more out of it. And while there are people that will always go for the cheaper option, there are also those that don’t have time to waste on spending money on something that won’t offer them the value they need or expect.
you are undervaluing your work
Here’s the next part, if you are good at what you do and you are undercharging for your products/services, then you are lowering your own value. It doesn’t matter how long you have been in business, it’s about the quality of the results and the work you are putting in there.
So, yes, you might have started your business just 6 months ago, but also spent 3 years studying for it, have read countless articles, done over 10 courses and worked with a couple of coaches yourself. So I say, give yourself some credit! Or, you might be one of those people that have worked as an employee in your field for decades and now have a business where you are helping your clients get massive results.
So, if you are undercharging for your work, you are undermining yourself, your effort, your expertise and experience.
What I see happens a lot is, entrepreneurs lacking confidence because they don’t truly understand how valuable their business is. If you start looking around and seeing so much competition, it could make you nervous, of course. In truth, the only reason you should worry is if you are failing to differentiate yourself and understand what makes you unique.
The more you understand your strengths, the more confidence you will have in your business and in charging what you are really worth. When thinking about pricing I like to analyze 5 different aspects:
Once you know what these things are, you can have the confidence to understand that YES, you are absolutely and without a doubt, worth it. And that undervaluing your work is not doing any favors for you, because here’s what happens: you are working like crazy, making a mediocre income, exhausted at the end of the day (too tired to enjoy anything else), and waking up deflated. Your mindset is off, your creativity is non-existent (you don’t even have time for it) and you lack a strategy for scaleability. So, you end up staying stuck and not moving forward. Can you see how you are the one responsible for hurting your own business?
you are attracting the wrong clients
The other thing that happens when we undercharge for our services is that you end up attracting the wrong people. This of course makes it harder for you to leave that range.
It’s a fact that when people pay more they are more committed to making things happen. They put in the work, they give it the time and effort and see bigger results. I have given my course for free to a few people in the past, and guess what happens? Nothing. They do nothing with it. The same thing happens when I have decided to take on clients pro-bono. The reason for this is that the commitment isn’t the same as when there’s money behind it.
I help people build premium brands and create successful businesses. If you are investing in that, it means it’s exactly what you expect to happen for you. Guess what happens to 99% of my clients? They have success. They bring in the clients. Yes, part of the reason that is true is that we have effectively worked in positioning them and designing a brand that looks incredible, but it’s also because of the implications behind investing in your business (or yourself). It means that you are going to make it work. It means that you are going to do everything in your power to be successful.
For me it means that I don’t even consider working for people that don’t have that commitment. I don’t like taking on clients that don’t have a real passion, so I don’t. And you shouldn’t either.
By undercharging, you are likely bringing people in that don’t have the same level of commitment to getting results. Of course, this is going to depend on what you do and the outcome of it for your clients. But know and understand that you have the power to bring in people that will appreciate you. It’s all about making sure you communicate it in the right way.
If you are ready to make that happen, here’s a checklist you can follow in order to charge premium pricing:
what if people are saying no to your low prices already?
If you are at a point where you are still having a hard time getting clients on board at your low prices, and it makes you feel nervous about raising them, one of these things is likely going on (I’m taking it as a given that you are good at what you do, and it’s not a problem with your offer):
you are talking to the wrong audience
One thing that could be going on is that you don’t understand who your audience is, and are focusing your strategies at the wrong crowd. So, if your ideal client is a teenager, and you are spending your marketing efforts on Twitter, you are wasting your money. You need to understand who they are, and most importantly what their problems are. I go in detail in describing what your audience really wants in here (it’s one of the MOST valuable lessons you will get on this subject). You need to make sure your communication is geared to the right people in a very clear and compelling way. If you are failing to do so, you are very likely bringing in the wrong people.
If you want to know more about defining your ideal audience, I wrote about it here as well.
you are failing to communicate your value
If you are focusing your communication on what you do, your exact services, the nitty-gritty details, the features and parts and leaving out the real benefits, it means you will likely bring in the wrong audience as well. This is one of the biggest keys. You need to focus on value over anything else. Here’s where understanding how valuable you really are comes in handy.
So, for example Beth, from Navigate HR, had a website that was merely communicating who they are, but not truly engaging her audience or bringing them in.
She wasn’t communicating based on value as effectively and impactful as she could be. She also didn’t have a sales funnel in place. So, what we did was change her look and her messaging in order to capture her audience straight away.
Can you see hoe much of a bigger impact her brand makes now?
your brand doesn’t reflect your quality
Finally, the last thing that might be hurting you in bringing in clients (even at your low rates), is having a brand that doesn’t look professional, doesn’t build your credibility. This will absolutely and without a doubt hurt you and make it REALLY hard to get people to buy your services.
Madina, for example was making that mistake in her business. She was communicating her work on the surface, and was having a hard time bringing in clients. She was (and is) a great stylist, but wasn’t using her strengths to her advantage. This meant she was basically bringing in people that were not the right fit.
This is what her brand used to look like and communicate before:
After changing her messaging and her look she was able to bring in more of the RIGHT clients for her business. Can you see how this change would make that huge difference?
As you can see, undercharging for your business is only really hurting you both in the short run AND in the long run as well. You need to make sure you are focusing on taking the steps to building a premium brand because it will absolutely change everything for your business, from the quality of your clients, to how you are showing up as well.