Picture this scenario. A prospective client calls your company to inquire about billing rates. You’ve done the research and already know what you should charge for your services. But then, fear kicks in. The next thing you know, you’re quoting a price that seriously undermines the value of your services.
Have you ever done that? If so, you’re not alone. Fear of overcharging is real. This is especially true for women and first-time entrepreneurs. Let’s dive into why this happens and how you can overcome this.
Fear of losing income. Only 2% of startup funding goes to businesses that are owned by women. When it comes to money matters and business, many women are on their own. As a result, women entrepreneurs:
- Often have to bootstrap their financing.
- Are more likely to struggle financially after they launch.
- Fear losing clients and contracts.
Women in business frequently undercut themselves and bid low on projects in an attempt to avoid financial hardship. This strategy often backfires because their businesses don’t generate enough income to become profitable.
Impostor syndrome. What if I charge a fair price, but nobody is willing to pay it? Am I really good enough? Self-doubt and lack of confidence can drive women to believe they don’t deserve the same rates as other entrepreneurs.
Common characteristics of impostor syndrome include:
- Overachieving
- Self-doubt
- Attributing success to luck or other external factors
- Setting goals that may be impossible to achieve
Misplaced empathy. This is common among business owners who serve low-income clients or other small businesses. You know what it’s like to struggle, and you may feel guilty about charging the rate you deserve.
If misplaced empathy is guiding your actions, you must make a decision about your business. Either you’re going to operate it as a for-profit entity or a non-profit – you can’t operate the same business as both.
Tips to Help You Charge the Rates You Deserve
Undercharging and overdelivering for your services can lead to frustration, burnout and poverty. If you want to bill top-dollar rates for your services, you must change the way you think.
Many companies will charge high prices for their services and products without thinking twice about it. For example, the executives at Apple are clear about the value of their products in the marketplace. They don’t mind putting hefty price tags on their computers, tablets and phones without considering the needs of people who can’t afford their products.
It’s time for you to level up and get paid well for your services. Here are five tips to help you reframe your thinking and charge the rates you deserve.
- Remember that low prices are associated with low quality.
It’s easy to think that clients will appreciate your low rates. In reality, many will simply assume you aren’t as good as your competitors. Pricing psychology studies show that customers often associate high rates with better quality goods and services.
One of your business goals should be to attract customers who will gladly pay competitive rates for your services and products. If some customers are put off by your rates or the price of your products, then they aren’t the right ones for your business.
- Separate business from charity.
Is guilt or a desire to help others preventing you from charging what you are worth? It’s admirable to want to give back. However, there are ways to do this without lowering your billing rates.
Instead, separate your efforts to do good in the world from your efforts to earn money. Here’s how.
- Commit to offering a free service each month to someone in need.
- Volunteer time with a community organization that needs your skills.
- Offer to refer people who can’t afford you to services that can help them.
- Add perks instead of discounting.
Are you worried about losing clients to people who charge lower rates? Don’t undercharge. Instead, find ways to make your services even better. The right perks can increase your value proposition.
A word of caution about adding perks or extra services to a customer’s package. Be sure that adding extra services don’t impact your company’s bottom line.
You can also offer packages with different features at various price points. That way, customers can choose a package that fits their budgets and needs.
You will never find success operating from a place of fear. To serve your business and your team, be sure to charge the rates you deserve.