Undercharging? Death of a Business
Is there really such a thing as undercharging? In the competitive world of business, selling your services cheap may seem tempting. After all, a lower price tag on your services may help you attract more clients than your competitors, right? But when you are in a field like consultancy or coaching you need to ask yourself this question. Is undercharging for your services worth it in the long run?
What is unique to you?
What sets you apart as a consultant from the others is your intellect, <em>your</em> widom. Cheapening or ‘devaluing’ your wisdom that is inline or less than a competitor may not be a good idea. Also, it is simple business psychology. People expect providers to reduce their prices even more. Especially if they are already offering their services at a fee lower than the average market rate. By reducing your fees you are buying into this psychology. If this is the case, then you may want to ask yourself “what is my true value and how this is being reflected in the fees I charge?”
Generally, people assume a high price automatically equals premium services or features. In fact if you look at your own buying patterns, this concept will become even clearer. Would you bargain with a store manager when you buy an expensive high end product like a Chanel dress? Not likely. However, if you buy a dress from a flea market or an outlet mall, you would probably try to bargain. Or at least ask if the sale price is reflected on the tag, right? For all you know the dress may be an export reject with a minor flaw like a torn tag. However, because the dress does not have the backing of a brand on the store front. Or an expensive price tag you assume it is common and therefore not worth the extra money.
Guilty by Association
The same thing happens when you sell your services cheap or undercharge for your products. You end up sending out the message you are average. Possibly even mediocre and there is nothing unique about the services you offer.
One of the keys to success in consultancy lies in putting a premium on your services. It is not just about convincing your clients but you need to believe in the uniqueness of your services. When you believe in your own value, you can easily share this perspective with your clients. Then your clients believe they cannot find or receive the kind of services you offer anywhere else. Undercharging may cut into your perceived valued.
This isn’t about running out and hiking up your fees immediately. Nor does this mean you should charge an exorbitant amount for your services as that too can backfire. There is a process you need to follow. And the first step is finding the comfort zone you can easily and confidently represent outwardly to your potential clients. When you think of your current service fees, how do they ‘fit’ you? What I mean is – are the fees so comfortable you feel as if you are wearing a well worn sweatshirt? If so then it is time to review and adjust your fees.
Going up or down?
When ‘trying’ on new levels of service fees think about the dollar amount as a balloon. Ask these three questions: Is there …
- Enough air in the balloon for you to float around in?
- Too much that you are getting lost?
- Or, too little where you can’t move at all?
As you work with your fees, you will begin to notice a few things. Like, where and how you can align the fees with industry standards and your own self-worth. The more confident you are with your unique services, the greater alignment your fees will be to your true value.
Ideally when you feel comfortable with your fees, you have room to move. The next step is for you to analyze the services you offer. Look at how they are now ‘premium’ to others in your industry. If you are increasing your fees. Then make sure you are effectively communicating the rise in the amount you are asking your clients to invest.
At the end of the day, your clients will be seeing the benefits. Such as increasing their profit margins and efficiency on the basis of your advice. This means you have vital role to play in their business, undercharging is definitely not an option. So you must value yourself accordingly.