Are You Charging Enough?
If you’ve ever looked at your prices and thought “Maybe I should charge less to get more clients”, this post is for you.
Undercharging is one of the most common mistakes small business owners make. It makes total sense why: you’re small, you’re not sure what you’re worth, and a lower price feels like the safest way to get people to say yes.
The problem here is that prices that are too low don’t just hurt your income. They make running your business unsustainable, and can make clients value your work less. So let’s dive into how to know if your prices need a little boost.
First off, if you’re fully booked but still aren’t making enough to cover your expenses and pay yourself properly, that’s a pricing problem. If your calendar is packed and you’re hustling, working more hours isn’t the answer when you’re already at capacity.
Next, if nobody ever pushes back on your prices, it might mean your prices are lower than what the market expects. If every single person says yes without hesitation, that is a huge sign that you may need to take a second to adjust your pricing, as a little bit price resistance is actually a healthy sign.
Following up on this, if you ever feel resentful doing the work, frustrated about how much you’re getting paid for a job, or just have a gut feeling that something doesn’t feel fair, listen to that feeling. It might mean that the exchange of services for price ratio needs to be re-evaluated before your brain can fully process that.
Finally, if you’ve never actually done the math, and just relied on what “felt” reasonable or what other competitors were charging, please do yourself a favour and run your numbers. They might confirm what you already had, or you might be shocked to find out that your prices barely cover your costs. It’s never too late to adjust.
On that same wavelength, a simple way to check your prices is to start with your monthly business expenses, what you want to pay yourself (if anything), and a buffer for taxes and any other unexpected miscellaneous costs that may arise. That’s your minimum monthly revenue target. Now, figure out your REALISTIC capacity per month. How many clients or sales can you handle in a month. Quick math time where you divide your first number by your second number and that’s what you need to charge per client to reach your goal. If the number you land on is higher than what you’re currently charging, that’s not a reason to panic, it’s just information. Now you can work towards adjusting either your prices, your expenses or your capacity, with actual data behind the change.
Something I want you to remember is that you are allowed to charge what your work is worth. That’s not you being greedy. It’s what makes your business sustainable, so that you can keep doing what you love without burning out or losing your passion.
If you’re scared to raise your prices, that fear is completely normal and almost universal. A few things to remember is that you don’t have to raise your prices overnight. You can start with new clients, while keeping your existing clients at their current price. Small gradual increases can feel less scary and allow you to build confidence in your new model. As well, your ideal clients won’t leave over a price increase that is reasonable. Clients who value your work will stay. Clients who leave never truly valued your product or service, just the price you were selling it at. Finally, charging more often leads to doing better work. When you’re paying yourself a fair amount, you show up with more energy, more care, and less resentment.
Want help figuring out what you should actually be charging? Let’s work though the numbers together. Book a free Clarity Call today www.korporateconsultingservices.com.