The stage is set. You have worked hard to qualify your lead, and you’re sure you understand your prospect’s needs. The time has arrived for you to deliver a proposal that will knock their socks off, and then it happens. A slightly nervous feeling builds in your throat, and you may even get a little queasy in your stomach. You wonder: “Why is that there?” After all, you have worked hard to make sure everything goes smoothly. The last thing you want is self-doubt creeping in. So what is that little lump in your throat trying to tell you about your selling process, and how can you build new confidence in your pricing?
To learn how to confidently charge what you are worth, sign up for Rainwerks’ free video series where we show why underpricing your services is so common, and show you ways to avoid setting your prices too low.
That nervous tension you feel may be because every time you hand a proposal to a client, you put your own time and money at risk. Assuming you can do the work to the customer’s satisfaction, you may be feeling a little hesitant to actually ask the customer for what you’re worth. After all, you figure it’s better to generate some income than lose the whole deal, right?
Unfortunately, that’s not true. Setting your rates too low can take valuable time and energy away from finding the right clients – the ones who will pay you what you’re worth. In fact, lowball prices can erode your confidence even further, keeping the vicious cycle in place. According to a McKinsey report, “80 to 90 percent of all poorly chosen prices are too low, and worse, once prices hit the market, it is difficult, even impossible, to raise them.”
So how can you tell whether your pricing is too low? After all, setting your consulting fees can be based upon an hourly rate, a per-project fee, and/or including a gain-sharing bonus. With all these pricing models, how can an independent consultant or freelancer know he or she is losing money? In order to build your confidence in your prices and keep that lump in your throat at bay, we have compiled a list of 6 clues to tell you when your prices are too low.
Here are 6 clues you are setting your consulting or freelancer fees too low.
Clue #1: No pushback on your pricing. Prospects will almost never admit to you that your prices are too good to be true. However, if you find your customers are jumping at your price quote, or you never need to negotiate your prices down, then chances are your prices are too low.
Clue #2: You don’t charge for follow-up support. The work we do for our customers is typically not over once the final project is delivered. Often clients need additional support either through re-work, phone calls or emails. Your low prices may also be attracting clients who like to drain your time even after you feel the project ends.
Clue #3: You are barely making ends meet in your business. You may have your pipeline full and believe success has arrived, but at the end of the month you are in the red. This red flag could mean there’s a drain on your time, and your projects are taking more work than you think.
Clue #4: Free time is a thing of the past. If you cannot remember the last time you took a vacation, or went to your child’s sporting event, it may be a sign you are not charging enough for your services. As independent consultants and entrepreneurs we need to keep a good work life balance.
Clue #5: You don’t seek professional help to set your prices. Simply hoping your prices are appropriate isn’t enough. Professional training can help you set your prices fairly and build confidence in what you’re charging. (Click here for more information on how to seek professional training on setting your prices.)
Clue #6. You have not increased your pricing in years. It’s no secret that the cost of everything keeps going up, and if your prices don’t keep pace with the cost of living, then it’s likely your prices are too low.
Stop feeling nervous when handing your price proposals off to your customers! Learn how to confidently charge what you are worth. Sign up for Rainwerks’ free video series, The Right Price, where we go into greater depth on ways to help you avoid setting your prices too low.