It can be so hard to set pricing for your work and charge what you’re worth, whether you provide a service or sell products. You want to charge what seems “fair,” you want to position yourself correctly among your competitors, you want customers to continue to purchase from you, and of course, you want to earn a living. I think that many small creative businesses are undervaluing their work, which I’m sure is not news to you. It’s funny, because if you’re like me, and call yourself “boss,” you may be in an enviable position where you can decide how much money you make – so why are we so hesitant to give ourselves a raise after years of dedicated work?
This information will apply best to you if you’ve been in the same line of work for a while, provide a very high-quality product or service, and enjoy a steady stream of customers. If you’re just starting out or struggling to attract interest in your work, your efforts may be better focused on improving what you do and adjusting how you attract people who want to buy it. It also depends on if the products you sell — if you sell products that can be bought elsewhere, you need to be careful not to overcharge, or people will find a cheaper price on the internet. If you sell products you design and have manufactured yourself, you have more ability to experiment with the price.
If you feel like you’re fairly successful right now, and would like to expand on that by positioning yourself as an expert in your field and being paid like one, I have got some ideas for you! And for those of you just getting started, there will be some goodies in here for you, too. You will find that you have a hard time growing your business if you are undercharging from the start.
The pitfalls of undercharging
For many small creative businesses, undercharging is common. While the urge to offer competitive prices is understandable, undercharging can have far-reaching consequences. Here are some reasons why undercharging is a harmful strategy:
- Undervaluing your work: Undercharging often leads prospective customers to undervalue your work. They might assume you lack experience, aren’t dedicated, or are simply not good at what you do because your prices are too low.
- Devaluing your industry: When many businesses in your industry undercharge, it creates a domino effect, making it harder for those who charge fairly to continue doing so. This harms the industry as a whole.
- Forced corner-cutting: Low profit margins can force you to cut corners, delivering subpar products or services just to make a living.
- Overworking yourself: Undercharging often means you have to work longer hours to make ends meet. This leads to burnout and takes a toll on your personal life.
- Attracting bargain hunters: Customers seeking the lowest price often make things hard when it comes to customer service. In the worst case scenario, they don’t respect your work, complain frequently, and have no loyalty.
The benefits of charging what you’re worth
Now that we understand the perils of undercharging, let’s explore why charging what you’re worth is crucial for your business:
- Perceived value: Charging more generally increases your perceived value. Customers associate higher prices with better quality, allowing you to position your brand as a premium choice. Of course, you have to back this up with an actual high quality product!
- Earning more with less work: Charging what you’re worth means you can earn more while working less, freeing up time for other activities and a better work-life balance.
- Customer commitment: Customers who pay higher rates are more invested in buying from you, may be more loyal, and more appreciative of the time and effort that goes into the final product.
- Delivering your best work: Charging more motivates you to provide your best work. You’ll be committed to exceeding customer expectations and continuously improving.
Assess your current pricing
So now that we know the perils of undercharging and the thrills of charging what you’re worth, let’s see how you feel about your current pricing.
How many hours a week do you have to work to make enough money to support your lifestyle? Is it more than you want to be working? If you feel like you’re never caught up, it’s probably time to either earn more and do less work, or delegate some tasks and raise rates to be able to do so.
Do you make about double what you could if you were working for an employer? Remember that if you were employed by a company, you would have insurance, benefits, and taxes taken care of, and you need to manage all of these costs yourself if you’re self-employed.
What do your competitors charge? It’s good to do a check on this to be sure that you have an idea of what is generally accepted, but in most types of business, there are different levels of quality and service, and different levels of pricing. Don’t feel you need to match what anyone else charges, but don’t be clueless about what’s usual, either.
What kind of feedback do you get from customers about your pricing? Hint: if anyone says you’re not charging enough, take their word for it – your pricing must be shockingly low if people feel they need to speak up. If you rarely get pushback on your pricing, that’s also a sign that you’re not charging enough. Do people say you charge too much? If so, are you getting plenty of other people who are happy to pay?
Do you have too much demand for your services? If you feel like orders are pouring in and you can’t keep up, it may be a good time to raise your pricing.
When customers ask you for extras, how do you feel? Can you graciously accommodate them, or do you feel like they’re asking too much of you? If you can’t put extra work into a project for a customer (un-begrudgingly!), you’re not charging enough. You should charge enough that you don’t feel forced to cut corners with your work.
When was the last time you raised your rates/pricing? Do you make adjustments regularly, or have you been charging the same amount for years, as your skill level increases, your knowledge expands, and your efficiency goes up? The more qualified you are for your job, the more you may be able to charge.
Addressing pricing fears
Charging what you’re worth can be intimidating, and various fears may hold you back. Let’s address some common concerns and debunk them:
- Fear of fewer customers: Charging more may seem like it will scare off customers. However, having fewer customers at higher rates is often more profitable and sustainable (especially when providing services).
- Guilt about stating prices: You should never feel guilty about pricing your work fairly. You’re providing value, and your rates should reflect that.
- Pushback from customers: Some pushback when revealing your prices is healthy. It indicates you’re not underpricing, and you can use these conversations to explain the value of what you offer.
- Perfect customers can’t afford you: As your pricing shifts, your perfect customers may change. That’s okay, and you’ll find new clients who value your expertise.
- Pricing higher than you’d pay: What you’d pay is irrelevant. Customers value your expertise, designs, or creativity, which makes them willing to purchase from you.
- Impostor syndrome: If you feel you’re not good enough, it’s time to improve your skills or seek a different calling. Pricing should align with your expertise and the value you provide.
Practical steps to charge what you’re worth
- Price for profit at the wholesale rate: This is important because ideally, that’s how you’ll be selling most of your products. Here are some wholesale pricing tips and formulas to help you get started.
- Add value: If you’re raising your rates, ensure you’re also adding value to your offerings. Customers should see tangible benefits in your new pricing – for instance, maybe you’ve sourced a higher quality wood for the toys you make. A solid brand strategy and impeccable customer service are great ways to add value!
- Be transparent: Clearly communicate your pricing and what customers will receive. Transparency builds trust and reduces the risk of feeling ripped off.
- Be confident: If you offer services, such as designing wedding invitations, set your prices thoughtfully and don’t negotiate on them. Your work has unique value, and you can convey that to your clients rather than bargaining.
- Know your ideal customers: Understand who your ideal customers are and adjust your pricing strategy accordingly.
- Consider specialization: Focusing on a niche can lead to an increase in business. Specialization can make you more appealing to customers seeking specific products or services.
- Be awesome: Ultimately, success hinges on the quality of your work. Provide exceptional value, and your customers will happily pay what you’re worth.
Charging what you’re worth is not just about financial gain; it’s about valuing your skills and expertise. By embracing the idea that you deserve to be compensated fairly, you can achieve a healthier work-life balance and deliver your best work to satisfied customers. So, what are you waiting for? It’s time to charge what you’re truly worth and embark on a journey to pricing happiness!
Additional Product Pricing Resources
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