How to Stop Undercharging Clients

                                        

When I first started my business I undercharged clients all the time because I was so eager to become a business owner and didn’t research the competition for pricing. In many instances clients would say “I can’t believe you only charge this much” or “You should be charging more”.

During the first few years I had several accounts in the red due to clients not paying or providing partial payments. I didn’t want to spend the money to hire a collection agency so I just absorbed the loss.  I later realized this was not the right business decision.  I now have an effective invoicing system in place and use software to keep track of clients, billing and revenue. I also keep track of “pro bono” work I provide and have policies where I only do a certain amount of “pro bono” work each month. I realized that a business owner should be in business to make money.

Undercharging directly relates to your level of confidence in your skills and abilities. The more confident you are the easier it will become to establish effective prices that help generate revenue. Time is money.  Your fees reflect how you value your services and should show your worth.

You can’t help anyone if you are broke and in debt. Remember this is business not personal. This is part of running a business. Your business with not be sustainable if you continue to undercharge for your services. I learned from my mistakes and hope that other business owners use this valuable advice to prevent making the same mistakes I did.

1.       Research competitive prices and adjust prices as needed.

2.       Created policies and processes for clients who failed to pay or who paid late.

3.       Discounts have to be earned not given freely.

4.       Don’t be afraid to ask for what you deserve and don’t be afraid to ask for payments from clients.

5.       Use tools such as pricing worksheet http://www.chicagoartistsresource.org/articles/pricing-worksheet, retainer based services worksheet http://stefan.haflidason.com/worksheet-offering-retainer-based-services-for-recurring-revenue/ or business worksheet http://www.nesta.org.uk/sites/default/files/cet_worksheets_case_studies_and_tutor_notes.pdf

6.       Read books such as Value Based Fees How to Charge and Get What You’re Worth by Alan Weiss.

7.       Use resources such as attending business seminars, joining your local Chamber of Commerce.