Guest post by Laura Ospina
Don’t Underprice Yourself: Part 2
The business world is one of profits and losses. Regardless of the industry, a company should always anticipate these losses. The key to a successful business, however, is the ability to generate more profit than loss. One of the many ways companies fall short in this endeavor is underpricing their services. The resources used and effort exerted to complete multiple projects under the same timeframe should often vary in price because some require more skill and effort than others. Many businesses do not take this into account and are left with losses that could have been avoided had they planned more thoroughly.
Rule 2: Plan, plan, plan
Sometimes you just know you’re going to have expenses and you can easily avoid losses by planning for these in your initial scope. Discrepancies in the way of pricing do not guarantee a zero loss potential. Everyone experiences losses at some time, but the key is to know how to manage it. That is the hardest part of understanding your business costs. We always tend to build a positive image when thinking of results: “From this deal, I’ll earn ____ and I’ll do ___ with this budget item”, but often we overlook inefficiencies, unplanned errors, sickness, or bad team members who fall through. All quotes must include pricing for these mishaps. Figure out the fully burdened cost based on the risks associated and think of the worst outcome scenarios to prevent potential losses.
The Brainleaf scoping tool is what I use to scope out projects and plan and I’d recommend it to anyone!
Rule 3: Respect your TIME
Every company selling services that include human resource capital should think in terms of selling time and high quality time that should be priced out accordingly. As explained previously, tasks that your client thinks should take 30 minutes can take 3 hours to one day depending on who works on the project. It’s common to hear: “…but you have all this expertise, certainly you can do it that fast?” Don’t fall in this trap! Think about how much your time is really worth based on the time you have invested in growing and learning your craft. If delivery on a product is two hours via highly educated experts AND it allows your client to save three hours of their time and have an associated ROI for the growth of their business, then the time should be of very high worth. Translate that in your rate.
With this in mind, you do still need follow market rates and be competitive. Whether you use smart tools that analyze data, you should dedicate some time for research online or call other companies to verify government statistics. This is easily achieved and greatly informs what your rate should be.
With the plan to continually grow in your craft, it’s necessary to increase your rates. Hooray! I mean, who doesn’t like more money?
Unfortunately, it’s not as easy as changing the rate and invoicing. There are best practices to keep in mind when going through a rate change. It can be scary and might even mean losing a few clients. But don’t worry, if done right you keep your good clients, get paid more, and lose any cheap clients. Those guys ultimately can’t afford you anymore. This leaves room for better, higher paying clients to fill the void.
Check out this fun blog post on how to announce new prices to your clients.
It all comes down to analyzing your needs. You can increase prices per client, fix the price change for the next project, or both. Alternatively, you can just raise your rate across the board all at once.
Don’t be afraid to lose a client. Not every client fits with your services, needs, and prices. Not every client helps you earn money. Use a tool to run your numbers and help remind you to plan your losses as well as your earnings. Make sure you’re protecting your valuable time and not undercharging for your valuable services. Don’t underprice yourself!
Laura is a graphic designer who specializes in B2B content marketing and is the owner of DO | Creative Content Marketing based out of Atlanta, GA. She is a driven creative who uses strategy, critical thinking skills, and her passion for communication and good, simple design to create promotional campaigns geared towards strategic growth for Marketing and Sales goals.