How much is it worth? It sounds like a simple question, but the answer is never straightforward. New entrepreneurs and small businesses are the most affected by the pricing aspect. Many end up undercharging for a variety of reasons but this is a destructive path as it means more work, leading to burnout and little to no financial breakthrough. Over time, you’ll feel resentment towards your clients. As entrepreneurial burnout takes a toll on your progress, you’ll dread dealing with clients, which affects your productivity, eventually driving your motivation into the ground.
Let’s look at some common mistakes that lead entrepreneurs to undercharging.
Imposter Syndrome
Doubting your abilities as you get started is bound to happen. It is among the top reasons people undercharge. Many new coaches in the industry naturally feel overwhelmed, especially considering how competitive the landscape can get. You’ll undervalue your products and services. You’ll set a price you think you are worth, typically lower than the market standards if you get stuck with an imposter mindset. Such a routine sees many entrepreneurs failing as they undercharge and stick with the rates for an extended period, translating to little or no progress.
Poor Research
Researching the going rates before developing a pricing strategy can’t be emphasized enough. Many entrepreneurs discount the function or don’t know how to research the going rates. This means that their pricing isn’t data-driven; instead, they base their pricing on what they feel their offerings are worth. In most, if not all instances, this leads to undercharging. You might offer the best services and products but charge a low rate as you aren’t aware of the standard pricing.
Need for More Business
I just want more clients! This is an aspect that forces many businesses to undercharge. While it can bring in more leads, it is not sustainable. Some clients could perceive your offers as low quality, meaning that you won’t generate and maintain a significant loyal following. Moreover, as you win more clients and earn less, you’ll be overworked and overwhelmed. This leads to entrepreneurial burnout, affecting your productivity and profitability. Overall, you’ll lose more than you gained. You want more people in the door, but don’t take them at any price. Know your worth and set fair and competitive rates.
Fear of Losing Clients
You’ve been around for some time and feel that you need to raise the rates to match the improved quality. Nonetheless, you fear that this will result in loss of business. Your existing clients could leave, which is a fear that forces many entrepreneurs to keep undercharging their offering for an extended period. This means that you don’t even adjust for inflation. You’ve grown and improved your products and services through experience and investments such as updates, which should be reflected in your rates.
Regardless of the reason you are undercharging, the outcome is the same. You’ll earn a lot less than you deserve based on your knowledge and experience. Moreover, you’ll develop negative feelings toward your entrepreneurial undertakings if you don’t feel you’re getting compensated properly. Over time, entrepreneurial burnout will kick in, forcing you out of business as you keep making poor decisions, losing more clients, and hardly breaking even.