Not everyone can be an entrepreneur. The internet says that any person who can do a thing well can start a business. And while that’s technically true, everyone can’t be financially successful at it, for one main reason:
Most people charge for time or internal value, but promise an experience. And that, my friends, is underpricing.
Let’s say for example, that you’re a coach. You provide one hour calls with your clients twice a month, supporting them through your area of expertise. Clients love talking to you, feel great when they get off the phone, and you have all confidence that they’ll refer you to their friends. But will they?
Think for a second about their interactions with you and your company:
Does your website make clear what you do and who you do it for?
Is it easy to get in touch or book a call to see if you should work together?
How long does it take to provide a contract and invoice to get started?
How much work is it to book regular calls, and communicate in between those sessions?
On and on. And since many new entrepreneurs don’t consider all of these needs and costs, they tend to bill on price. X number of 1 hour sessions cost $X/month. The thing is, they’re not paying you for time. They’re paying for the experience. Potential clients will miss out on your awesome if the can’t figure out how to contact you. Friction in the scheduling process can frustrate clients who may decide not to return. If you promise follow up that you can’t deliver in a timely fashion, it can feel like folks aren’t getting what they paid for.
Now I don’t tell you this to shame you or tell you to quit. Chances are if you’ve made it this far, you want answers to how to change this life for yourself. So I’ll give you step 1.
I say often that pricing is arbitrary. There is a constant back and forth of what is too much or too little to charge, and often it feels like there is no right answer. But if we start with the assumption that your price is too low, it begs the question what are you charging for? And what is missing from that price?
Clients aren’t just paying for your tasks (trust us - Little Fish made this mistake at the beginning too!). They are investing in your infrastructure. They are paying for a hands on experience when needed because software took care of the bits that could be automated. Clients are paying for the team you hire to support the company with speed and excellence so that all responsibilities aren’t on your shoulders to complete.
Simply, they are not just paying you for what you do. They’re paying for how you do it.
Think about that before you send your next invoice.