Why Underpricing is One of The Biggest Issues for Freelancers (and How to Fix It)

Why Underpricing is One of The Biggest Issues for Freelancers (and How to Fix It) - letsreachsuccess.com

Pricing your products seems to be one of the main blocks on the road for freelancers and independent creatives of all kind.

We all do work we love, we put in the time and effort, and have the expertise. And when it comes to asking what we think we should be paid for it, we get it wrong.

That happens for a few reasons:

  • we compare ourselves to the big names in the niche, think we’re nowhere near their quality work and reputation, and charge many times less than they do;
  • we still aren’t sure we’ll make it on our own;
  • we think being a freelancer is amateurish compared to the real entrepreneurs making the big money and don’t even try to get to a higher standard;
  • we don’t believe in our products as much as we should;
  • we aren’t sure about the ‘why’ behind the work we do;
  • we don’t feel comfortable taking people’s money;
  • we still think like an employee;
  • we think a higher price will raise customers’ expectations so much that we won’t be able to answer that with our offers;
  • we base what we charge per hour, or per item, on so many outer factors;
  • we keep in mind the clients’ budget and don’t want to make them take big financial decisions, so think that a much lower price would be a no-brainer;
  • and more.

If you look closely at all those reasons why we underprice our products and services, even though we’re answering a need in a specific market and care about the work we do for clients, you’ll see that the underlying problem is that we aren’t confident enough.

That, however, can be crucial for our business. Here’s why.

The Consequences of Underpricing

1. A proof for low quality.

One of the common rules in any business is that the customer gets what he pays for. And when you charge less, you are directly telling each and every potential client of yours that you’re offering them lower quality.

Underpricing means undervaluing your work and your abilities.

2. A negative perception of your brand.

If you, the owner of the business and the provider of the product/service, undervalue what you have to offer to people, you’re ruining your brand reputation.

3. You won’t attract high-value clients.

One of the freelancer’s dreams is to have a few big, loyal clients who come back with new projects on a consistent basis and thus provide security, a recurring income, and even help with word of mouth marketing.

But to do that, you need to build a name for yourself and to be confident enough to position yourself in the way that will attract such clients.

4. You won’t grow.

Pricing higher is a challenge. And as you know, challenges help us grow, both in life and in business.

If you keep your prices low, you’ll stay small, attract low-quality clients, and never live up to your potential.

Charging more, however, will help you get out of your comfort zone, see where your work can take you, and let you create the ‘learn and optimize’ mindset so that you can always be innovating and making a better offer with your goods and services.

Now that you know why underpricing is bad for our business and what makes us do it, let’s see what we can do about that.

The Solution to Underpricing Your Products: Value-Based Pricing

According to Sean McCabethe pricing models most freelancers and independent workers are using today are broken because it’s based on anything else but real value.

However, you should charge depending on the value you’re providing, and that is pure math and combination of stats and numbers.

To simplify that process and let you get paid what you’re worth, Sean has spent the last 2 years refining value-based pricing and developing custom tools to help you get through the process effortlessly.

It all begins with defining the value – that’s the starting point.

In fact, he created the Value-Based Pricing course where he describes the process in steps, and then gives you the tools you need so that the work is done for you.

It’s all about giving you the confidence to price correctly, and be sure that it’s fair to both your client and yourself.

The course is perfect for beginners, just getting started with client work. People who’ve never done contract work can still start charging the right price from day one, and do the best work they can at the same time.

***

If you’re tired of underpricing, think about all the reasons for that I mentioned above. Write down your version of this and think each item of the list through.

Confidence is the underlying connection, but there must be more.

Maybe you’ve got people in your surroundings killing your self-esteem, maybe your lack of diploma or special training makes you insecure, or it might be that you’re terrified of expressing how much your time is worth in numbers.

Whatever the reason, you need to get clear about it so that you can define your value clearly, and then ask to be paid more.

No more underpricing, just value-based pricing.

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