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
The 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.
It all begins with defining the value – that’s the starting point.
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.
How to Price Your Work on Value and Take Your Freelancing Career to The Next Step
“Are you charging for your work based on what is costs to make, or based on what it’s worth? Professionals charge based on what it’s worth.”
In the beginning of your freelancing career you’ll be charing per hour.
That makes sense as it’s a solid way to follow what others are doing, to calculate your earnings, to give one price to all clients, and to know exactly how long you’ll be investing in it.
But if you stick to this approach long enough, you start noticing a few things.
Some of the work you do requires more efforts and energy, although it takes the same amount of time, but you’re still receiving the same amount of money for it.
You often feel like you aren’t fulfilling your earning potential.
You sometimes feel like negotiating a different price for your services or products, but don’t feel comfortable asking the client and fear you might lose him. So you settle for what you’ve always been paid.
You compare yourself and your work to what others in the market are charging, although you might have more experience, a more creative approach, a bigger desire to do meaningful work and help your clients’ business with what you do.
All these are signs that you’re not charging what you’re worth.
And I’m here to tell you that you could be charging more.
What you need to do to take your career and aspirations to the next step is to start pricing on value.
What will that change for you as an independent worker?
Here are some benefits:
- you’ll enjoy your work more;
- your clients will take you more seriously – charging more for what you do means you’re showing confidence in what you can offer;
- you’ll earn more;
- your pricing process won’t be a guessing game anymore;
- You’ll attract better clients too.
Here are some tips from me on how to price your products and services better and take your work to higher levels:
How to Price Your Products and Services
1. Quality over quantity.
Begin paying attention to value for a start.
Ask yourself how much you’re investing in each project, whether it’s on your mind when you’re not behind the screen too, whether you believe you’re contributing to the client and their business in some great ways.
If you do believe you’re giving it your all, then price what feels right for you, not what the average prices in the market are, not what you’ve charged before for that same thing, not what the client expects you, and not what others advise you to.
2. Start saying no.
If you keep saying ‘yes’ one more time to old clients, or new ones who are on a budget or just don’t want to pay more knowing there are cheaper workers out there, then you won’t really make it to the next level.
You should let go of the mindset that makes you settle down for less if you want to scale.
It’s all about freedom here. And hourly pricing is like a prison for you, that limits your creativity, satisfaction, and profits.
3. It’s all about the result of the work.
Stop calculating what your current expenses are, letting the client give you a price first, comparing yourself with freelancers charging less, or trying to fit in as many working hours in a day as possible.
That will drive you crazy. And it will definitely affect how you work.
Instead, find the value in what you’re doing. Look for it in the end result.
When a potential client shares with you what he wants, create a vision in your mind of what you’ll do and how exactly it can help him make his clients happier, make his brand more professional, or find leads because of an aspect you’ll take care of.
Sometimes they can’t think of all the possible benefits. So you’re there to tell them. Once they can calculate the long-term advantages of the work you’ll do for them, they’ll gladly pay more.
But for that to happen, you need to know what you can do, to believe it will get your client there, and to express this vision in an understandable way.
That’s where you start – by letting go of the hourly pricing mentality and finding the confidence to price on value.