Whether you're just trying to launch a new business, you're in a highly competitive industry, or you've recently had a dip in business, there are plenty of temptations to slash prices instead of charging what you know you're worth. Rather than offering the ticket to success, however, slashing your prices can lead to further problems for your business down the road--including clients who don't understand why you need to bring your prices back up when the immediate crisis is over. Understanding your true financial worth and charging your clients accordingly is one of the most responsible things you can do for your business.
Set Your Business Up for Future Success
When you charge the amount you're worth to your clients, you aren't chasing away valuable business. Instead, you're setting yourself up for future success! Your business needs income in order to be successful. When you undercut your prices, you may keep business coming in for the moment, but it's unlikely to provide the funding your business needs to ultimately enjoy success in your field.
Increase Your Value to Clients
Many business struggle with clients who see them as commodities. If you want to be recognized as a valuable partner to your clients, it's important that you ask for a payment that reflects that value. When people pay for things, they're more likely to assign value to them--and high payment often correlates to high value in your clients' minds. Charging the right price for your services will also help ensure that your clients are considering what your time is really worth. You must, of course, deliver values equivalent to or greater than your pricing.
Underpricing Undermines Your Position
Underpricing is often just as hazardous to your business as overpricing--if not more so. When you underprice yourself, people wonder if you lack the experience to get the job done right. Many how-to articles recommend never going with the lowest-priced contractor who offers a bid, and with good reason: the lower the price, the better the odds that the contractor isn't going to produce the high-quality work that the buyer expects. Pricing your services appropriately demonstrates that your business is established, comfortable, and understands what it's worth.
Learning to set you business's financial worth is an important step for any business owner or manager. You need to know what your company is worth, then develop the confidence to ask your clients to compensate you accordingly. As you do, you'll watch your overall business success increase to match it.