People (and women, especially) who start their own businesses tend to have a few things in common. We want to be of service. We want to do meaningful work that’s an expression of personal passion. We’re not afraid to be independent (in fact, I’d say we’re wildly brave) and we’re willing to take risks. And – here’s the one that can get us into trouble – we tend to be generous.
Oh, G-word, how beautiful and dangerous you are! As generous souls, we entrepreneurs want as many people as possible to benefit from our work. And sometimes, we think we’re doing that by undercharging. Undercharging can take a few different forms:
- Working for free
- Charging less than market value for your product or service
- Working more hours than you bill
Sometimes it feels good at the time. Like sending flowers to someone you love. But the costs, in the end, can be too high. Especially if you want to nurture that generous spirit of yours.
Five reasons undercharging is no fun.
ONE: Undercharging leads to resentment. Money is only energy. There needs to be balance for there to be peace. If your output (work) and input (money) aren’t even, that imbalance is going to show up in unpleasant ways. Even if you don’t end up resenting your clients, you may well grow to resent your business. And doesn’t your business deserve better?
TWO: Undercharging is expensive. If you need to make $100 in a month and you charge $7 instead of $10 for your very pretty widget, you have to sell 15 widgets instead of 10. That means spending extra marketing and staffing dollars. It also means losing $3 per widget. If you’ve been undercharging, do the math on what you’ve missed in revenue and what it’s cost you. Being able to buy all-organic groceries? A new lingerie collection? A month in the south of France?
THREE: Undercharging is exhausting. When you charge less, you have to work more. Simple fact. That’s forgivable because you love your work, right? But what else do you love? If undercharging costs you only 12 hours in a month (and I’m sure it’s more, but let’s be conservative), that’s time that could be spent making home-cooked dinners, hooking up with someone hot, reading a good book, napping. Whatever fills you up. And if you’re filled up, you’re more productive, and being more productive leads to… you got it! … working even fewer hours!
FOUR: Undercharging is unfair. Do some of your clients always pay full price where others get “helpful” discounts? That’s not fair to full-paying clients. Set pricing and stick to it. If your pricing is across-the-board low, on the other hand, then it’s possible you’re being unfair to your profession! If you charge $60/hr for a service another equally experienced colleague bills $120, you may lessen the value of the service itself.
FIVE: Undercharging is bad for your clients. Sure, everybody loves a deal. It’s okay to have a sale or special offer now and again. (Those are fun!) But when you undercharge consistently, you’re not only depriving yourself and your client of fair reciprocation but you’re denying your client the opportunity to invest in herself. It feels good to save up for a beautiful handbag or a gourmet dinner or to pay a doula or midwife her priceless value.
If these reasons haven’t convinced you, I’ve got one more: undercharging can eventually cause you to close your doors for good. And then who would do your beautiful thing for the world?
Writer Carrie Klassen is a green tea enthusiast, amateur poet, fine point pen aficionado, INFJ Scorpio, and president of Pink Elephant Creative, a writing and design boutique for inspired entrepreneurs. She also writes workbooks and teaches workshops at Pink Elephant Academy for Entrepreneurs.
(Pretty price-tag photo above borrowed from: u-handbag.typepad.com)