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Price Setting for Success
by Wendy Priesnitz
Q: Since I'm just starting out in the self-employment world, I don't feel that I can charge as much for my services as my competitors do. How long should I keep my fees low, and how do I go about raising them later on?
A: Who says you're not worth as much as someone who's been in business longer than you? Your fresh perspective, recent training, extra caution, and enthusiasm more than compensate for your rookie status.
In addition, raising prices is always difficult. Your clients will have been conditioned to paying low rates and might balk at a substantial increase just because you've started to feel undervalued.
Under-pricing just because you're starting out communicates your novice status to prospective customers. This type of negative marketing and should be avoided at all cost.
And never forget that other people will only value your services as much as you do. Some may feel that your business provides them with a bargain, but others may believe the adage that you get what you pay for. Low prices could communicate to them that you're not very good at what you do, or not very confident about it, which is just as bad.
When I first began speaking in public about home business, I did it for free - although I inevitably received a mug and a free lunch. Nobody ever offered to pay me in those days. Once I finally figured out that I should be charging - and convinced myself that I was worth the money - I was asked to speak more often, at better quality events.
I eventually doubled my rates a couple of times and continued to get more work. The message? If I'm priced in the big leagues, I must be a player!
If you still want to charge less than the going rate, be sure you're doing it to attract new business and not because you feel you're worth less than your competitors. Then find a way to communicate that to your customers. Invoice at the going rate, then give a discount. That's always a good marketing plan, and it will be easier in the future to stop offering a discount than it will be to raise your prices.
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