Low prices won’t win you clients. You are not the exception.
There are all kinds of reasons entrepreneurs tend to offer low prices as way of attracting clients. In fact, lowering your rates and underpricing your services does both you and your business serious harm. And it’s one of the most common ways you cheat yourself out of what you deserve to be paid for your work and professional services.
Now, if you’re brutally honest with yourself about how you let this happen, you’ll admit to telling yourself the following *low price* lies (although we can certainly understand why they seem to make sense to you at the time).
Low price lie #1
I’m new to this [business, role, field, industry] and have to prove myself before I can charge higher prices/hourly rates.
This says more about your professional insecurity and lack of confidence than it does about your level of experience. After all, you should know best what you’re worth and you’ve just told people you don’t believe you’re good enough, compared to the competition, and you know it.
When you present yourself to a client in this manner what you are really saying is “I’m not your best option”. You can therefore expect that, in most cases, you won’t be given a chance to prove yourself at their expense.
Low price lie #2
I’m keeping my prices low to attract clients and then when my practice is full I’ll increase my fees.
Low-balling your prices for professional services fees is a turnoff for high quality clients. And who wants to have a practice filled with high maintenance (and often toxic) clients looking for a free ride?
Not only is this not the best way to build your client list, it’s the fastest way to lose money. (It also runs counter to your best interests and long-term business objectives which are typically to work less and get paid more.)
Low price lie #3
I can afford to work for less because I’m working for myself from home and have fewer expenses now.
Sorry, but working from home means you just took on a whole lot of expenses you did not have to worry about before. If you’re thinking this way, you are clearly not thinking like a business owner. This must stop. Immediately.
Low price lie #4
I’m focusing on getting the client to work with me first and then I’ll raise my rates and prices later, after they’ve fallen in love with/become dependent on me.
Cheap rates and prices always attract clients from hell. Unless you are completely open about offering a one-time low “introductory” rate from the start, it’s unrealistic to expect these clients to pay market rates any time soon, if ever. That’s not how you positioned yourself; it’s not what they bought into. This is not a good strategy.
Furthermore, you never want to create client dependency. It’s not good for them; it’s especially not good for you. Professionals want to foster client independence. Clients should come away from the relationship feeling the success they’ve earned is theirs; not yours.
When a client feels this great about having worked with you, they’ll not only recommend you highly to others, they’ll want to hire you for even more projects over and over. Increasing a) your client base, b) the frequency with which former clients hire you/your company, and c) how much a client spends on your professional services, is the most reliable and cost-effective way to grow your bottom line.
Low price lie #5
I’m just doing it for a short time because I’m desperate for some quick cash and need money yesterday.
Lowering your prices and billing rates to create quick cashflow does not work. You are not the exception.
Never let your desperation show. It’s the kiss of death for your professional practice. It drives good clients away. Fast. Also, it attracts deadbeat clients; the kind you absolutely can’t afford to have and don’t want.
The high cost of low pricing
When we price ourselves too low we tell ourselves we are doing it for all the right reasons and only for a short time. However, our “real” reasons are usually such things as:
- not wanting to be seen as arrogant, egotistical, or disillusioned
- not being comfortable with self-promotion of our achievements and stature
- fearing we’ll be written off as unaffordable and will lose more business than we get
- or worse, fearing we’ll be seen as unworthy
But then we find out our low prices aren’t really bringing any clients in. Instead, we are losing money by not working. And, because our rates are so much lower than our competitors, people assume we aren’t nearly as good. (Which is understandable since we’re conditioned at an early age to have a strong association between price and value.)
That’s when we start to feel bad about ourselves. Really bad. We start thinking we are no longer valuable. That no one is interested in our services or in us. Even at bargain rates.
That’s bad for business and bad for us. Because then we slip from keeping a low profile to having no presence at all. There’s no money or satisfaction in that.
Want to learn more about how to put the right price on whatever you sell? Get our free ebook, SMARTSTART Pricing and read up on how to be fair to yourself while providing tremendous value to your clients.