Your business finances could be in danger if you are under charging for your services. It can be very easy to undercharge. For example, as a start-up business or a freelancer you may find it difficult to know where to pitch your prices. It can be easy in the early days to make sure that your prices are cheaper than bigger companies in your industry. This is all well and good, but you could be risking your business finances if you charge particularly low for what you offer. Here are some tell tale signs you could be undercharging:
People snap your hand off
If people are quick to take up an offer, it may mean you are under charging. You may even hear them shout “that’s cheap!” – in which case, you may want to revise your prices. It is not always good to be the cheapest service out there – it may initially attract customers but then you can find you don’t have enough time for all the work and even end up letting people down.
You never have raised your prices
In the business for two, five, ten years and never raised your prices? If you can’t remember the last time you hiked your prices, you may be under charging. It is only natural to raise your prices in line with living costs and the competitors in your field will be doing the same.
You work long days and have no time off
If you are working very long hours and never have enough time to take off holiday, you could be over working but under charging. Every business manager deserves to take time off. It is also to the benefit of your business that you take time off so you can recharge and come back revitalised and with fresh ideas. Make sure you can afford to take time off and if you don’t you may well be undercharging and would benefit from revising your prices.
And don’t worry…
Deciding on a price hike can be worrying. However, you may find that your clients understand your new price range and some may not even batter an eyelid at your change of prices.
However you announce your price change, do it confidently. If you announce your price changes very timidly, this could open you up to further negotiation and clients who ask for a cheaper price again. You will feel more confident if you announce it early, rather than worrying about your prices for many months and jeopardising your finances in the meantime. Keep calm and make the right decision – so your business can grow and succeed.