When you’re creating the structure for your new business, it can be tempting to undercharge for your services. You may think you have many good reasons.
You may not feel worthy of charging high prices because you’re still developing skills. You offer discounted rates to attract clients, who may give you feedback, references, or reviews. You even continue doing it while developing your business plan.
But no matter the reasons, you may be hindering your firm rather than helping it by low-balling quotes. If you don’t charge what you are worth, clients can kill your drive and passion, if you let them.
7 reasons to charge what you’re worth
1. Develop a solid fee structure from the beginning
If you start with a low-fee structure, this may attract many clients. Unfortunately, they may not be high quality. As soon as you experience success and raise your rates, your existing customers may disappear. They were only attracted to your company because of the reduced price and not with the services you provided.
You need to develop a fee structure from the beginning and stick to it. When you increase your price, do it gradually so that it won’t affect your working relationships with your clients.
2. Low rates can be demoralizing
If your fees are too low, you run the risk of providing services, or even products, for free. Is this what you want? When you run your own company, you sometimes work nights and weekends. With an excellent salary, you don’t mind working longer hours. But when working for next to nothing, it can be demoralizing giving up your spare time for little reward.
Your relationships with others can also be affected. They may resent your business, particularly if they know how little money you’re bringing in.
3. Higher rates = less work
There’s a saying in business. The lower your rates, the longer your hours. The higher your rate, the more free time you have. This is true. Wouldn’t you love to work six hours a day and have the rest off? This can be the case if you charge fees that cover your cost of living.
Or, do you want to work for low rates every evening and weekend for the rest of your life? It’s time to take a look at your fee schedule to determine what is best.
4. Earn respect
When you charge rates that are comparable with what’s happening in the industry, you earn respect. This is even more applicable when charging premium prices.
But if you charge a rate that matches the guy at the fast food joint, your clients won’t respect you. They may even ask you to do a task over and over again. And, if you’re afraid to charge for revisions, well, you have an even bigger problem.
5. The higher the rates, the greater the chance they’ll be happy
There have been studies that prove the more money a client pays for a service, the happier they are with the results. Charge only a minimal fee, and they’ll be less satisfied. But really, the quality of the work might be the same in both cases.
In 2016, Upwork, one of the largest freelancing sites, said, “Nearly half (46%) of full-time freelancers raised their rates in the past year, and more than half (54%) plan to raise them next year.”
It’s just that the client who pays a fair price psychologically feels pleased with the goods and services they receive. But if they pay too little, they start to wonder what is wrong with your work.
6. Raising rates makes a happier client
Some experts believe that raising your fees makes your clients more satisfied. This is due to the perception of your business. Premium rates give a company the air of being a great success.
Of course, the exception is for cheap clients. In this instance, you won’t see them again or decide to fire them, but that’s good for you. Now, you have time to find better paying and appreciative customers.
This podcast gives advice on raising your rates:
7. Charge big clients more
Chances are you have customers who own companies in different sizes. One guy runs a business from his apartment, another owns auto body shops, and then, there is the big corporation. You should charge your bigger clients more money. But it’s not because they have more money to spend.
The reason is their needs are typically more intricate with a larger scope. Their audiences may be bigger. This means you must put in an extra effort for these people.
This article explains how this can work for you:
Book a date and review your fee schedule now
By now, you understand the merits of charging your worth. If you’re being dragged down by unhappy or disgruntled clients, then develop a new fee schedule. You won’t necessarily lose these customers. They may perk up and become more satisfied with your services, however. This is especially true when you have a solid business structure, fee schedule, and contract in place.
Suddenly your psychological and monetary worth have exponentially increased, all due to a little effort on your part!
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