When it comes to the success and growth of your business, one of the most important decisions you will face is how to price correctly for the work you do without undercharging. If you charge too much, you could scare away all of your potential customers. Charge too little, and you could easily run yourself out of business.
Figuring out how much to charge can be stressful but will be worth it. If your business isn’t bringing in enough money to pay all the bills and compensate you, it won’t last long.
So, how can you tell if you’re not asking enough for your services? Here are some signs you should consider charging more, and soon.
The work just isn’t worth the money
Many small business owners will have periods where they just don’t feel motivated to work. That’s very normal. But what’s not normal is constantly taking on projects (or clients) that you think are not worth the money they bring in. You may feel obligated to do the work, but you may also hold a sense of resentment about it.
If the work doesn’t feel as though it’s worth the money you’re bringing in, you’re undercharging, that’s a sign it may be time to charge more. You won’t always feel excited to work, but you should think that you’re fairly compensated for what you do.
This brings us to the second sign…
You’re not taking home a wage
Small business owners tend to make sure everything else is taken care of first. There are always bills to pay, marketing to take care of, and sometimes, employees who also need to earn a living. You need to make sure you don’t forget about yourself.
If your business isn’t bringing in enough to make sure you bring home a liveable wage, you are undercharging and can’t be charging enough for your services. You own the business, so you can control the work you do—you should also be in control of your wage. If you don’t make a wage, you need to charge more, and you need to do it soon.
Your prices haven’t increased in years
If you struggle to remember the last time you raised your prices, or it was a very long time ago, then you need to increase your rates. The cost of living is constantly going up, and so is the cost of doing business. If your cost of doing business increases but your prices don’t, you’re now earning less from your small business than you used to, or than you should be. You shouldn’t go years without reviewing and increasing your prices. Ideally, this will be done annually.
Final thoughts
It can be scary to think about raising your prices, but it’s essential to do so. As a small business owner, you work hard, and of course, you deserve compensation for all the time you put into your business. It would be best if you also charged enough to ensure all your business expenses are covered and that you can handle a cost of doing business increase.
If changing your prices for your existing customers seems overwhelming, start small. Set higher prices for your services and start charging all of your new customers those rates. If you’re concerned about losing existing customers by raising prices too high too quickly, try increasing their rates incrementally. You can also give your existing customers notice about the increased rates, so they have time to become used to the idea.
The ideal customers and clients will understand that you need to raise the rates and support you. Those who don’t support you don;t understand the impact of undercharging and probably weren’t great clients to begin with.
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