A business that’s busy but barely breaking even isn’t a sustainable business. It’s a very demanding hobby.
The difference, more often than not, comes down to pricing. Not the product. Not the market. Not the competition. Pricing.
Most founders who come to us aren’t undercharging because they don’t care about money. They’re undercharging because they haven’t yet given themselves permission to charge what the work is actually worth.
That’s what this post is about.
Why underpricing happens
When people underprice their goods it’s rarely about maths, it’s usually about a set of beliefs and understanding and overcoming those is a key to creating a pricing strategy that is appropriate and will ensure that you are both attractive to your customers but also that you are making a sustainable profit.
Putting people off.
It’s true that pricing too high might lose some customers. But pricing too low tends to attract customers who don’t value what you do — and it burns you out trying to serve them.
You’ll charge more once you’re more established.
This is one of the most common traps. Customers who found you at a low price resist paying more when you eventually raise it. And in the meantime, you’re absorbing the gap with your own time and energy.
Not being sure the work is worth that much.
If that doubt is there, it tends to show. It can show itself in how you talk about what you do, how you present your prices, and how firmly you hold them when someone pushes back. Pricing confidence and business confidence are closely linked. Working on one tends to build the other.
What sustainable pricing actually looks like
A sustainable price does four things.
- It covers your costs.
- It pays you a realistic amount for your time.
- It leaves some margin for a quiet month or an unexpected cost.
- It reflects the genuine value of what you’re delivering.
None of that is complicated in principle but what it does require is clarity and honesty with yourself. You need to be certain what your costs really are, what your time is actually worth, and what customers in your market are willing to pay.
Pricing is not permanent
This is a great thing to keep in mind- your prices will change- just look at your weekly shopping bill if you don’t believe us!. As your costs shift, your reputation grows, and you get clearer on who your best customers are, your pricing will move with it.
The goal right now isn’t to get it perfect, It’s to get it honest. Make a start by pricing in a way that makes the business worth running for you, not just for the people buying from you.
If you’d like to talk through your pricing with someone who understands this stage, Tree Shepherd’s mentoring team is here.
