I speak with coaches, consultants, service providers, and small business owners (and corporate employees) every day who do great work, and offer high-quality products, services, and programs that are a cut above, but are failing to make any money. In studying this phenomenon, and living through it myself when I started out as a coach, I’ve seen that there are numerous critical factors behind a failure to generate sufficient revenue, but it’s usually not what we think. Often, our subconscious blocks and mindsets are the culprits holding us back.
For example, I see service providers by the hundreds staying stuck in a cycle of undercharging for their work. They won’t budge out this trap, no matter how many people tell them that they’re not charging enough (even their own paying clients). I met someone Thursday night, in fact, with this same issue, far undercharging, and her rates were damaging her credibility and attracting clients who simply couldn’t pay anything.
I remember hearing Nell Merlino, Founder of Count Me In For Women’s Economic Independence and the Make Mine a Million $ Business Program (through which I was honored to win, with several others, the “Micro to Millions” 2008 award in CT), speak at a More Magazine Reinvention Convention in NYC, and she rocked me with this message:
“If you’re making $50,000 or less in your business, it’s not a business, it’s a job, and it’s not a good job either.”
I was making around that at the time in my new coaching practice, and I was truly offended and angered at those words. But I’ve come to see the validity in that message (and I realize that I was in denial about money at the time). If you were working for someone else, and had to toil for 18 hours a day to make ends meet and still generated less than $50,000, you’d say something would have to change, right?
Below are the top four excuses I hear people give for not charging what they deserve. I used all of these excuses myself, before I figured it out:
1. “I’m having so much trouble having people hire me as is. It would never work at a higher price/rate.”
2. “I’m not really sure what my work is worth, and what it could command.”
3. “I’m scared to raise my prices – where will I find customers who can pay that?”
4. “Times are bad – I don’t want to contribute to people’s challenges by making it hard for them to pay me. I want to help people.”
But underneath all this, I’ve observed deeper reasons for a reluctance to charge and earn more. These reasons are:
A deep insecurity about the value you’re bringing
Folks who chronically undercharge or fail to earn what they deserve also tend to work very long hours each day (18+), and don’t stop. That drive to keep working without stop often stems from a lack of confidence and self-worth that what you deliver is really good enough. I’ve seen scores of coaches and therapists go over their one-hour session time habitually, giving more and more time for free. The reason?
Deep down, they’re afraid they’re not good enough, or powerful enough to help the client in the time allotted.
A lack of understanding the key outcomes you deliver
Another reason why people don’t earn what they deserve is that they haven’t taken the time or effort to measure, quantify or identify clearly the key outcomes that they offer. They also don’t know how they stand apart from their competition. What you offer IS different from your competitors, but do you know how, exactly? Do you know what you bring to the table that your top 30 competitors don’t, and can’t? If you know your competitive advantage, are you marketing, communicating and promoting it wherever you go?
A failure to realize that prices that are too low also attract problem clients and customers
Your prices reflect your value, expertise, know-how and your status in your field. If you undercharge, what message do you think that gives prospective customers? Do you want to attract only customers who will pay bottom dollar?
Thinking you’ll get more great clients and customers this way, you’re missing a critical point – people who underpay also tend to make you crazy in the process of working with them. They nickel and dime you, second-guess you, and refuse to honor, respect or value your boundaries and great experience and expertise (in part because you’re not honoring those yourself).
Mistaking pricing as the most important driver in their business
People who undercharge tend to think that their low pricing is what brings in a lot of customers, and often neglect critical aspects like digital marketing, promotion, social media engagement, publicity, events, thought leadership, networking, affiliate and referral partners, and more. They also don’t understand these critical principles:
1) If you start operating differently in your business and work today, your current underpaying client pool will no longer represent what you’re capable of attracting (ideal, higher-paying clients)
2) People pay not only for the outcomes you deliver but for the experience you give them in working together. What experiences — aesthetic, emotional and functional — do you offer that change people’s lives for the better?
3) Finally, word of mouth is one great strategy to build your business, but it’s not nearly enough. When you rely solely on word of mouth, you’ll continue to attract only the same level of customers/clients you have now, and you won’t expand beyond that. In other words, you’ll continue to “play in the wrong room.”
Vagueness about the numbers
You need to have a tight handle on how and where the money is coming in and going out. So many small business owners and other professionals have someone else overseeing the finances, so they’re clueless about the financial drivers, the cost of doing business and what they’re truly earning. Don’t make that mistake. Take control of your finances and your key business measures and metrics, and understand the financial picture intimately so you can improve it.
What to do differently?
Take these six steps:
1. Know how you work
Identify the process of how you work and what you bring to the table, along with the special outcomes it delivers. Do an exhaustive competitive analysis and figure how you’re different, and better, than the competition. If you find you’re not better in some key way than the competition, take some steps to power up your offerings and become stronger and more effective in what you do.
2. Don’t stop yourself from reaching farther
Stop relying on word of mouth as the only way to generate business. Start marketing and promoting your business in ways that will exponentially expand your circle of influence. (Yes, you can do this, and it doesn’t have to break the bank.)
3. Get over your blocks and fears
Overcome your own personal blocks to attracting and earning great money. Check out these powerful books – Tapping Into Wealth, The Big Leap, and The Energy of Money – to revise your relationship with money and become more excited about earning what you deserve, and speaking up and standing up for that.
4. Develop stronger boundaries.
Start saying “no” to outlandish requests for your time and effort. Know what your time is worth, and command respect for that. If you don’t do it for yourself, no one else will.
5. Get some help
…to build to and strengthen your business. Find a way to get some financial, accounting, business development, and marketing help. Take a Quickbooks class to learn how to manage your financial picture. Read the great book The E-Myth Revisited by Michael Gerber, and The Pumpkin Plan by Mike Michalowicz. Also identify how you can delegate more (to an intern, a virtual assistant, etc.), and focus more time on what you do fantastically. Leave the rest of the work to those who can support you well doing work they’re great at.
6. Charge 20% more starting today
Just do it. Then figure out what the right number is within the next few months, and charge that. You can transition your existing clients to your higher fees in a more gradual way, but new customers and clients need to pay you more, starting now.
In the end, if you’re not charging enough, there’s something holding you back from believing in what you deliver, strengthening your work or business, and asking for what you deserve. Usually, these blocks emerge from fears and messages we learned in our childhoods, about our own self-worth and power, and about money, wealth, prosperity, and the energy of money.
Take a step today towards overcoming these blocks. Your business will grow when you do, and you’ll finally be able to love your work rather than drown in it.
To build a prosperous, rewarding career you love, join me in my FREE 3-part webinar series The Quickest Path To Your Happiest Career, starting April 6th.