How to Stop Undercharging Clients Once and For All
Finding out too late that you’ve undercharged for work is disheartening. The story often ends with you doing a considerable amount of work for free or less than what your effort is worth.
A habit of undercharging will undoubtedly lead to burnout and can even put you out of business.
Here are a few ways to avoid undercharging for your work:
Draft Your Proposal… And Then Come Back to It Later
I always tend to leave money on the table whenever I give a quote to a client “off the cuff.”
It’s very easy to underestimate the full scope of an entire project when you don’t give yourself some time to consider all variables of the job.
After experiencing one too many occasions where I felt undercompensated for work, I made it a rule to think about quotes over a few days before sending them out.
To avoid undercharging, always sleep on your proposals to give yourself enough time to decide what compensation will be appropriate for your effort.
Don’t Be Afraid to Ask
One of the most valuable things I did to get myself out of an undercharging cycle is asking other business owners how much they charge for similar services.
Build relationships with other service providers you can trust. Ask their opinion before deciding what to charge whenever you’re unsure.
If you haven’t yet established relationships with other business owners, Facebook groups and forums are a place where you can meet people and ask advice.
Many websites also publish research on average pricing for different industries.
Calculate Your Hourly Rate Meticulously
You should calculate how much you’re getting paid per hour regularly to make sure your time is always properly compensated.
You may think you’re charging a decent amount for your work (especially when first starting out) only to discover your hourly rate is less than expected.
Sure, charging someone $500 for a project sounds great. But if after doing the math you realize the project takes you 20 hours you may want to reconsider what you’re charging.
Before you get stuck being overworked and underpaid, decide how much income you want to make per month. Then break that amount down into an hourly rate. Keep this rate in mind when setting your project prices.
Also, remember to take into consideration taxes and business expenses.
Undercharging for client work can leave you feeling defeated.
You commit to doing great work, and it’s a real challenge for your mindset and finances when you aren’t getting paid well for it.
Make adjustments right away whenever you feel like your pricing strategy is leaving you vulnerable.
All clients who I ask to give me some time to think about pricing have been understanding.
The extra time gives me an opportunity to ask for advice, to seek out pricing suggestions from other resources, and to calculate a project price that will pay me appropriately per hour.