I was surprised, to say the least.
I had been working for this customer for well over two years, and suddenly they were questioning my pricing?
Nothing had changed with me. I still charged the same rate with the same trip charge.
Yet, there I sat, staring at my computer, reading an e-mail from a shocked customer who was upset about their bill.
“Was there a mistake with the invoice?” They asked. “What are these extra trip charges for?” and “Can you please call us to discuss this?”
Luckily, I’ve been doing this for a while, so it wasn’t a huge deal. I knew it was just a simple misunderstanding and as long as I didn’t get emotional about it, it would be O.K.
So, that’s what I did. I called them, explained myself, and worked it out. No big deal.
But, the story doesn’t end there.
That customer still needed more work done. This time, it was a custom job, and they wanted an estimate before I got started.
Now, this was challenging for two reasons. First, I’d never done what they were asking me to do before which made it difficult to estimate.
The second challenge was the psychological pressure they put on me by questioning my pricing on the last job.
I didn’t want to bid too high and lose the customer forever. But, I also didn’t want to underbid because I know how much I’m worth and I have no interest in working for free.
So, I put together my estimate, stayed strong with my pricing, and sent it over via e-mail…
…and…crickets. They didn’t respond.
After a couple of weeks, I figured I had lost the customer. And it got me thinking, maybe I was too expensive? Do I need to lower my rates? Did they find somebody better?
Even though I’ve been doing this for years now and have more business than I can handle, it still caused me to question myself.
Then, two months later, guess what happened?
Out of nowhere I got an e-mail from that same customer asking me when I could start! All of that worrying was for absolutely nothing.
The Challenges of Pricing Your Services
Pricing your services is challenging for two main reasons.
The first challenge is knowing how much to charge, and there’s always a bit of interpretation involved.
The second challenge is getting over the psychological barriers that often force people to underbid. Examples would include worrying about a customer not liking you, getting a bad reputation for being too expensive, or losing the job.
This is the most difficult to overcome.
At least, I know it’s the most difficult for me and what I struggled with in the story above. I had that customer on my mind for two months, thinking that maybe I was too expensive, only to end up getting the job anyway. Talk about a waste of mental energy.
The reality is that there could be a million reasons why they took so long to get back. But, my mind went straight to the worst case scenario.
Luckily, I’ve been doing this for a few years, otherwise I would have buckled under the pressure and lowered my rates – and my profits in the process.
How To Overcome Pricing Challenges
Most people would give you advice like “have confidence” or “stick to your guns.”
This is great. But unfortunately, you can’t just go to the store and pick up some confidence off the shelf. Confidence is a result of knowledge and preparation.
Here’s what I recommend instead.
The first step is to have a profitable pricing strategy that allows you to generate a healthy profit and income. Understanding how much you MUST charge to make a profit is critical. Without this, nothing else matters.
Then, once you know how much you need to charge, the secret to getting over the psychological challenges is to…
….be willing to walk away.
If you desperately NEED every customer that comes your way, you’ll be powerless with your pricing. All the positive self-talk and rationalization won’t do much for you.
When customers are scarce, pricing is scary.
On the other hand, if you have plenty of customers coming in, there’s a switch that flips in your mind. It’s like the fear gets turned off, or at least turned down, and you suddenly feel more confident. Losing a jobs here and there isn’t a big deal.
An abundance of customers allows you to test higher rates, become more profitable, and it has the additional benefit of being able to work for better clients.
So, if you are struggling with pricing – maybe it’s your marketing that needs some work.