How Price Trapping Yourself Can Destroy Your Confidence

When you’re first starting out on your own and don’t have much of a customer base your first thought is to probably lower your prices to reel in more customers. While this may seem logical at first, it actually may be revealing a large hole in your confidence.

You Don’t Know How Much You’re Really Worth

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Back when I first started out on my own I was doing everything I could to bring in new clients. Putting bids in on freelance websites, getting out to networking events and even looking for contract jobs on the large job resume websites.

But, I was also making one huge mistake. I thought that if I lowered my prices a bit I would look more attractive to my clients and it would be a good way to build a portfolio and gain trust for a long term relationship. While I believe this line of thought did have some merit to it, there was more bad than good.

It Will Cost You in the Long Run

So, you went ahead and did it anyways. You did a project for less than you know you could have gotten for it. No worries, you think, just raise prices next time, right? Unfortunately, here in lies the flaw in the ointment, as one of my old college professors used to say.

The first project is done, everything went smoothly and you even managed to make a couple bucks off of it. Great! A couple weeks go by and you notice an email from your client. Even better! You look at the details of the project; simple website redesign, easy enough. You put together the bid, send it over and wait for a response.

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What comes next shocks you. Your client is outraged at your price increase, wondering why rates went up by 25% in less than a month. Now you’re really stuck. How do you explain to them at the reason you were so cheap the first time around was because you were just trying to build your business and now rates are going up?

Quite the pickle indeed. Likely, you’re either going to be a wussy about it and continue doing work at a discounted rate, costing you money, or you’re going to tell them the truth, and possibly lose them as a customer. It is a tough call to make, and only you can decide which path you are going to choose.

It May Even Shatter Your Confidence

The worst part of this entire situation is that when you look back at your actions you may begin to question whether you made the right decision in the first place.

Should I have been given discounts in the first place? I’m really stuck now. Do I have what it takes to continue on?

Your confidence is probably shaken a little bit now, and that’s OK. It is important to learn these lessons early on than it is after you have achieved growth and the mistakes cost you much more. Just remember that you need to shrug it off and actually learn from your mistake. It does you no good to just admit you screwed up, you have to actively assess the problem, devise a solution and work at fixing the problem so that it doesn’t happen again.

Moving Forward

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Now you know firsthand how undercutting can affect your business, not just monetarily but on a personal level as well. Remember, the take away from this short article is that you should never sell yourself short. Be honest with yourself, know what your skills are worth and don’t be afraid to get compensated for them.

Take it from me, somebody that isn’t that is constantly second guessing themselves (but I’m working on that), the sooner you start to believe in yourself the sooner your business will flourish and the more confident you will be in your decisions.

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Author: Garrett Graff

Garrett is a qualified engineer, and when he’s not helping businesses grow as a consultant at Palladous, you can find him building hobby race cars, managing the family farming business or chilling out on the lake fishing.

Get in touch on Google+ or drop him a line by e-mail.

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