In Entrepreneurial Leap: Do You Have What It Takes to Become an Entrepreneur?, I share the eight mistakes that most entrepreneurs make when starting their business. These are the eight reasons most entrepreneurs end up living an entrepreneurial nightmare.
For the sake of this message, I want to help you avoid mistake #5, not charging enough.
It’s extremely common for companies to not charge enough for their product or service, and therefore the company doesn’t survive economically. Most of the time, what lies at the root of this is fear.
As Casey Brown, an expert on pricing, says, “No one will ever pay you what you’re worth. They’ll only ever pay you what they think you’re worth and you control their thinking. Clearly define and communicate your value.”
You can watch a great eight-minute TED Talk by Casey here. It’s worth every minute.
I’ve lost count of the times my clients have raised their fees. Whenever they do, they never skip a beat. Dan Sullivan has a great rule of thumb when choosing your pricing. He suggests that you think about the number that scares you and then add 20 percent.
I don’t mean to insult your intelligence with the following simple math. But, simply put, if your start-up is breaking even right now and you raise your prices 10 percent, you will be generating almost a 10 percent profit.
What is vital is making sure you are in tune with your customers’/clients’ needs and that you’re providing tremendous value.
Always obsess about your clients’ needs.