One of the most common and biggest mistakes I constantly see entrepreneurs* make is devaluing what they do.
Whether it’s a product or service, the overall mindset is to sell it for cheap. Especially when they’re just starting out.
After all, it’s better to get some money than no money, right?
Unless your ultimate plan is living in someone else’s basement for free and eating Ramen Noodles the rest of your broke life, you have to charge what you’re worth. Plus you need to make a profit.
Unfortunately so many people don’t understand this.
When it comes to business, your priority is making a living from your investment. Otherwise you should keep a traditional job with a somewhat guaranteed paycheck.
Because I promise you this.
Losing everything and going bankrupt is not a glorious life. I’ve been there and it sucks!
For the first 10 years of my entrepreneurial adventure, my only objective was just to get paid something for my services. If my living expenses was $1,500 per month, my only goal was hitting that amount — even if it meant negotiating my fees down to almost nothing to get the sale.
Of course this meant working a LOT more for way less and having absolutely no real enjoyment out of life. But hey, it’s better to have some money than none.
So how’d that work out for my family?
Receiving cut off notices or no electricity. Eating MREs for two months because we couldn’t afford real food. Losing our house to foreclosure and car to bankruptcy. Begging friends and family for money to survive.
You get the point.
Thankfully my wife finally thrust her foot up my ass and I got some priceless business advice that changed everything.
Here’s another real example.
I used to work for an athletic company that produced some of the best hats in the United States. The stuff I designed was sold all across the country in universities, professional sports venues, and national stores like Lids.
But one day I did some research and calculations based on what it cost us to make the hats compared to what we charged for them. We were easily losing $2-$3 per hat on hundreds of orders.
I asked our CEO about this, who was not amused with my concern or ability to ask hard questions. Yet he told me not to worry, we easily would make it all up in volume.
Now I’ve never been good at math BUT … if you’re losing money on every product sold, how in the hell can you make up the difference with volume?
Three years later the company folded and went out of business.
My job is to convince you to think differently about what you charge because your livelihood depends on it.
More often than not we don’t ask enough for our services or products because we don’t believe in ourselves. We don’t look at the incredible value we deliver to our clients or customers in a meaningful way.
So we lose money or go broke in the process.
I can’t tell you what you might be doing wrong in a “one size fits all” type of post, but I know from experience a lot of you are not charging enough. I’m also willing to bet most of you are not making a profit.
Today I want to encourage you to raise your prices.
If you offer something valuable that helps the people you’re marketing to, you won’t have any pushback and you will make money.
If you’re only concerned with hitting numbers for what you need to survive, add at least 25% on top of that amount to start making a profit.
If you double your rates from what you charge now, and you do happen to lose half your customers, you’re still making more money for less work.
These are just a few thoughts for today.
I have lot more advice and input on this topic so be sure to subscribe for updates. And if you can’t wait and would like some input, comment here or email me here.
I’ll do my best to help.