As a freelancer or founder, you’ve likely asked yourself: "Am I charging enough?" For many, the answer is a resounding "no." The truth is, nine out of ten freelancers and founders I talk to are undercharging for their services.
This isn’t just about undervaluing your work. It's a mindset that could be holding you back from achieving your financial goals.
Understanding the Scarcity Mindset
The scarcity mindset is a common issue among freelancers and founders. It’s the belief that there’s a limited pool of clients, and if you charge too much, you’ll lose out on opportunities. This mindset shows up in thoughts like:
"If I charge too much, I won’t get the client."
"They’ll say no to my pitch."
"I NEED this client."
This fear-driven thinking keeps you from charging what you’re truly worth. And you end up stressed and burnt out.
The Reality: More Clients Than You Can Serve
The reality is there are far more potential clients out there than you could ever hope to serve. Recognising this fact is the first step toward adjusting your pricing strategy. For every "no" you hear, there are limitless potential "yes's" out there (that's a word, right?). By changing your thinking, you can start to get comfortable charging what you're worth.
Additional Insight: The Power of Pricing Psychology
Research in pricing psychology tells us that clients often associate higher prices with higher value. This is especially true in service industries like freelancing and coaching. This idea, known as "perceived value pricing," suggests that setting your prices too low can signal lower quality.
"Price is an indicator or value for both consumers and producers. A high price implies an increased level of quality and signals desirability to consumers." (pricinghub.net)
And you don't want potential clients to undervalue your services, do you?
Calculate Your Ideal Rate
To overcome undercharging, you need to work out two key figures:
Your Ideal Earnings: The amount of money that supports the lifestyle you want to live.
Your Ideal Number of Clients: The number of clients you can comfortably handle while maintaining work/life balance..
For example, if your goal is to earn $168,000 annually ($14,000 per month) and you can manage seven clients a month, you should be charging about $2,000 per client.
What If You’re Not Charging Enough?
If your current rates don’t align with your ideal earnings, you have three options:
Lower Your Ideal Earnings: Not my recommendation if you want to achieve your financial goals!
Increase Your Client Load: This can work, but often leads to burnout.
Charge What You’re Worth: Recognise the abundance of clients available and set your prices to reflect your true value.
Additional Consideration: The Impact of Niching Down
Specialising in a niche can significantly boost your profitability. By focusing on a specific market, you position yourself as an expert, allowing you to charge higher prices for your services. Clients within your niche are more likely to recognise the unique value you offer and are often willing to pay a premium for it. This approach not only improves your earnings but also strengthens your brand. Making it easier to attract and keep the right clients.
See this post on the benefits & risks of picking a niche for more info.
Using Price as a Client Filter
One effective strategy is to use your pricing as a filter. If a client can’t afford your rates, they're probably not a great match anyway. This helps you avoid clients who won't value your services, and also ensures that you’re working with those who truly appreciate your skills.
Conclusion
If you’re not charging enough, it’s time to reconsider your pricing strategy. Don’t let a scarcity mindset control your business decisions. Instead, work out what you need to charge to live your ideal lifestyle and use your rates to attract the clients you truly want.
What next?
Feeling unsure about your pricing? Let’s talk. As a coach, I specialise in helping freelancers and founders sign more clients, work fewer hours, and earn multiple six-figures.
Check out this case study to see how "Client A" added 10k a month to their income (hint: pricing strategy was a big part).
Fill out my contact form and let's have a chat.
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