Pricing Mistake 2: Undercharging and Overdelivering
Undercharging and overdelivering: Ah, what a classic combination!
Often, if charging is difficult for someone, when she finally does accept money, she'll feel compelled to over-give to the point where she might not make much money at all.
And even then, she’ll feel guilty!
I’ve done this often.
I’m Denise Duffield-Thomas, money mindset mentor, author and founder of The Money Bootcamp and today we’re talking pricing and one of the big mistakes I see entrepreneurs make when setting their prices - undercharging and overdelivering.
So picture this gorgeous: I was on stage leading a free workshop, and it was time for the “upsell.“
This is my least preferred way of selling, and I hate it, so I always overcompensate with the bonuses.
My offer was a one-day live workshop, teaching all my secrets of manifesting success, for $97.
I undercharged in the first place, but then I went one step further. In my desperation to offer value, I also threw in two 60-minute face-to-face bonus coaching sessions.
Crazy, awesome bargain, right? But I wasn't done. “If you decide today, you also get these bonus earrings.” Yes, earrings.
In my defense, they were cool earrings with “Love” written on them, and one of my manifesting tips is to wear affirmation jewelry, but it was a completely unnecessary bonus.
The $97 offer was good enough as it was!
Women came up and threw cash at me for the workshop, and why wouldn't they?
I was practically giving away the naming rights to my first-born child!
Hey, why don't I come over to your house and clean your toilet while I’m at it? Cook you dinner? It was like a bad infomercial.
But wait, there's more!
Of course, once I added up the costs for the event (including ones I forgot about, like buying new pens and magazines for the dream board segment), the cost of all those in-person bonus coaching sessions (parking, coffee, and the hassle of putting on a bra), plus those stupid earrings, I wasn't making much money at all, certainly not for all that effort.
And that, my friend, is the huge mistake that a lot of women make around pricing: Being over-generous to the point of self-sabotage.
Maybe we do it because we don't believe we're worth it without all the bribes, bells, and whistles.
We want people to like us, and we desperately want to help people make changes in their lives.
Here's the thing: What you offer is already amazing and life-changing.
Read that again. Let it sink in.
Your work can stand alone without making you broke or making you resent your clients. Plus, you're allowed to make lots of juicy profit!
Almost every time I create a new product or event, I fight the urge to overdeliver.
We usually think it’s a good thing to give our clients more, but it's not.
A course stuffed to the gills with extra information becomes incredibly overwhelming and failure-inducing.
I know this because I've researched why refund requests were creeping up for my Money Bootcamp.
It turned out we had too many modules and too much bonus material.
People thought they had to complete it all and felt like failures before they even started.
When we reduced the amount of content, refund requests went down. Turns out less really is more!
Overgiving can disempower your clients.
For that reason, I don't recommend ever offering bonuses like unlimited email coaching if you're a service professional (it's a pain in the butt that really doesn't teach your clients self-reliance or boundaries).
And I don’t recommend adding premium services like face-to-face coaching unless you’re charging appropriately for it (your personal attention should always be your most expensive offering).
Overgiving can also be terrible for the environment.
Think of any corporate conference you've gone to. What have you done with all those branded stress balls and endless USB flash drives?
Landfill mostly, right?
I decided that I'm not going to add to that problem, which is why I rarely give away freebies at my conferences.
I’ve learned my lesson about creating overstuffed goodie bags, but it’s a widespread phenomenon.
Even when I went to a VIP Oprah event, there was random unnecessary junk in the gift bag.
As if Oprah herself wasn’t enough!
The same goes for over-delivering in terms of time.
Humans need time to integrate and apply information, so if you're a coach, and you're having monster three-hour sessions with your clients (unless it's a VIP day), you're probably overwhelming them with information, most of which they'll forget almost instantly.
When we try to jam our years of experience and knowledge into one session, it's often incredibly tiring and uncomfortable for clients.
They don't rebook because they want to implement everything from the last session (which is impossible).
So, over-delivering can ultimately derail your client. Again, less is more.
Guess what? Not only are you allowed to charge what you’re worth, you’re also allowed to make a healthy profit. Say what?!
I once bought a beautiful handmade soapstone jewelry box from a local bookshop for $14.
I said, “You know, I think these are underpriced.
Clearly, a lot of love goes into them.“ The owner said, “I know. My wife does an amazing job, but we’d rather be affordable for people.“
First up, “affordable“ is different for everyone, right?
Those soapstone boxes would still be a bargain at $25.
Plus, handmade items should be more expensive than mass-produced ones, and many people are happy to pay a premium for something that’s made by an actual human being.
I hate to think how little profit they made on those boxes, especially factoring in his wife’s time (which I suspect they aren't counting at all).
It’s a shame, because I bet she’ll give up, get discouraged, and lose her enthusiasm for the craft pretty quickly.
My friend, multi-millionaire entrepreneur Leonie Dawson, says, “When I sold handmade prints years ago, I forgot to include the full cost of postage and the special tube I was sending.
In the end, I lost $4 for every print I sold. It cost me money to be an artist! That profit number obviously didn’t sustain me.“
That’s an understatement, but what Leonie did was really common.
In fact, my first-ever business was selling handmade bracelets made of wetsuit remnants.
I bought the raw materials for two dollars and sold each bracelet for…two dollars.
Okay, I was nine, but still.
The thing is: I loved having a business.
I loved creating, and I even loved selling. It didn’t occur to me that I could also make money too!
My hubby was an entrepreneurial kid too.
He bought bulk packets of candy and then sold them individually for a profit.
From the outset, his goal was making money, while mine was about creating and selling for the joy of it.
For years, I thought that money and joy were mutually exclusive.
Women often feel guilty about making a good profit, especially on something that feels good, is easy for them, or is something that helps people transform their lives.
But that’s the whole point of being a Chillpreneur: It’s supposed to be easy and feel good.
So, make sure you’re adding up all the true costs of doing business—including your time and expertise—and make sure you’re actually making a profit! If you’re not, you have to increase your prices.
You’re even allowed to pay yourself a salary! I know, crazy, right?!
Paying yourself is incredibly symbolic.
Why? Because most of us will move heaven and earth to pay our suppliers and make sure they are taken care of.
In fact, I’ve been so stressed about not being able to pay an invoice on time that I went after more sales or chased down clients who defaulted on invoices I sent to them.
I hate letting other people down.
But guess who comes last?
Who works her ass off?
Who does the buck stop with?
You deserve to get paid, and not with the leftover scraps.
There will never be any “spare“ money left over for you until you stop undercharging in the first place.
Charging appropriately is an act of self-care and self-love. It’s not greedy or unethical to charge well for what you do.
Money is a tool that helps women take care of their own needs and use their energy and resources to help others.
You might think you're doing people a favor by undercharging, but it rarely works out.
It can lead to burnout and resentment, and you won't have the energy and vitality you need to make a difference in the world. So, stop being cheap with yourself. It serves very few people, least of all you.
You are enough.
You might not believe that, yet, because it's so deeply ingrained.
But you are.
So the lesson is
You don’t need to bribe people to work with you.
And you’re allowed to make a healthy profit.
While I can’t tell you what to charge, I can help make sure that your money blocks don’t sabotage your pricing and your ability to receive.
I’ve got a free workshop all about identifying and clearing the seven most common money blocks.
Watch it today at DeniseDT.com/Blocks.
You deserve to be paid beautifully and when you set the right price your sending a powerful message to the universe that you’re ready to receive.
It’s your time and you’re ready for the next step.
PS: To nail your pricing strategy in your business I’ve got an awesome bonus for you. Change your money mindset (and life) with the exercises and ideas that I share in my Ultimate Guide to Pricing. Get your copy here.
P.P.S: Dive Deeper:
- Read Pricing Mistake No. 4 on why you shouldn’t take it personally when someone says you’re too expensive. That’s their stuff – believe me!
- Read Pricing Mistake No. 3 - why you shouldn’t work for free
- Read Pricing Mistake No. 1 on why you shouldn’t base your prices on other people’s suggestions – really!
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