Originally published on MoneySense.com
If there is a single mistake small business owners tend to make—and I've seen them make a bunch—undervaluing their work would be it. With a desire to get new clients and grow their company, new small business people give the sweat of their brow instead of charging a fair price for a job well done.
Clients will always try and convince you that they can find someone else to do the job for less money. But if you know what your costs are, what your work is worth and what value you add, you won't give in to their whining.
Let's face it, there is absolutely no point in busting your butt to go broke. This means you have to be prepared to walk away from a sure-thing that pays less than you need to make a profit. And that means having more irons in the fire so that the client you're currently pitching isn't the only prospect for work. Get really, really busy and you won't have a problem setting your rate because it'll be a case of who wants you the most.
If you work in an industry where negotiation is the norm, build the fat into your fees so that after trimming it, you still make money. If you work in an industry where others will do your job for free, either find another industry or accept that what you're doing is a hobby.
Sometimes small biz folk are willing to do a smaller job for less money in the hopes that a much larger job will make 'em rich. That kind of backward thinking is exactly why you never get the bigger jobs. Having set the standard on what you'll work for, clients will balk at the substantially higher price on the next job. Or worse, in a desperate attempt to keep working, you continue to do the bigger jobs for the same low rate you set at the beginning of your relationship with the customer. Quit low-balling the first job.
Read the full article at Moneysense.com