The Perils Of Underpricing As A Creative
Pricing is a big issue for businesses of all shapes and sizes, and there are a lot of individual factors involved. You don’t want it to be too high or too low for obvious reasons. However, the real struggle comes when you price yourself too low. This is a huge issue with creatives in business, and it is very challenging to recover from underpricing.
If you are a startup, you may be tempted to price things low – perhaps as an introductory offer to get people in the door. It is understandable – you’re new in business, you want to make people happy, and you are not quite sure how much people will actually pay for your services. You may even look to undercut the competition, again quite natural for startups and those new to business.
Price is not always the most important aspect
While some of your customers will be concerned with the price, others will be more interested in whether your product or service meets their needs. If you do, then the price will be less important. But if you price yourself too low, people may assume that you don’t have much to offer your clients. If people view your brand as cheap, then it will be more difficult to increase your prices in the future.
Cash flow is paramount to your business
While there is a popular belief that creatives have to suffer for their art and not cover their costs, it is definitely not true in business. A small profit margin will not give you a buffer in business during the lean times, and you will struggle with cash flow throughout the year. This is not a great way to run your business.
Cover your costs at all times
Instead, focus on the production and running costs which are involved behind the scenes. How long did it take you? What costs are involved? How experienced are you in your field? How complicated was the process? Then look at the market. What are other people charging for a similar product? If your product is unique, original or different in some way, you may be able to charge more for your product or services.
Just because your customers may want you to lower your price, doesn’t mean you should. Making a profit should be your number one concern. Without continual cash flow eventuating in a profit, your business will struggle to last a few months, let along twelve months or longer. Creatives have a tendency to underprice, but the reality is that it will not allow you to grow your business. Selling yourself short will not cover any unnecessary delays or costly upgrades that may accompany it.
Pricing can be one of the most complex issues you have to deal with in business. Always do your research to ensure that you will indeed make a profit and your customers will be satisfied. With time, you will find the middle ground to please everyone involved and avoid the issue of underpricing.