Oh boy, where do we begin? I guess I’ll start with my own struggles with this.
I started my business because I saw a need; a frustration among small business owners who felt overwhelmed by the day-to-day of running their business. I saw that many people were highly clever and creative, but just couldn’t break out of the cycles of being broke, falling behind, and worrying about what would come next in their business. When I would admit to people about feeling secluded and alone while running my company (and sacrificing personal time, among other things), I found people nodding along, or screaming “Me too!”
I was also annoyed by the nonsense being spread on the internet by business consultants who were clearly not living up to their “success” stories. Yeah, you who proclaim to have made $100k last month by simply signing up for so-and-so-guru’s email marketing program. I call Bullshit. And the fact that these people were charging $300 for a book or $1000 for an email training program just pissed me the eff off.
Yes, I know I can be a little harsh sometimes. But by and large, I think people appreciate an honest voice and real-life experience over some crap from a book. And that is the heart of how I roll in my business. I set out to actually help people, to charge reasonable rates, to show people how to take control of their business and provide them with resources rather than selling them the damn kitchen sink.
And that’s still my goal. BUT (did you sense a but coming?) I’ve come to realize that a very significant part of the stance I have taken comes from a deep-seeded issue called Profit Guilt.
Do I need to explain Profit Guilt? Probably not, it’s pretty obvious. I feel bad about making money. Especially making money from overwhelmed, passionate, and sometimes struggling small business owners.
So now that I’ve said it, let’s relate this to you. IF you experience Profit Guilt, THEN you probably undercharge. You probably struggle with money, which means you probably do a lot of DIY in your business (rather than focusing on what you’re good at and hiring for the other stuff). Profit Guilt is the opposite of greedy, but it’s not necessarily any better. Because it also warps your expectations for other people’s time and value, and in turn warps it for your clients too. Basically, everything I just complained about with the ‘gurus’ over-valuing their products and services, the businesses that undervalue are also hurting the marketplace. And themselves, obviously.
Even with what I have learned about how long things take and how much work it is to accomplish the things we do, I still struggle with what to charge. I still see black and white numbers in a proposal and think “could we do it for _____(less)?” I want people to walk away from their experience with us and feel like they got way more than they expected.
But each and every time I low-ball something, it comes back to haunt me. And if I have learned anything about what it takes to run a company (not a freelance business) it’s that you have to see the bigger picture. A 30-50% markup seems like a lot until you realize that you pay 35% in taxes. And if you boil down all of your product/service costs and the expenses of running a business, and realize that you take home less than minimum wage, well, you can’t do that for very long.
So here’s how I deal with Profit Guilt. First, I recognize and remind myself that this is a business. It’s not a charity, it’s not a fun way to spend my time. This is me and my team’s livelihoods. We provide the best things we can for the best prices we can. But it’s my responsibility to make a profit. If we don’t, I’m not doing my job.
I’ve also structured my business to cater to different budgets. I can charge what I need to for our full-service packages and still feel good about keeping it real with our micro-business buddies. My blog and email list are free weekly resources. I have low cost digital products, virtual consulting and entry level website and graphic design packages. I like to do giveaways on my email list and run discounted beta tests on new products and services. These are affordable investments for small businesses.
Sort of in relation to my first point, we really do help people. If you can see and prove that you make an impact with the things you provide, the value of it outweighs the price. Most people who work with us DO feel like they got more than what they paid for. They make more money because we gave them the tools to do it. It’s a win for everybody, and there’s no shame in that.
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