How much should I charge?

Small Business Guides

5 min read

Are you charging what you’re worth? If you’re like most entrepreneurs, you probably aren’t – but that’s something you can change. We spoke to business strategist Danetha Doe to learn more.

Think about what money means to you

Money can be an emotionally-charged topic. That’s because it represents more than just business revenue. It’s also used as a measure of success and a validation of your skills and experience. When you set a price for your product or service, you’re setting a price for something that you’ve poured your heart and soul into. And that always makes it a tough decision.

Knowing what price to charge is an issue for female entrepreneurs in particular. Stereotypes surrounding gender roles in business still exist. And some women charge less than they are really worth.

Danetha Doe, business strategist and founder of Money & Mimosas lets us in on a few of her thoughts on this topic.

Take a good hard look at your business financials

If you want to charge your worth, it’s vital that you look at your attitude to business and money first. Start with your business:

  • Understand the performance of your business
    Are you thriving, barely making ends meet, or sliding into debt? The answer to this question will tell you a lot about your business.
  • Use accounting software to see real-time cashflow
    Run financial reports to see how well your business is performing. Are you pleased with your business finances, or do you think you can do better?
  • Critically look at your financial habits
    Do you check your books on a regular basis and have regular discussions with your accountant or bookkeeper? If not, why not? Are you trying to ignore something important?

Examine your psychology

Now think about value. How do you present your products or services to potential clients? For example:

  • Do you have trouble demonstrating your value to others?
  • Do you hesitate when you’re asked for costs, then quickly offer a discount?
  • Do you regularly ask yourself if your prices are too high?

If you answer ‘yes’ to all of these questions, you may have a problem. Charging what you’re really worth starts with your mindset. You need to believe that you deserve to be properly compensated for your time.

Research the market

If you want to charge your real worth, the first step is finding out what other businesses charge. This might not be easy because pricing is often commercially sensitive information.

If you’ve been in business for some time, you probably have contacts who can help. Talk to them and find out what your competitors are charging for similar services to yours.

Do your own research too. The internet has made pricing more transparent than it used to be. Online discussion forums may give you some clues about the level of market rates.

Industry reports from analyst companies can also help. Sometimes you have to pay for these reports, but the information in them could be very valuable.

So how much should I charge?

You’ve looked into your business finances and checked out the competition. And you’ve explored your own attitude to money. You should now have a rough answer to the question “How much should I charge?”

If it looks like you’re already charging what you’re worth, that’s great. But if not, you need to find a way to get your pricing up to the right level. And that means changing the way you do business.

Four pricing strategy steps

Having a strategy can help you achieve the right pricing. Try these tips:

  • Get your accounts in order
    Hire an accountant or bookkeeper if you haven’t already. Ask them to help you get your books in order. They can also give you an objective assessment of the state of your business.
  • Find an accountability partner and meet them weekly
    This person could also be your accountant or bookkeeper. Or it might be another professional, like a fellow business owner or a financial advisor. Whoever you choose, your accountability partner will help you focus on your value.
  • Keep financial goals in mind
    Talk to your accountability partner at least once a week for 30 minutes. Review your financial goals and the progress you’ve made. Work towards improving the state of your business finances and cashflow.
  • Talk about your challenges
    Don’t bottle up your problems. Perhaps you have financial issues such as overdrawn bank accounts or maxed-out credit cards. Fear won’t help you resolve these issues, but your weekly meeting will. Don’t be afraid to talk to your accountability partner. Get advice about how to change course and overcome these challenges.
Being a business owner is all about confidence. You must be confident about your skills and rates, so you can convince others you are worth what you charge.

Increase your pricing

This is the important part. You've worked out that you're undercharging and you understand the reasons why. So now it's time to do something about it and raise your rates.

Of course, this is easier said than done. The idea might make you feel uncomfortable, so raise your prices slowly. Start today, then do it again at six-monthly intervals. You could increase your rates 10 percent twice a year for jobs where you offer real value.

Maybe you can even go higher. If you’ve done your research, you’ll know what you’re really worth. Female entrepreneurs often undervalue themselves and their business skills. Here’s your chance to remedy that.

Build your confidence

Being a business owner is all about confidence. You must be confident about your skills and rates, so you can convince others you are worth what you charge.

Once you’ve made the decision to increase your rates, you’ll need to update your marketing material. Make sure you update your website and any sales material with the new pricing. Then go out and meet as many people as you can. Share interesting information about your business. Tell them what you do, and that you do it well. When they ask you about pricing, take a deep breath, then smile and tell them your rates. Now pause and wait for their response – don’t rush to defend your value.

You may feel anxious, and your palms might get sweaty. That’s normal, but it will get easier with time. As your confidence builds, so will your belief in the value of your business skills.

Know your worth

Only you can decide what you should be paid, so make sure you do your research and really understand your industry. Work on your confidence, get help from your accountability partner, and refer to your strategy. As long as you persevere, you'll be charging your worth in no time.