Overcome Underearning: How to Avoid Underselling Yourself

 

A few years ago, I had the chance to speak with a group of businesswomen about their biggest financial mistakes. One that came up almost immediately was pricing products or services too low initially. Women especially struggle with worth and conceptualizing the value of their own labor, whether we’re working for an employer or ourselves.

Actually, I’d argue it can be even easier to get stuck in a cycle of chronically undervaluing yourself when you’re a solopreneur. One woman I spoke with shared about struggling with this. She priced her services too low initially. After realizing this, she found it difficult to raise her rates, because her first clients expected her low prices. She struggled between raising her prices and earning a wage that was too low for her needs. 

Whether you’re in a similar position, or just starting out and not struggling with this, there are actions you can take to avoid this pitfall of solopreneurship.

Establish a Plan and a Purpose for Your Income

First, establish your money why – your purpose and plan for the money you earn though your business. Where will it go? What will it do? An important part of this process is looking through your expenses and determining how much your business will support you with them. Once you’ve established your money why, you’ll be able to set income goals based off this information, so that your income is truly able to cover your living expenses. Once you know how much money you need to make, it’s easy to figure out how high your prices need to be.

Consider Materials and Costs

Ask yourself a few more questions: What products or services are you planning to produce and sell most often? How much time, labor, and supplies will go into production? Account for those costs in your pricing formula, and make sure the answers are what you want them to be. If you’re planning to make most of your money from custom embroidered portraits, but you actually hate embroidery, maybe you’ll want to tinker with your profit model a bit. After this inquiry, you’re well on your way to pricing yourself well. For more resources, check out this article I wrote about my interview with Megan Auman.

Work on Your Mindset

If you’ve already priced your products and wound up in a similar situation to the woman above, you can still double back and figure out your true income targets and prices. The real challenge comes in actually implementing a rate change. Before you do this, it can be helpful to do some mindset work. Raising your rates can be a scary prospect that brings up all kinds of emotional baggage, but if you work on it, you can get to a point where you feel settled. Then, go ahead and raise your prices! You deserve to be comfortable and make a living wage. After all, isn’t that why you went into business for yourself?

If you enjoyed this post, you might also enjoy a free copy of my eBook, Reach Your Life Goals:  a Business Owner’s Guide. Click here or below to download your free copy.

How to Avoid Underselling Yourself

A few years ago, I had the chance to speak with a group of businesswomen about their biggest financial mistakes. One that came up almost immediately was pricing products or services too low initially. Women especially struggle with worth and conceptualizing the value of their own labor, whether we’re working for an employer or ourselves.

Actually, I’d argue it can be even easier to get stuck in a cycle of chronically undervaluing yourself when you’re a solopreneur. One woman I spoke with shared about struggling with this. She priced her services too low initially. After realizing this, she found it difficult to raise her rates, because her first clients expected her low prices. She struggled between raising her prices and earning a wage that was too low for her needs. 

Whether you’re in a similar position, or just starting out and not struggling with this, there are actions you can take to avoid this pitfall of solopreneurship.

Establish a Plan and a Purpose for Your Income

First, establish your money why – your purpose and plan for the money you earn though your business. Where will it go? What will it do? An important part of this process is looking through your expenses and determining how much your business will support you with them. Once you’ve established your money why, you’ll be able to set income goals based off this information, so that your income is truly able to cover your living expenses. Once you know how much money you need to make, it’s easy to figure out how high your prices need to be.

Consider Materials and Costs

Ask yourself a few more questions: What products or services are you planning to produce and sell most often? How much time, labor, and supplies will go into production? Account for those costs in your pricing formula, and make sure the answers are what you want them to be. If you’re planning to make most of your money from custom embroidered portraits, but you actually hate embroidery, maybe you’ll want to tinker with your profit model a bit. After this inquiry, you’re well on your way to pricing yourself well. For more resources, check out this article I wrote about my interview with Megan Auman.

Work on Your Mindset

If you’ve already priced your products and wound up in a similar situation to the woman above, you can still double back and figure out your true income targets and prices. The real challenge comes in actually implementing a rate change. Before you do this, it can be helpful to do some mindset work. Raising your rates can be a scary prospect that brings up all kinds of emotional baggage, but if you work on it, you can get to a point where you feel settled. Then, go ahead and raise your prices! You deserve to be comfortable and make a living wage. After all, isn’t that why you went into business for yourself?

 

 

 

I hope you found this helpful! If this is the type of work you’d like to do with an expert guide, check out my Profitability Coaching Services and schedule a free Financial Self Care Consultation!

☮

Angela

Image Source: Magnet.me


This blog post is a tweaked and re-published version of the original, published in 2019 as part of a series on financial mistakes made by women solopreneurs. You can read the full series here

Why You Need to Consider Your Hourly Wage As a Business Owner

How much does your business pay you, hourly? Whether you’re working on a pricing strategy or just feeling burnt out by your business, this can be an important thing to consider.

Why Think About Your Wage?

Knowing your hourly wage can help you be more aware of the time and effort you’re putting into your business, and what kind of return you’re getting. Calculating your hourly wage can be a great tool for a perspective shift. For many business owners, even if they work 12-hour days and have just enough to cover bills, they might not see that their business isn’t paying them enough until they’ve figured out their hourly rate. If your hourly wage would make you want to leave your position if you were an employee, that’s a great clue that some new thinking about your pricing is in order!

Appropriate Pricing

Understanding what your hourly wage is (and what you want it to be) can be a huge help in pricing your products appropriately. First you need to understand your money why, or why you earn the money you take in from your business.  This will help you understand if your current prices can really sustain the goals that you have financially. You can learn how to set informed income goals here. Once you understand what your income target is, you can work backwards and see how much of your product or service you would need to produce and sell in order to make that income. 

Take a moment to consider the cost of low prices, too. Look around at what other people in your industry are selling their product for. If you’re giving your goods away because they’re priced so low, you’re not doing anyone any favors. Remember, selling more doesn’t mean you’re necessarily making more. You aren’t making money, you’re reducing the value of what you do in the eyes of the buyers and you’re making your industry fellows unhappy.

Consider Your Time

When you are considering how to price your product or service, you may take into account the cost of supplies, transportation, and other materials. However, you must also take into account the cost of your time. If you were working for someone else and getting paid, you would receive an hourly wage, so consider that just as important in your own business. If you hired someone to help you with production, you’d need to pay them an hourly wage too. If you’re planning to scale up a business you’ll need to be able to hire other people and your prices need to be able to sustain that.

Another thing for product-based businesses to consider when looking at your pricing is your interest in wholesaling. When selling wholesale, you will typically  sell at 50% of your retail price. If, at this price, you’re not covering your costs, labor and making a profit that supports your financial goals, you need to raise your prices. 

Taking your hourly wage into account can help you accurately price your products and meet your income goals. If you’re interested in learning and thinking more about pricing formulas, I encourage you to check out my interview with Megan Auman. Our talk, plus my articles on how artists define their own success and how business skills and artistic sense can coexist, are great resources for anyone with a creative business looking to tinker with their profit model. Enjoy!

 

☮

Angela

Photo: bruce mars 


This blog post is a tweaked and re-published version of the original, posted in 2019 as part of a series for creative business owners. Check out more articles on that topic here

Your Prices Matter, Here’s Why

When it comes time for you to price your services or products, you might find yourself at a loss. There are all kinds of pricing formulas out there. Some involve complicated math and some that just ask you to consider wholesale versus retail pricing. My personal favorite way to determine prices is to set income goals informed by the purpose and the plan you have for the money you earn from your business.

This month, I’m going over some financial mistakes women I’ve talked with recently first made in their business, and how to correct them. Let’s dive in:

The Mistake

This woman I spoke with listed not pricing her services high enough as her biggest financial mistake. She priced them too low initially. After realizing this, she found it difficult to raise her rates, because her first clients expected her low prices. She struggled between raising her prices and earning a wage that was too low for her needs. 

The Solution

If you are just starting out and are about to price your products – congratulations! You can take preventative action to make sure this doesn’t happen to you. The most important thing to do first is to establish your money why – your purpose and plan for the money you earn though your business. Where will it go? What will it do? An important part of this process is looking through your expenses and determining how much your business will support you with them. Once you’ve established your money why, you’ll be able to set income goals based off this information, so that your income is truly able to cover your living expenses. Once you know how much money you need to make, it’s easy to figure out how high your prices need to be.

Ask yourself a few more questions: What products or services are you planning to produce and sell most often? How much time, labor, and supplies will go into production? Account for those costs in your pricing formula, and make sure the answers are what you want them to be. If you’re planning to make most of your money from custom embroidered portraits, but you actually hate embroidery, maybe you’ll want to tinker with your profit model a bit. After this inquiry, you’re well on your way to pricing yourself well. For more resources, check out this article I wrote about my interview with Megan Auman.

If you’ve already priced your products and wound up in a similar situation to the woman above, you can still double back and figure out your true income targets and prices. The real challenge comes in actually implementing a rate change. Before you do this, it can be helpful to do some mindset work. Raising your rates can be a scary prospect that brings up all kinds of emotional baggage, but if you work on it, you can get to a point where you feel settled. Then, go ahead and raise your prices! You deserve to be comfortable and make a living wage. After all, isn’t that why you went into business for yourself?

I hope you found this helpful! I’m doing a series on financial lessons learned from business in honor of Financial Planning month, so stay tuned. And if you enjoy these thoughts, I wrote a lot more about planning and financial lessons in this month’s newsletter. Read it here and subscribe if you wish – you can unsubscribe any time.

☮

Angela

Image Source: Jason Blackeye

Why You Need to Consider Your Hourly Wage As a Business Owner

Have you paused to consider what hourly wage your business pays you? This might not seem important – maybe you think that as long as you have your bills paid, you’re all set.

Why Think About Your Wage?

The thing is, this is really about pricing your products appropriately. First you need to understand your money why, or why you earn the money you take in from your business.  This will help you understand if your current prices can really sustain the goals that you have financially. You can learn how to set informed income goals here. Once you understand what your income target is, you can work backwards and see how much of your product or service you would need to produce and sell in order to make that income. The next step is to see whether that’s realistic. 

The Cost of Low Prices

Look around at what other people in your industry are selling their product for. If you’re giving your goods away because they’re priced so low, you’re not doing anyone any favors. Remember, selling more doesn’t mean you’re necessarily making more. You aren’t making money, you’re reducing the value of what you do in the eyes of the buyers and you’re making your industry fellows unhappy.

Consider Your Time

When you are considering how to price your product you may take into account the cost of supplies, transportation, and other materials. However, you must also take into account the cost of your time. If you were working for someone else and getting paid, you would receive an hourly wage, so consider that just as important in your own business. If you hired someone to help you with production, you’d need to pay them an hourly wage too. If you’re planning to scale up a business you’ll need to be able to hire other people and your prices need to be able to sustain that.

Another thing for product-based businesses to consider when looking at your pricing is your interest in wholesaling. When selling wholesale, you will typically  sell at 50% of your retail price. If, at this price, you’re not covering your costs, labor and making a profit that supports your financial goals, you need to raise your prices. 

I hope these thoughts of mine have helped you consider how taking your hourly wage into account can help you accurately price your products and meet your income goals. If you’re interested in learning and thinking more about pricing formulas, I encourage you to check out my interview with Megan Auman. Our talk, plus my articles on how artists define their own success and how business skills and artistic sense can coexist, are great resources for anyone with a creative business looking to tinker with their profit model. Enjoy!

 

☮

Angela

Photo: JOSHUA COLEMAN

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