Underestimating the Value

I've seen so many businesses make the mistake of underestimating the true value of a service. While it's important to price your services at an appropriate level, the true worth of a service will only be seen once you provide the service to a client.


What happens then? It's a much harder sell because you know the true value of the service. You were never truly in competition with someone else offering the same service.

This isn't a problem if you charge fairly, but if you price poorly and end up charging too little for a service that should be worth more, you end up selling a product that nobody wants or needs.

The problem is easy to fix. Just remember to look at the big picture first.

STEP 1: Figure Out What You Are Worth

There are many ways to figure out the true value of a service. It really depends on how comfortable you are with writing your own estimates. If you're not sure, use the $/hour average as a starting point.

Once you have your hourly rate, calculate the average hours per week you expect to spend providing your services. You'll likely need to add a bit of buffer, just to cover unexpected obstacles and delays.

Next, figure out what your total value to a client is. You'll often need to add on the value of any services you provide alongside yours. For example, I'm a graphic designer by day, but by night, I provide web design and hosting services.

Your estimated value is made up of the hourly value of your services plus the additional value of providing extra services. For example, if my average hourly rate is $100 and the average number of hours per week I expect to spend on each service is 10, my total estimate would be $110/week.

STEP 2: Find Your Value Threshold

Now that you've determined what you should be paid and how much extra you should be willing to provide for your service, it's time to find the threshold.

Many of you reading this post are already aware of this concept, but others might not be so familiar. When you go above your value threshold, you begin to take on risks. You could spend more time than you expect on the projects you accept, or the project you accept might be a little too complex for your current skill set.

It's important to note that when you reach the value threshold, your true worth will be revealed. It's very unlikely anyone is going to pay you what you think you should be paid, but they might pay you a bit more if you're willing to take on a little risk.

It's also important to realize that reaching the value threshold will cause your income to increase, even if your clients don't want your additional services.

STEP 3: Adjust Your Pricing to Reach Value Threshold

Now that you know the value you should be getting paid for your services, it's time to adjust your pricing to meet those new numbers.

You might be tempted to cut your prices to meet the value you