The First Commandment of Agency Ownership – Thou Shalt Charge What You’re Worth
Failing to charge what you’re worth leaves you feeling undervalued. That’s why making sure you get what you deserve is the first commandment for agency owners.
Are you charging what your services are worth?
Many agency owners aren’t, which is why they feel undervalued and underappreciated. At worst, this can lead to you resenting a client who you feel doesn’t recognise what you bring to the table.
Undercharging also leads to desperation.
But how do you know that you’re doing it in the first place?
There are several symptoms that suggest you’re not charging what you’re worth.
The first is that you’re looking at what your competitors charge. You know the client will compare you against your competition. Instead of thinking about the true value of your service, you’re more worried about the value the client perceives when comparing prices.
The second is that you don’t really understand what your deliverable looks like. This can result in what you deliver going deeper than you intended, which means you’re giving work away for free.
Finally, there’s a lack of understanding of the value that your solution brings. For example, your service may be able to generate another million dollars for your client. You’re underpaid if you’re only charging $10,000 for that service. You should charge 10% or 20% of the value that you’re going to add.
The Root Cause
Most agencies don’t charge what they’re really worth because they’re scared of losing the deal.
You’re tied to your sales process and you don’t want to hear the word “no”. It damages your ego and you get this mistaken idea that a “no” is a reflection of you personally when it isn’t.
That fear of hearing “no” can lead to you lowballing your price just to get the “yes”. But in the long run, you’re not achieving something that benefits the business.
Another root cause of this is that you don’t have a lead funnel in place. That means you don’t have more prospects coming in.
The client becomes the only game in town so you lower your prices to make sure you get them.
Why You Should Fix the Issue
When you charge what you’re worth, you’re showing clients that you’re a specialist. You’re charging a premium price because you’re very good at what you do.
Pricing based on the value that you offer also means that you get a lot more thank-yous from your client. Take the million dollar example I mentioned above. You’ve shown the value that you offer from the start so the client’s happy to pay $100,000 or more.
But if you just have a flat fee with no proof of value attached, the client’s more likely to scrutinise.
Finally, you get a sense of confidence in what you do when you charge what you’re worth. You’re not worried about where the next client’s coming from because you’re not constantly working with tight margins.
This gives you more room to innovate.
Dev “Know Your Worth” Basu