How To Stop Undercharging a Client
April 19, 2022
How To Stop Undercharging a Client
Finance icon

By Addisson Shaw

Start Small Think Big Contributor

Accidentally undercharging a client can be defeating. You are putting in long hours, the hard work, the sleepless nights. When you’re a small business owner (or maybe even working solo), not getting compensated appropriately can be damaging on several different levels.

Learning how to not undercharge clients is a skill that develops over time. Unfortunately, that means small businesses are likely to succumb to low rates in the beginning due to being in survival mode. Any clients are better than no clients. Right? Well, not really.

Undercharging might seem like a hit worth taking until your business is on its feet, but in the meantime, you could become burnt out, bankrupt, or stuck in the unsustainable habit of not charging enough.

Suppose you can recognize that your rates are not where they should be. Congrats, you’ve already made the first step. In this article, we’ll look at some simple ways to charge higher rates for your services that aim to elevate your business, not limit it.

Higher Rates Unlock Higher Growth Potential

As a small business owner, it can be hard to identify whether you are undercharging or not.

You know you have something of value to offer, but you don’t want to put off clients with a sky-high bill. You may think decent rates are something you have to earn. But that’s not the best approach.

Marketing studies from over the years all conclude that while undercharging might feel safe initially, it can harm your client’s reach in the long run. The clients who pay well, the clients your business needs, are not going for the cheapest options. They’re going for the businesses bold enough to charge what they know they are worth and the quality of your product and services. If you adopt a habit of undercharging in the early stages, you could seriously inhibit your potential for growth over time.

Sometimes requesting what you are worth is intimidating. But as an evolving business owner, you will need to develop the confidence to market yourself to clients who accept your rates and are happy to pay them.


How To Stop Undercharging

You know undercharging is not ideal. But it’s not that simple. You’ve got bills to pay, debt to cover, and a great responsibility to your family and your community to make your small business a success. It’s no wonder you feel pressured into charging less.

Fortunately for you and the millions before you, there are ways for you to break the cycle of undercharging and start making the money your business is worth. Some of them include:

1. Sleep On Proposals

Sometimes you can be eager to start a new project or close a deal. But taking a bit of extra time before you hit send on a proposal can be very useful in moments of stress. If you feel pressured into working with a client, you will probably convince yourself that a low rate is best, as long as it gets you the job. Think again.

Your rates need to reflect your work’s time, effort, skill, and standard. Accepting underpaying jobs hold you back from moving forward as a business.

Next time you send a rushed proposal, consider whether your rates are genuinely fair. Your client’s PC won’t explode if the rates are too high—and neither will they. What will happen, though, is you’ll feel very proud of yourself for standing your ground and charging a professional rate.


2. Be Meticulous In Your Calculations

Sometimes, the problem isn’t that you don’t want to charge higher rates. You just never realized you could ask for them. The beginning phase of running a small business is full of growing pains, and regular rate adjustments are a normal part of the small business journey.

Try revisiting your current business model and brand guide and see which areas need an upgrade. Perhaps your hourly rate hasn’t changed in two years, or your hours increased per job, but the project rates didn’t. If this is the case, you need to recalculate your markup and work out how you can adjust your rates accordingly.

Regularly assessing your work input vs. financial gain is an essential component of running any business, big or small. Growth is necessary, so make sure you’re driving yours.


3. Ask For Input From Other Small Businesses or Seek Find Other Support Systems

Not everyone is lucky enough to have community or networking support when starting a small business. Through talking to others with more experience and seeking help, you can learn so much about the do’s and don’ts that seem apparent to everyone else but evaded you up until now.

Get insights and guidance or advice from those you trust. There’s no shame in accepting that there is still a lot you need to learn. Being open to learning new things is what makes a great businessperson. Don’t be shy to broach these topics with those in the same boat as you. They might even be hoping you do.


4. Value Your Hard Work

Rates are about value. If you charge too little, clients may interpret that as a sign of poor delivery. It can feel so difficult to assess what you believe is the correct rate, but you must if you ever hope to make it big in your industry.

Increasing your rates tells clients that your business is growing, you are competitive within your industry, and you deliver high-quality work. Instead of fretting over off-putting prices, focus on refining your value output. If you have a great product (or set of services), tell your clients how great it is by adequately evaluating its worth.


It’s not about greed; it’s about compensation: high value, high price. And your clients know it. So, don’t be afraid to start claiming your space in the industry by charging what everyone else is probably charging anyway.

Blog Home