4 mistakes you make when pricing your work 

Making mistakes when pricing your work can mean a big problem for your business, as it directly affects your profit.

And, contrary to what is believed, it is not just the “less” values that cause problems, as a higher price can harm your customer acquisition.

But how do you set the right price? What is the best way to overcome changes in the price of raw materials? 

In today's material we highlight 4 main mistakes that entrepreneurs tend to make, and we will see how to resolve each of them.

Oh, stay until the end, as we will also see some bonus tips to communicate the price change without losing old customers!

The importance of pricing your work correctly

There is a very popular phrase here in Brazil, which says “undertaking is for the strong and persistent”, this is said thanks to the fact that many beginning entrepreneurs face challenges that lead them to give up.

Among the most common challenges, the financial aspect certainly weighs heavily, as it is not easy to find an adequate price thanks to the obstacles that appear, such as:

• Customers wanting low prices and high quality;
• Fees and fees for sales platforms and card machines;
• Taxes;
• Variation in raw material prices;
• Competition;
• And so many others.

In general, when trying to meet one of the above criteria, such as low price, for example, the loss comes in another sector, such as raw material costs.

Therefore, it is important to find the right balance, as there is no point in selling a lot and making virtually no profit.

Mistakes you are making when pricing your work: stay tuned!

Most people, when trying to price their products or services, only consider two columns: cost and sales value.

In general, the mathematics done is very simple: sales value – cost = profit.

And although it seems to work, we must consider that many things are between the lines of these two columns. For example:

Sale value: Do customers want to pay that price? What about the machine fees?

Cost: Did the price of materials go up? What about transportation to pick up products and make deliveries to customers?

There are few examples, but they already show us that we must consider many points when pricing work correctly.

So, let's now look at 4 mistakes you make when pricing your work, which can directly interfere with the financial health of your business.

1. Undervalue yourself 

The biggest mistake entrepreneurs make is not considering their own value, and only prioritizing customer requests.

Does the customer like a low price? Yes, but if that price completely disregards your efforts and skills, it's not fair at all.

Remember that your profit does not come from the “surplus” of your cost, but from the price you think your work is worth. So, value yourself!

2. Or, if it overvalues 

If, on the one hand, undervaluing is bad, on the other, overvaluing it can cause some problems.

This occurs especially when this appreciation puts their prices high, above the market average.

There is no problem in charging above average, but remember that those who pay higher amounts expect to receive something proportional.

So, check whether your products and services meet this requirement. To do this, make an honest assessment of the quality you can deliver.

Remember that frustration is one of the main factors that generate cancellations and refund requests, and worse than not selling, is having to reimburse all production or service execution costs.

+Do you need to optimize your company’s processes? See some tips.

3. Not considering your costs when pricing your work

Do you remember that previously we talked about the basic mathematics of sales value – cost = profit?

So, a big problem when pricing your work occurs especially in this cost determination part.

Contrary to popular belief, you shouldn't just consider the raw material. Let's look at an example:

A baker who wants to price her cakes only considers production costs, including ingredients and packaging. However, the following items are always left out:

• Cooking gas;
• Utensils (which wear out over time);
• Cost of water and dishwashing products;
• Specific materials, such as piping bags, nozzles, etc.;
• Disposable for cleaning the work area.

There are a lot of items, right? But, remember that we are only talking about production itself, we still have transport costs for purchasing materials, energy, tariffs, among many others.

What we want to say is that cost calculation is something very broad and must be done carefully. This way you can certainly find the ideal value, without leaving items along the way, which in the end become expensive.

4. Make your budget based on the lowest prices on the market 

One of the biggest mistakes you make when pricing your work is not considering a cost margin above regular prices.

Let’s look at another example to illustrate:

A carpenter always buys his wood in a store in the city center, as there the price per meter is R$ 20.00 cheaper, and it is this cost that he considers in his budgets.

But, on one occasion, a customer placed an order for a piece of furniture, and the carpenter gave the ready price. However, when arriving at the store to buy the wood, it increased by R$ 25.00.

And now? The professional's profit all went down the drain, as costs exceeded expectations.

Therefore, it is ideal that you never consider the lowest prices on the market in your budgets, as they may vary.

So, always put a margin above, considering possibilities of increase, or even the store you usually buy from does not have the product.

Another important point: never consider promotional prices in their budgets. Remember: you won't always pay this amount.

How do I adjust the prices of my services for old clients? Check out some tips!

By now you know what to consider when pricing your work, and you may notice that you need to make the adjustment for yesterday!

But what about old customers? How to communicate the price change without losing customers?

Let’s look at some tips:

Invest in adequate communication: Always communicate in advance, and look for ways to convince the customer that the increase is necessary and fair.

Make the adjustment in one go: After all, who likes receiving a different price every time they seek a service from the same professional?

Is the customer always right? It depends: If the customer does not accept the adjustment, believe me: it is better to let it go than to end up at a loss. Those who stay because of the price, go for the same reason!

Improve your services frequently: most of the time, changing quality for the better can convince customers to spend more.

Did you like the tips? So, remember to price your work responsibly and safely, as this is a crucial item for the financial health of your business!