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15
Dec

My recent article on “Evil Capitalists” created a great discussion about an important issue that is plaguing the natural health movement and the world in general.

If you missed this classic post, make sure to check it out at:

http://www.dowhatyoulove.com/angryreader

I want to follow up on this topic, with what I believe is a giant mistake for many entrepreneurs in general, but particularly in the natural health movement.

In one of the comments to my last post, someone wrote:

“after reading your words and all the comments, my eyes have been opened a bit wider to the truth….i’ve spent the last 10 yrs trying to provide every ounce of my energy and expertise for practically nothing in hopes that patients would realize how much i care and want to help. i thought it would put a line of waiting and paying patients outside my door, but i have barely survived and have often come close to closing. i’ve ran myself down, gotten used and abused and worn out, and remain unappreciated.
they SAY they appreciate the service, but seem unwilling to pay.”

This brings me to:

Giant Mistake #1: Undercharging

Everyone that I help in private coaching initially has the same problem: they are unsure about charging a reasonable fee for their product/service. They feel bad charging much for their work and are too modest.

When I push them to charge what they’re worth, many are not at ease. “Will people resent me for it?” “I will probably not make as many sales if the price is too high.”

I assure them that no, it’s quite the opposite.

The more you charge for your products, the MORE people respect you for it. The less you charge, the more you’re viewed as a cheap commodity, and the more people try to take advantage of you and waste your time.

When I urge my clients to raise their prices for their digital products (often by doubling them), they are often surprised to discover that their sales don’t go down. In many cases, they go up!

Undercharging for your product and services essentially tells the world that you’re not worth it. And you can probably find the same information for free somewhere else on the internet.

There’s something fundamental in human nature that we tend to value what’s expensive.

For example, remember the last time you went shopping for a category of item you didn’t know much about, such as a kitchen scale or another small appliance.

If you get presented with two options, a cheap one and a more expensive one, and without more information, you’ll naturally assume that the more expensive one is probably a lot better and might last longer.

Another fact of human psychology as that people who don’t enforce their personal boundaries and make it too easy for people to have access to them (and thereby waste a lot of their time) often get used and abused.

Perceived Value

A few items that are commonly sold already have attributed perceived value. By that I mean that the value of these items has already been determined by the marketplace.

For example, even if I tried to sell a book for $100 with great marketing, it’s just not going to fly. Why? Because the value of a book is generally thought to be less than $30-40.

However, digital information products, coaching programs and counselling or other services have no established perceived value.

We know that there are therapists that charge only $50 an hour, while others charge $300 an hour. In most people’s minds, the cheap therapist is not as “valuable” as the expensive one.

It’s okay to sell a few items with established perceived value, but to make a living you generally have to also sell other programs where YOU establish the value based on what you think you’re worth.

And let me tell you… it’s better to try to be perceived as “valuable” than “cheap.” People will respect you for it.

People Don’t Value Free

The reality is that nobody really values something that’s free. I don’t mean that every exchange in life has to be based on money, but generally there is some sort of exchange.

Often, the true cost of something is hidden. And when that something is offered for “free,” people don’t value it as much and tend to take advantage of it.

For example, in Canada where I’m from, we have a huge problem with our Universal Health Care system.

Although a lot of people think it’s “free,” most people are aware that it’s paid for through our high taxes.

Yet, a lot of people think it’s free and try to use it as much as they can. That puts a tremendous strain on the system in Canada, which is now one of the least efficient of the entire Western world.

When something is free, it’s not only undervalued for its true costs but people will also take advantage of it and take more than they need.

If you charge the TRUE cost of a product or service, you’ll attract the right clientele who is willing to pay for it.

Quality People

When your products are cheap, you attract cheap people.
When your products are expensive, you attract quality people.

I know it sounds like class warfare, but it’s true.

It’s been my experience and other entrepreneurs will certainly agree.

I get the most customer service from people who place the smallest orders, and the least customer services and the happiest customers from those who place the largest orders and buy the most expensive products.

I once had a conversation with Dr. Doug Graham, author of the book 80-10-10 Diet where we talked about his pricing.

Dr. Graham charges $600 an hour for a consultation, and he’s raised the price of his fasting retreat in Costa Rica over the years from $3000 for 45 days to now $10,000.

All of his events are priced higher than everybody else, but at the same time he sells cheaper books for people who cannot afford the events.

One day he told me, “I try to make myself less available. If I charged less for consulting, I would have to do it all the time. By charging more, I can make my work load more manageable.”

He also told me that when people pay for 30 minutes of consulting, he generally gives them one or two extra hours of email consulting for free. He doesn’t advertise that, but does it out of the goodness of his heart.

So charging more doesn’t mean that you can’t overdeliver. In fact, it will make you much more likely to overdeliver, because you’re taking care of yourself first.

Sell From the Start

One of the worst mistakes someone can make in Internet Marketing or business in general is to not sell from the start.

Some people think they can start a list and give away a lot of free content to grow it. Then at some point, they will release a product and sell it to their list.

This is a giant mistake!

When your list gets in the habit of getting everything for free from you, they might resent you when you try to sell them something. They will think “this isn’t what I signed up for!

It’s especially difficult to turn this type of list around.

What you should do instead is to make sure you have something to sell right from the start. Don’t wait too long to start selling products, as it may backfire against you.

The core of any business should always be about selling something. If that part is not clear when you start your business, then you should wait and make sure you have a good plan on what to sell.

Life Is Expensive

Let’s face it, life is expensive.

People think that you get more respect if you live a life of poverty and try to help others at the expense of your own needs. Giving away all your free time, helping others financially, giving the shirt off your back etc.

In my experience, the opposite is true. The more personal success you have, the more respect you gain, and the better the quality of customers you tend to attract.

Don’t be a slave to poverty mentality!

In the end you can help more people if you are successful at what you do. If you can barely keep your business afloat it’s only a matter of time before you have to close up shop and not be able to help anyone at all.

Most of us want to make a difference in the world, but nowadays life is just to expensive to be able to live in poverty like a saint and be recognized for it.

If you can’t wait to get started, make sure to check out my program on how to write your own eBooks.

It will teach you exactly how to write and sell your own eBooks (including how to price them), from start to finish in just 24 hours! Check it out and take advantage of our Christmas sale. Go to:

http://www.fredericpatenaude.com/writeyourebook.html


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Category : Making Money Online

5 Responses to “The Biggest Mistake: Undercharging”


Bonnie Boots December 15, 2010

I totally agree with everything you’ve said, Frederic. And as a marketing consultant, I’ve seen far too many people also display the flip side–not being willing to pay what other people are worth. I like to work with people that are passionate about their topic, but I’ve learned that if their passion isn’t accompanied by enough self-respect to charge what they themselves are worth, they will eventually try to nickle-and-dime me to death by constantly asking for reduced rates and free services. People confident in their own worth are generally able to see and respect the worth of others.

Alexander December 15, 2010

Wow, so there it is. Never undercharge, ever, or be forever branded as cheap. Simple. What the hell was I thinking? Now I’ll stick to the RRP that I was told is the standard… for my starscapes work… geez…. thanks, Fred, I’ll be tough and I’ll never buckle down to cheap-arse people… I want a better life, so I’ll do that, stick to the right prices for my products. Thanks, Fred, again. I’m grateful.

Carolyn December 15, 2010

Love what you’re saying Fred.

I’ve been guilty of undercharging in my business and it’s time I changed my way as no-one appreciates the great deal they get, they just expect it cheap again next time. You can always offer a discount but it’s hard to increase the cost of your product..

Keep it real! which means keeping up with the cost of living.

Christine December 16, 2010

Though this certainly makes sense, there is also a balance to it. I see prices that are so ridiculously high and out of range for a good majority of people. If your goal is sincerely to help people, then you’ll want to place your prices within reach of the masses, not just the elite few.
I’m not saying don’t offer other high end product, just remember us “common folk” who do not have thousands in disposable cash floating around.
Just a thought.

Frederic December 17, 2010

I agree Christine! Nobody says one should only sell very expensive products. In fact, most of my products in my raw-food business are rather affordable, although I prefer to sell them as packages rather than individual books and DVDs, etc. It’s also important for business owners to have a wide range of price points depending on the level of involvement. A book might be cheap, but a seminar will be more expensive.