Why Underpricing Is More Dangerous Than Over-Servicing

Our recent analysis of ca. 300 firms found that around 98% of them weren’t getting paid fairly for their work. It comes from some degree of underpricing, defined as intentionally pricing a project at less than what an objective pricing would suggest, or over-servicing, which is intentionally over-delivering what you and the client agreed to.

Underpricing occurs before the project starts and it’s usually motivated by a fear of not getting the work, either because you don’t want people sitting around without enough to do or because you honestly believe that landing this project will open some opportunity for you (that’s a lie that’s easier to tell yourself).

Over-servicing occurs during the project itself and its motivations are more complex. A creative might land on something interesting to explore, and they might be excited enough to pursue it on their own time. Or the client might express some disappointment with your work as it unfolds and so you try to repair the relationship. Or the client begins flirting with a competitive alternative and you stretch to impress them. Or your positioning simply hasn’t created enough power in the relationship and you feel vulnerable. You might even care more about effectiveness than the client does!

Now here’s why underpricing is so dangerous. You follow a certain research method and creative process that cannot easily be compressed. You know this, too, because your plea to just “stay within the tight budget on this one, folks” seems to fall on deaf ears. The pace of work is like a military tank in low gear: it’s just going to crush any budget in the way. You are going to solve the problem and there are no shortcuts.

This is also why you don’t dare get out of bed for less than $x, and that $x should be clearly stated on your website. I wish more of you would be courageous about this and quit trying to scrape opportunity from the unwashed dishes that other firms leave behind.

If you build a bad foundation (the estimate) it doesn’t matter how good the house looks if it’s on a shaky slab of concrete. But once the client sees that beautiful house under construction, they’re more likely to go for the upcharge to install marble in all the bathrooms. Underprice up front and you’re screwed. Over-service later and you might solve for it.

Getting paid what you are worth is always an intermediate goal, though. The real goal is a price premium for your work, and that’s only possible with a positioning that makes you less interchangeable.

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