Why Startups Underprice Work

#Discussi(Startup) [ via IoTGroup ]

Headings…
Why Startups Underprice Work
(And why they shouldn’t.)
Why Startups Underprice
Another reason that leads to underpricing is a lack of experience, courage
A desire to beat the competition in securing the project can lead to pricin
Why Startups Shouldn’t Underprice
There is an argument that overpricing your work is always better than under
Trying to price to a client’s budget can be a surefire way to gain the job,
Is It Ever Acceptable to Underprice? A Few Considerations
Entrepreneur’s Handbook

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Why Startups Underprice
Pricing work correctly is no easy feat, when you have to consider the following questions:
What rate do you want to earn?
Should you charge day rates or hourly rates?
What do your competitors charge?
During the initial stages of a startup, one of the biggest challenges is learning to accurately estimate the time it will take to complete a project.
You will often find at the conclusion of a piece of work that you estimated wrongly and worked for far less than you anticipated (or next to nothing at all, as we have experienced in a number of our earlier projects.) Unfortunately, once the price is agreed, you have to hand over your work, put on your best ‘customer face,’ and accept the peanuts you signed up for.
A great technique is to start a logbook of all the hours you worked on each project, the cost of the materials you used, the details and extras you forgot to include.
I can admit that we have gone as far as to reduce our final project price, almost out of doubt that our calculated totals could be right — does that not sound like a lot of money?
It’s naive, but seeing a large price tag next to work you produce yourself takes some getting used to.
Self-doubt can be a heavy influence on your final price, and unfortunately this only changes as you grow the belief in yourself and your product or service.
A desire to beat the competition in securing the project can lead to pricing too cheap.
In the past, we have been guilty of telling clients we will be cheaper, or can be cheaper, even asking for clients’ budget to price within from the outset.
Although it may succeed in getting you the work, you will now be pricing the commission to their needs and budgets, rather than pricing effectively to maintain and further your startup.
Many entrepreneurs start with the assumption that all startup products should be priced lower than the competition

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