Photos of Raul Colon Web Developer Puerto Rico

For the last three years my biggest obstacle has been pricing my services.

This last year I have been working hard on understanding pricing and seeing what can be done to get everything in line with being profitable. I have been experimenting and I have noticed that the pricing I have established for some of my clients has put me into a situation where the services I give them are not profitable.

Changing Fees

Given that only a few of these clients have supported me from the beginning, I am willing not to change their fees to fulfill my commitment.

Little by little my pricing strategy has hurt me because most of these clients, (I underpriced them), have also wanted me to quote them way below what my services are worth for other services. I have made the mistake one too many times to go ahead and offer more discounts to align my current pricing to past services. Short term, it makes my clients happy (so I think) but in the long term it affects how I can take care of them and other clients.

Getting Hurt in The Long Term

There have been instances where I have offered my ex-clients great prices and adjusted my pricing to go in line with their needs. If I underpriced that project previously, it has only created a haggling war on the clients side to bring the cost of my services down even when I have underpriced my services in the past.

It really puts me in a difficult position because nobody wants to lose a client but I also don’t want to continue running an unprofitable business. Little by little these clients, who have been given discounted services, have been leaving and I am not sure if that is good or bad.

Less Unprofitable Clients more Love for the Profitable Ones

The advantage of having some of these clients leave, is that I am able to serve my current active clients in a better way. Instead of spreading my resources thin I am able to offer better quality services to those that understand the value of what we do at CIMA IT Solutions.

A Tough Call To Make

It is a difficult topic to talk about. But during the tough economy, many of us fall under these pricing issues where the client clearly does not value what you do or services you are providing. Even when you bring them an attractive return on investment they decide they will not compensate you adequately for what you have done.

What issues do you run into when pricing your services?

What factors do you take into consideration when pricing your services?

We will be possibly creating a series on pricing products based on our knowledge dealing with clients?

photo credit by cdsessums

6 Comments

  1. George 'Urban Jibaro' Torres on August 23, 2011 at 12:28 am

    I have talked about this in my coaching circles (that were underpriced, by the way)… I think the obstacle I ran into was one of confidence. Maybe I do not look as good as the guy with office space? Why would they trust me? What if they think I am too expensive? were all questions I was asking… and what I realized recently is that I may have lost potential customers because they have priced my competition and probably thought I had some sneaky extra fees or some fine print that would cost them down the line.

    Another thing I encountered was never setting my self up for a long term relationship and therefore giving myself an opportunity to lose clients. I did not right fit them for services they wanted, instead I offered services that would eventually cut my role in the project. One example was a client who I taught how to manage his own project only for him to get frustrated because she really did not retain much after 4 sessions. Instead of admitting she needed jhelp, I found out she hired someone else to do what I used to do.

    I can go on for days…

    Long story short, I charge by retainer now that includes hours of consultancy and project execution so that it reinforces that I am there for the long term.

    We should record a skype session discussing this in detail.



    • Raul Colon on August 24, 2011 at 4:57 pm

      I have been in your position many times. I try to help out and empower my clients to later find out they are annoyed at the fact that I handed them more to do ( it is a thin line in empowering and pissing them off). Over the years I have given my clients the option to learn something or for me to take care of it. 

      Over time they are so comfortable with the fact that if they wanted to do it they could but they rather have me do it. I have others who have gone on there own taking more stuff but those are very few compared to most people.. 

      I guess confidence does come into play and when you mix it with a bad business cycle it can work against you to underprice your work. 

      Overall I have to say that I trying to focus on enhancing my services and finding the few people that are willing to pay for my services vs. trying to get a large volume of business with people that can take my business too the ground because they are only thinking of themselves. 



  2. George 'Urban Jibaro' Torres on August 23, 2011 at 12:29 am

    I said all that to say…. Great topic…. 🙂



    • Raul Colon on August 24, 2011 at 4:52 pm

      Thanks! 



  3. Rick Manelius on December 14, 2011 at 6:29 pm

    I’ve done this a lot myself. Just because I can do something extremely quickly, I sometimes don’t charge what it’s really worth. Well that’s fine as long as I can execute and just get the job done. But what actually happens? A lot of emails/communications and some redesigning. It ultimately kills my bottom line.

    This hurts clients as well, because it encourages lazy thinking. If it’s cheap (from their end) to switch things on a dime, then there is no need to think things through. It also hurts our relationship, etc, because I feel undervalued/not respected.

    Great article… and a great reminder!



    • Raul Colon on December 14, 2011 at 8:57 pm

      Rick, 

      Thanks! I have been working with this the past 6 months. I got hurt greatly by underpricing my work. 

      I agree if you only take into consideration the actual time it takes you normally to complete something without considering  communications (depending on the client) changes etc. It can put you in a bad position!