How to Lose a Sale…by Charging Too Little
I learned an interesting lesson many years back: Charging too LITTLE for your goods or services can price you out of a sale. Let me explain.
I was with the management consulting firm Accenture for 15 years. Back in 2001, I left the company to become a “professional speaker.” Although I had been giving speeches since 1992, I had no idea how to start a speaking business.
At that time, I was living in England. One week after starting my business, I met with the owner of a speaker’s bureau in London to discuss representation. We spoke for a while, he watched my videos, and he expressed serious interest. During our conversation, we never discussed my speaking fees – and I had never even thought about what I would charge.
A few days later he called me about a potential gig. The call came in to my cell phone as I waited for a train. It was difficult to hear him due to the noise on the platform. However, I did hear him ask the dreaded question – “What is your speaking fee?” I honestly had no idea and had never thought about it. I did some quick calculations and then pulled a number out of the air. “Thirty Five Hundred” was my response. He thanked me and hung up.
A day later he called back. I quickly realized that he too must have had a hard time hearing me during our previous conversation, because he asked me, “Was that Thirty Five THOUSAND dollars or Thirty Five THOUSAND pounds ($70,000)?” I stumbled for a moment, debating how to answer. I then sheepishly responded, “Thirty Five HUNDRED DOLLARS.” Again, he thanked me and hung up.
As you may have guessed, I did not get the speaking gig. Although I will never know for sure why I was not chosen, I did discover that the person they hired was paid $35,000! I learned a powerful lesson that day. Your price often determines the PERCEPTION of your credibility. Under-pricing can often imply low value.