You're underpriced. You probably know it. You've thought about raising prices. Maybe you've mentioned it to a friend or a mentor and they've said, "Yeah, you should definitely charge more."
But you haven't done it. And you probably won't.
Why? Because raising prices feels risky. What if clients leave? What if you can't justify the increase? What if people think you're greedy? So you keep your prices where they are. You work harder. You add more services. You hope margin improves through volume.
Spoiler: it doesn't.
Underpricing is one of the biggest constraints on business growth. And it's almost entirely psychological.
Why Business Owners Underprice
It's rarely about not knowing the market rate. It's usually one of these:
The imposter feeling. You don't feel like you deserve premium pricing because you don't feel like you're premium. You're still in start-up mode. You're still figuring it out. You're not "real" yet. So premium pricing feels like fraud.
The comparison trap. You look at competitors and see lower prices, so you assume that's what you should charge. But you don't know their cost structure, their positioning, or their actual business model. You just see the number and assume that's the market.
The fear of rejection. Raising prices means some people will say no. And that feels like rejection. So you avoid it by not raising prices and not risking the rejection.
The volume fallacy. You tell yourself you'll make up for lower prices with volume. You'll just do more work. But more work doesn't scale. More work means more stress, more hours, more team overhead. And margins still get worse.
The "good for the client" story. You're helping them by keeping prices low. You're being the good guy. They get a deal. Everyone wins. Except... they don't actually win. Low pricing signals low value. It attracts price-sensitive clients who are often more demanding. And it doesn't let you invest in actually being great.
All of these are stories. And none of them are true.
The Real Cost of Underpricing
Underpricing doesn't just limit profit. It limits growth.
Here's what happens:
You can't afford good people. You're paying yourself and your team low margins, so you can't attract or retain top talent. So your quality goes down. So you have to charge even lower to compete. It's a death spiral.
You can't invest in being better. You're barely covering expenses, so you can't invest in training, tools, systems, or anything that would actually improve. So you stay stuck.
You attract the wrong clients. Price-sensitive clients are often demanding, late to pay, and high-maintenance. Higher-priced clients usually come with higher expectations, but they also trust the pricing and have fewer complaints.
You're exhausted. You're doing more work at lower margins just to stay alive. You're working weekends. You're stressed. The money isn't there, so you can't hire help. It's not sustainable.
You can't scale. You want to grow but you can't because the margin isn't there to support growth. You'd have to hire at lower salaries, which means lower quality, which means you can't command higher prices. You're stuck.
One of my clients was running a service business at price points that were 40% below the market average. He thought he was being smart. He was actually killing his ability to grow. Once we raised prices to market rate, he lost a few price-sensitive clients. But his margins improved so much that he could actually invest in the business. He hired better people. He improved quality. His profit went up. His stress went down. Fewer clients, more money.
That's the real cost of underpricing: not just lower margins, but the inability to grow.
How to Actually Raise Your Prices
This is the part that feels scary. So let's be practical about it.
First, know the market.
What are others charging for what you do? Not just one competitor. Many. Talk to peers. Look at what similar businesses charge. Get a sense of the range.
You don't need to charge the absolute highest. But you need to know where you fit.
Second, know your costs.
What does it actually cost you to deliver your service? Labor. Materials. Overhead. Everything. If you don't know, you can't price it. And you definitely can't justify raising the price if you don't know what you're covering.
Third, decide on your new price.
Not based on what you're scared clients will accept. Based on what you need to run a healthy business and actually grow.
If you need to go from $100/hour to $150/hour, then that's the number. Not $125 because you're scared. Not $110 because you're trying to split the difference. The number that actually works.
Fourth, build your narrative.
Why are you raising prices? Usually it's some combination of:
Increased demand has made your time more valuable
You've improved the quality/speed/reliability of your service
Your costs have gone up
The market rate has shifted
You've invested in becoming better at what you do
Pick the honest one. Tell clients that story. Not as an apology. As an explanation.
Fifth, implement it smartly.
You don't have to raise prices on all clients at once. You can:
Raise prices for new clients immediately
Give existing clients 30-60 days notice before raising prices
Phase it in gradually
Grandfather some clients at the old rate if you want to keep them
The key is to actually do it. Not in some distant future when you feel more confident. Soon.
Sixth, prepare for rejection.
Some people will say no. That's okay. Those are the price-sensitive clients who would leave anyway the moment someone cheaper came along. You're not losing anything. You're becoming more selective.
What Actually Happens When You Raise Prices
The fear is that clients will leave. The reality is usually different.
Some do leave. Typically 10-20%. They're the price-sensitive ones. You didn't want them anyway because they create more work for less money.
Most stay. They don't like it, but they stay because you're good and switching costs are real.
And new clients come in at the new price point. Often, the higher price actually makes you more attractive because higher price signals higher value.
Then something magical happens: you have breathing room. Your profit margin improves. You can invest in being better. You can hire better people. You can be more selective about clients. Your business actually gets better.
And (this is key) you feel less resentment. You're not working for peanuts. You're not bitter about the work. You actually enjoy what you do again.
One of my clients raised his prices 30%. He was terrified. He expected to lose half his clients. He lost 15%. But his profit went up 60% because of the margin improvement. More importantly, he could finally breathe. He wasn't in constant scarcity mode. He could think strategically instead of just hustling.
That's what proper pricing does.
What To Do This Week
If you haven't raised your prices in over a year, you're almost certainly underpriced.
First, do the research. Find out what the market actually pays for what you do.
Second, calculate your actual costs. Labour, materials, overhead. Real numbers.
Third, set a new price. Not what you're comfortable with. What you actually need.
Fourth, write the messaging. What's the honest reason you're raising prices?
Fifth, decide on the roll-out. New clients at new price immediately? 30-day notice for existing clients? Grandfather some?
Sixth, set a date and commit. Pick a date to implement. Not "sometime soon." A date.
Then do it.
The scary part isn't the mechanics. The scary part is the psychology. You have to decide that you're worth it. That your work has value. That you're not going to undersell yourself because you're afraid of rejection.
But once you do it? Everything changes.
Ready to Price Your Business Like It's Actually Worth Something?
Underpricing is one of the fastest ways to kill your growth while making yourself miserable.
This is what I work on in the Mastering Business Expansion Program, helping you understand your real costs, know the market, and actually raise your prices in a way that feels right and doesn't tank your business.
Here's what we work on together:
We map your actual costs and profit margins. We research what the market actually pays for what you do. We build the narrative for why you're raising prices. We create a roll-out plan that minimizes risk and maximizes buy-in. And I hold you accountable to actually doing it instead of just thinking about it.
Over time, this changes everything. Better margins. Less stress. The ability to actually invest in your business. Clients who respect your work because they've paid for it.
Your first session is free. We'll look at your current pricing, your actual costs, and what you could be charging instead.
If you're tired of working hard for small margins, and you're ready to actually raise your prices, let's talk.