How Undervaluing Yourself Affects Your Profitsby
Sometimes, it's actually strategic to undercharge clients. Often, however, accounting and finance professionals do so simply because of fear. Billie Anne Grigg of Profit First Professionals delves into one of the specific reasons accountants are making less than they should and offers a helpful solution.
Previously, we explored some of the times when it’s acceptable to undercharge for our services. Undercharging as part of your strategic business plan can actually help you grow your accounting business. The problem is, it’s easy to fool ourselves into thinking we are making a strategic decision to undercharge when something else is really the cause.
“Fear” is the blanket term used to describe why accountants and bookkeepers undercharge. But fear is complex, and telling ourselves to just move past it isn’t particularly helpful. And that’s assuming fear is the culprit; fear might not be the root cause of your tendency to undercharge at all.
I asked more than 40 accountants, bookkeepers and other financial professionals why they find themselves tempted to undercharge for their services. Their answers fell into five broad categories. Over the next five articles, we’ll look at each of these reasons why we undercharge and explore “fixes” for them.
Reason #1: We Undervalue Ourselves
Accountants and bookkeepers often lament our clients not understanding the value we bring them. It’s easy enough to tell when our clients don’t value our knowledge and expertise. It’s harder, though, for us to see when we are undervaluing ourselves.
Undervaluing yourself can show up in the following ways:
- You hedge when someone asks about the results you get for your clients.
- You think what you do is so simple, it’s wrong to charge more than a nominal fee for it.
- You find yourself thinking, “I wouldn’t pay that much for [your services]!”
It’s one thing to be humble. It’s another to downplay how you positively impact your clients’ businesses and lives because you don’t value what you do and what you know. Humility is commendable...not understanding your own value is sacrificial.
A Popular Story
I was speaking with a financial professional who isn’t an accountant or bookkeeper. He mentioned he had been struggling with his bookkeeping. Something just wasn’t clicking for him, and he had spent hours trying to figure it out. After 10 minutes on a call with a bookkeeper, his problem was solved. In his words, that 10 minutes saved him 10 hours.
You’ve probably heard fictional variations of this real-life story. The most common versions of the story involve an engineer who knows which part of a machine to tap or a computer programmer who knows what line of code needs to be tweaked to solve a customer’s seemingly insurmountable problem. In each version of the story, the professional bills for the outcomes they produced because of their knowledge and expertise instead of the time it took to produce that outcome.
Accountants and bookkeepers shouldn’t hesitate to do the same, but we do. Instead of charging for the outcome, we charge for the time it takes to produce the result. And that’s assuming we charge at all; often, we provide the solution free of charge.
Is it any wonder some of our clients undervalue us when we undervalue ourselves?
The next time you find yourself wondering if the fee you’re about to quote is fair or thinking that you wouldn’t pay that much for the solution, think back to the first time you did similar work. Recall the time you spent researching the issue at hand, devising a solution, and then testing that solution to make sure it worked. Did it take closer to 10 hours than 10 minutes? Now, adjust your price accordingly.
If that doesn’t work, try this: Think back to a time when you were trying to solve a problem that was outside of your expertise. Maybe it was setting up your website or creating workflows in your CRM. Maybe it was something even further outside of your wheelhouse, like changing the sparkplugs in your car. How much time did it take you to solve this problem? What was that time worth to you? Did you ultimately pay a professional to get the results faster?
The important thing to remember when overcoming the tendency to undervalue yourself is this: What you do wasn’t easy before you figured out how to do it. Don’t undervalue the time and effort spent on “figuring it out;” that time and effort should be reflected in your pricing.
The Next Step
It’s not uncommon to replace one tendency to undercharge with another. Once you’ve overcome your tendency to undervalue your knowledge and expertise, you might find yourself making money decisions for the client before you even have a conversation with them. We’ll explore this tendency - and, of course, how to overcome it - in the next article.
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Billie Anne Grigg has been a bookkeeper since before the turn of the century (this one, despite what her children think). She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, and a Mastery Level Certified Profit First Professionals. She is also a guide (coach) for the Profit First Professionals organization. Billie Anne started...