I get twitchy whenever I hear someone suggest that they should drop their prices to land more clients. Part of that is due to the reality that make creative professionals have a hard time remembering the value of their own work. If you don’t put a value on how you spend your time, how are you ever going to convince someone else to give you money in return for those hours?
But there’s an underlying issue that may be a little harder to resolve: competing on price is bad for business.
There are a few industries in which there is no alternative to competing on price. But the truth is that anyone can compete on price. New entrants to the market can find just as many ways to cut costs as people who have been in business for years — and may have the added advantage of not knowing about certain expenses when setting their prices. Someone who can afford to take a loss, at least in the short term, always has the advantage over those competitors who can’t afford to do so.
That’s dangerous: cutting what you offer to the bone just to get your prices down can put you in a dangerous place, particularly if you’re selling your own creativity in one way or another. There are alternatives, however, to competing on cost: adding value, branding your work, and other strategies can keep you competitive without forcing you to constantly be selling just to keep your head above water.