Why Being Cheap Will Kill Your Business

Why are you being cheap? I don’t mean cheap, like, you’re resistant to spending money. I mean cheap like you’re resistant to charging money. Why are your services and products cheap? 

You’re probably being cheap because you don’t want to screw your clients. You want to be the person who’s looking out for the little guy, offering great quality at a great price. But guess what? You can only be successful selling cheap products if you sell a whole lot of them. Capitalism is largely self-correcting. There’s a reason your product or service usually costs more than what you want to sell it for. It’s because that’s what it takes to run a healthy business. It might not be what it takes to turn a profit on the specific product, but it’s what it takes to turn a profit on all the admin, marketing, research, and development of that product. 

Still, a voice whispers in your head: Help the people. Do it for the people. 

I once ran a business doing social media marketing for cheap. I charged about half as much as my competitors. But I didn’t account for all the extra work I needed to do to pitch and win these projects. I told myself I was being “generous” and “standing up for the little guy,” but really I was biting off more than I could chew. I was exasperating myself, and running myself out of business until I couldn’t help anybody. 

Let’s flip this on its head. Charging a lot enables you to go the extra mile. To provide incredible service, and to have the time to really develop your offerings into something special. It gives you the margin to delight your clients and work with people who respect you. 

If you still want to look out for the little guy, then offer your most premium package for free to a non-profit client. That is, if you really do want to be generous. Host an application for a free premium package, and market that on social media. Help someone who is really doing good in the world. And then raise your rates again so you can do even more good yourself.