Know Thyself (and Thy Worth)

Originally published on on November 24, 2015 By Ron Feathers
Know Thyself (and Thy Worth)
Just because it’s easy for you, doesn’t mean it’s easy. Or second-rate.
Many years ago I started a small web development business. In the end, my business didn’t make it, but it should have. After all, I was at the forefront of the technology, especially in the small town where I lived. I also had a nice, low price point on my services, and it was relatively easy for me to find clients searching for the services that offered. I developed great relationships with my customers, which was key, and I held a genuine interest in the success of their businesses. That should have been a recipe for long-term success, right?
The building of web sites came easy to me. Once I discovered content management systems (like Drupal), it became even easier. Then, shops offering pre-designed templates started to become popular and suddenly for a large percentage of my customers, nearly all of the work was done by a script. It was embarrassingly simple to spin up a web site on a service like GoDaddy or Dreamhost, perform a one-click install of Drupal and upload a theme from TemplateMonster. I got to the point that I could do the whole thing in less than an hour. I simply couldn’t believe I was getting away with charging hundreds of dollars for this service. Hundreds of dollars. And there was my mistake: I should have been charging thousands. Because I had greatly optimized this process, I didn’t appreciate how difficult it would have been for my customers. Unlike me, they hadn’t done it hundreds of times. They didn’t know about template shops or web hosts. They didn’t understand how to change MX hosts to point email to the right IP addresses, or even what an IP address is. These things were all black magic, and worth a lot more than I wanted to admit.
I wasn’t making enough money to continue to build web sites, and since this stuff was so easy, I couldn’t understand how anyone would be willing to pay more for them. So, rather than raise my prices, I decided to shutter my business and move on to bigger things.
In hindsight, I realize that what I was selling wasn’t web sites. It was me. And, I had undervalued myself to such an extent that I ended up failing myself and the businesses that I was trying to help. Which is an interesting predicament, if you think about it. Perhaps, had I realized my value earlier (and charged appropriately) I may have been more inclined to stay the course, and directly help more small businesses.
Why are expensive things so expensive?
Expensive things are usually so expensive because they’re worth it. However, the price of something can dictate a portion of its perceived value. For example, two packages of some widget, priced differently, can have different perceived values. The more expensively priced widget will (to an extent) be perceived as the better of the two. We are wired to believe this. Unfortunately, the inverse of this paradigm is also true: If the more expensive widget is believed to better, then the less-costly one must be inferior. Therefore, if we under-price ourselves in order to appear a better value, we also run the risk of diminishing our perceived value. Perhaps I wasn’t the best web developer in town, after all. How could I be? I was the cheapest.
At least I’m not alone.
According to a corollary of the Dunning Kreuger Effect, “… highly skilled individuals may underestimate their relative competence, they may erroneously assume that tasks which are easy for them are also easy for others [1]…”. Sure, there’s more to it than that, but ultimately something as simple as understanding that you are valuable – even if you find what you do to be easy – is one of the keys to success.
Therefore, it’s important to understand the actual value of what you bring to the table. I had undervalued myself and my business. I provided a service that few others could and developed great relationships with clients. However, by giving away my talent (which I thought would be my key differentiator), I ultimately diminished myself and lost business opportunities and the desire to chase them.
This is a great time of year to take inventory of who you are and what you do. Measure yourself against your peers, find the things that you excel at, and recognize the value that you bring to the table – and charge for it. And maybe a little more.
…and a big thank you to Emma Rawnsley for helping me with my grammar and spelling 🙂