Expose Yourself Out of Business

17

“We priced it low because we wanted the exposure.” Every young, and even some seasoned entrepreneur can fall on the trap of the “exposure” temptation. In the search for legitimacy and clout, entrepreneurs want to have the recognizable “big fish” names in our portfolios.  After all, that means great PR and lots of new clients, right? Wrong.

Out of business

There are several traps of  such reasoning:

It sets the wrong expectations. You will enter an organization at the wrong level. Your first job defines what level of player you are. You do not want to be the “cheap” guy. Trust me on this one.

It’s not sustainable. Even if your project is successful and the client loves the results, you have set an unrealistic expectation of cost, timelines, and services. When your next bid comes in at twice the price of your first, your new client will balk. “They’re good but not that good.”

It prevents you from doing your best work. When you’re scraping to get things done, working late hours, and doing things on “the cheap” you cannot do your best. Lacking margins and the budget to get the job done properly will hurt you later. The client will not give you grace because of all the extra effort. More likely they will give you grief for the extras they expected you to do.

The  law of inversion always applies: The least profitable project has the most demanding client. This happens to me all the time. The project that you are doing mostly as a favor where you have very little or no profit turns out to be the project from hell.  You end up losing money, patience, and your religion by the time the project is finished.

Next time you feel the urge to lower your prices or compromise on your timeline just to “get in,” think twice. Better yet, don’t do it. If your work is good and you’re worth it, win the business on your strengths and not by creating artificial, unsustainable, unreasonable expectations. That’s often a lose-lose situation

Have you been burned by trying to take on a project or client in order to can exposure?

  • Michael Bagnall

    I am doing a project like this now. I was hungry and saw the opportunity so I jumped with both feet before I could see the floor. As a result, I badly mis-judged the time needed to complete and the associated cost. Now I’m scrambling to get it done and will likely end up giving away some of my work because I botched the time quote so bad.

    There is a lot of wisdom in what you say. Sometimes it is just hard to say “No I won’t do your $10,000 project because it’s $20,000 worth of work”. Especially when you’re talking about saying no to $10,000. I can be hard to lose sit of the Forrest for the trees.

    • http://www.maurilioamorim.com Maurilio Amorim

      Well said, Michael.

  • Christian

    This is so true. My last employer was in the practice of giving our services away for (almost) free and convincing our clients that our inferior “product” was worth their time (and insurance coverage)!?!

    His business was an ethical nightmare: he was taking advantage of “the system”, practicing insurance fraud, and lowering the expectations of our clients. By my third week, I was mentally and physically burned out, the quality of my work suffered, and our client’s wanted everything for nothing.

    This business model was built soley on the principle of “numbers” and “cash flow.” My only regret was taking too long to get myself fired.

    • http://www.maurilioamorim.com Maurilio Amorim

      I bet that was a tough lesson to learn, but it will stay with you a lifetime.

  • http://www.jasonvana.com Jason Vana

    I made the mistake of charging very low when I started doing my branding and graphic design work earlier this year. I figured it would smart to get some clients under my belt before going after some bigger businesses. Everything you said is true, though. They became some of my most demanding clients, even asked me to do some free work for them. It was nuts.

    A buddy of mine who does some of same stuff as me really challenged me to value my time. Is working 10 hours on a logo really worth only $50? Would I be willing to work a job for $5 an hour? I upped my prices which actually landed me some bigger clients. When you have reasonable prices, people actually respect your work more. 

    • http://www.maurilioamorim.com Maurilio Amorim

      Yes, people will not respect you if you devalue your own work. What would they?

      • http://www.jasonvana.com Jason Vana

        Exactly. I just started doing the branding and graphic work in a freelance capacity, so I was a bit unsure how to price it, especially for the area where I live. Even when the economy is doing fantastic, it’s still below average here. But I’m getting a good grip on it now.

  • http://somewiseguy.com ThatGuyKC

    Great advice. Very Seth Godin-esque.
    I think it’s a good idea to do a freebie blitz at launch for a limited time if I  have a product, but when it comes to projects people won’t take me seriously if I don’t price seriously.

    • http://www.maurilioamorim.com Maurilio Amorim

      I’m taking “Seth Godin-esque” as a big compliment. I think.

      • http://somewiseguy.com ThatGuyKC

        Yes, a BIG compliment. :)

  • Billy Williams

    This is a great article, however, I don’t think it adresses a couple of issues. 

    #1 In a non-robust economy (like the one we are in) the concept of “what will the market bear” has to come into play. Right now, in my industry, price is driven by competition not so much by quality or even perceived value.  I would love to charge what I charged 3 or 4 years ago, but the market will not bear it. what to do, what to do!  

    #2 would be  - when is it better to work than not to work? A persons bills have no grace for holding out for top dollar. 

     I agree with all of the pitfalls you have pointed out, but wonder if there is a more balanced approach or idea.  

    • http://www.maurilioamorim.com Maurilio Amorim

      Good points, Billy. The comparison I’m making is not with what it was a few years back  and what it is today as much as comparing your current rates with those around you. If the market is down and the ongoing price is less across the board, then so be it. The danger is to lower it even further to get the job and in the process, devalue and lose money in hopes to get a return that usually never materializes.

      As far as point #2 is concerned if you cannot charge enough to create a “sustainable” business model, then I would evaluate my line of work for its long-term viability. I rather do something else for a period of time if I believe the demand and value will return than devalue my product to the point of bankruptcy.

  • http://twitter.com/onepursuit jenni baier

    I’ve made the mistake of selling myself cheap or working for free for churches and ministries… no matter how well-intentioned, it never works out. No one truly values what they get on the cheap, and while making sacrifices “Christian Service” might seem like a good idea at the time, no successful Christian ministry ever really practices that themselves… they just want others to practice it towards them.

    • http://twitter.com/onepursuit jenni baier

      (Let me revise that a bit: truly successful churches/ministries usually don’t want free work… but plenty of others do. And the fact that they want it free/cheap is good enough reason to leave them alone. If I truly believe in the mission of an organization that can’t afford to pay a fair wage, I’d rather be a volunteer — and keep that relationship clear with them — than muddy the waters by “working” for free or a ridiculously low wage.)

  • Pingback: Expose Yourself Out of Business | Maurilio Amorim « Lawrence Ford

  • http://twitter.com/cesarstm .V airamatnaS raseC

    Amazing post. I’ve been in the situation of doing extra-hours for a project with a lower price, just to ‘get the client’s trust on this one; in the next project we’ll charge them a more balanced price’. In the next project, they saw the quote and ran away.

    Sometimes I believe people do this because of fear to ‘be too expensive for been someone without a great portfolio or sucess stories. So let’s go cheap at least to have something in our client list to impress next clients’. How do you recommend fighting that back? I mean, how a company that is starting and has no big customers yet prove to their first set of clients they have what it takes to help them with their needs?

  • JD Crouse

    Great post! I LOVE your images, where do get most of them?

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