#002 - Why smart women still undercharge

Samantha Noelle introduces episode two of the OvercomeHer Podcast, explaining the show’s shift toward female entrepreneurs and a focus on mindset, money, and the nervous system. She unpacks why women undercharge, noting research that men self-promote more and that women often price below competitors to win work, contributing to a gender earnings gap. 

She connects pricing anxiety to emotional and historical conditioning around safety, likability, and beliefs about money, and explains how undercharging leads to resentment, burnout, lower perceived value, and limited ability to scale. 

She contrasts “survival pricing” with strategic pricing that covers fixed and variable costs, profit margin, and paying yourself a salary, and shares rules of thumb for early business years. She recommends pricing based on transformation and value, benchmarking competitors, market testing, gathering feedback, raising prices with notice, and never apologizing for increases.

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Transcript

SPEAKER_00 0:00

Hey everyone, it's Samantha Noel, and you are listening to the Overcome Her podcast. You are actually listening to episode number two. And if you've been listening to this podcast for a little while, then you will notice that some episodes are missing and that things are slightly changing. That's because this podcast is going to be geared towards my female entrepreneurs and we are focused on mindset, money, and your nervous system. So today's episode, episode number two, is going to be where I talk about why women entrepreneurs undercharge and how to finally just stop this altogether and to figure out what you should be charging. Before we get into today's episode, I just want you to think about right now increasing your prices 20%. Think about that. I want you to imagine what you currently charge, and you're going to, in your mind, imagine raising your prices 20%. Now, if that idea makes you anxious, then this is probably not a numbers and business issue. It's probably also a nervous system issue. So let's get into that. Let's discuss this. Let's talk about the emotional, the mental, and the actual tangible financial side of pricing so that you can go out and be more confident in your business, charge the prices that are going to take you from just getting by, broke, feeling like you have to hustle and burn yourself out, to actually thriving and growing and being able to reinvest that profit into your business. Now, years ago, there was a study from Harvard that found that men are typically more inclined to self-promote than women, meaning they are more likely than their female counterparts to be a little braggadocious, to be a little more confident about what they're bringing to the table. And this is what often leads to the advancement of men at an increased rate over women. So it's not really that the Harvard study was showing that men possessed something better than women. It was that men tend to be confident enough to go out into the world and know what they bring to the table and to express it. And then there was also a study by FreshBooks, and that's several years ago, that FreshBooks, which if you don't know, is kind of like QuickBooks Zero. It's one of those online cloud-based accounting systems. And they put out a study that reported that female entrepreneurs tend to believe that they need to price their services below other businesses in order to win the work. Now, this strategy helps explain why male entrepreneurs out-earn female entrepreneurs by 28%. That's almost a third. But ladies, let's be honest, and men who are listening, we did not need an Ivy League university to spend time, money, and human intellect to tell us something that we already know intuitively and through our lived experience. We know that we don't go out into the business world as confidently as men. And we know that naturally, by and large, we make less money, not because we're less worthy or not because we're less deserving. Now, over the years, I've had the opportunity to work with women and men who run businesses solo or in a partnership. And while no observation can be applied to 100% of people in a group, there are always unique distinctions that I notice in the way women carry themselves and operate in business compared with their male counterparts. And it often hurts them more than it helps them. Very few women have mastered the art of pricing in their business, and even some men, but I want to speak directly to the women. And we do know that women have more of an emotional attachment to pricing. And this is probably why I see more women run hobby businesses than true businesses that fully launch into something that can provide real legacy. Now, there is nothing wrong with a hobby business at all. But if you desire to build something that can outgrow you to provide real tangible benefit to the world and to your family, then you have to learn how to price confidently and strategically. If you're a female and you're still underpricing your services and products, it's likely due to a deep-seated belief that in order to survive, be liked, or be palpable for people, you have to undercharge. You believe that if you really asked for what you were worth, you would be rejected. But I'm going to let you in on something. The minute that you actually step into your power, that you know your numbers, you know the value that you bring, and you charge accordingly with the confidence to back it up. That's when people begin to take note and you will demand and you will receive more often the respect that you deserve. Now let's get into today's episode because there's a lot to unpack around pricing. It's not just numbers and it isn't just emotional or mental. Okay, ladies, let's talk about the emotional piece a bit more. So let's just look at the history of women. Now, it's still fairly relatively new that women have been able to legally vote, where we've been able to pursue higher education, where we've been able to own our own homes, where we've been able to operate and run our own businesses, where marriage was a choice based on love and not on survival and necessity. There's a lot of freedoms that women have today that even 100 years ago we just didn't have. Now, I don't think we need to look at the past and paint it with some brush that says women were so oppressed and get all upset about that. That's not the purpose of me talking about the past. It's not for us to sit in a sense of as women, we are victims and because that energy isn't even helpful to us. What is helpful is to recognize what has been and how far we have come, but also to recognize that those changes have happened in a relatively short period of time. A hundred years might sound like a long time, but it's really not. In the grand scheme of things, it's a very short period of time. Now, if you want to go back even more than that, centuries and millennia, women have experienced many forms of oppression. And it's quite new that we have this freedom. And all of those years, the centuries and the millennia of the women before us, our grandmothers, great-grandmothers, great-great, great-great-grandmothers had to experience this. And that follows down and it doesn't just disappear in one or two generations. All of the subconscious beliefs, all of the patterns, all of the programming, that doesn't just get erased just because there's a new generation. It carries down in every generation, has to release a little bit more of that past programming. And so there's still this subconscious survival mechanism built into us as women that says, I have to play it small. I have to stay safe. I have to make myself likable and palpable, and I have to be pleasant and I can't stand out there too much. If I charge too much, people aren't going to like me. If I'm too much, people will not like me and I will therefore die. I mean, that's what the brain is subconsciously interpreting is that if we don't fit in, if we aren't accepted, if we don't mold ourselves into what we think we need to mold ourselves into, we will not survive and we will be outcast from the pack. And so when we run these businesses and we get into the pricing aspect of it, we don't believe that we bring value that is worth charging a premium and not even necessarily a premium. If you want to charge a premium, that's great. There are definitely niches for premium pricing, but I'm talking about pricing that covers your costs and covers your business so that you can continue to grow and reinvest into that business. So when you think about emotionally, how do I feel when I look at pricing? How do I feel negotiating my prices with people? Do I feel I have to actually negotiate? What am I afraid of? Am I afraid that people are going to leave me, abandon me? Do you feel afraid that who the heck am I to charge this? Like, why would I be able to charge a thousand dollars for something? I need to undercut this. Nobody's going to buy from me. Nobody's going to see my worth. Or maybe you're afraid of being seen as greedy, a materialist. And if you come from a faith background, well, money is the root of all evil. These are beliefs that we've been taught. You know, there's certain scripture that says you can't love mammon and God. So there are certain fundamental beliefs that have caused emotional triggers within us that when we go to price within our business, we don't necessarily feel confident about it. If your nervous system associates being liked with being safe, then pricing confidently can feel threatening. Now, I want to talk about what happens when you actually undercharge. And so many of you can probably relate to this. Undercharging often creates resentment. And there were many times in my business in the beginning, I would go above and beyond. I would drive out to clients' locations and I wouldn't charge for the time driving. My hourly rate was already low because I hadn't learned how to package pricing, which is strategically better for the service, the industry that I was in. And so I built resentment towards certain clients. And sometimes I would get clients who were really demanding and they would want less. They would want more from me, but they would want to pay less. And that resentment grows. You feel burnt out when you underprice or when you undercharge because you know intuitively, you know that I'm not charging enough. You feel it, you become resentful. You decide to abandon your business and go back to the corporate world because you're burnt out. You're stressed out, you're angry, you're mad, you're frustrated, you feel like this is never gonna work, that this is not what you're meant to do, or it's just too hard. You think this is too hard. So I'm gonna go back to what's comfortable. And it's not that it's so much that it's too hard, it's just that you don't have the tools, the support, and the wisdom to understand how you should be charging and that your undercharging is actually hurting you and making you hate your business. It's making you hate the very thing that you started because you were so passionate about it. Remember, you started your business because you were so passionate about the idea that was seated in you. You just didn't have the business skills or the acumen to help you succeed. And that's why I'm sharing this information with you. The other thing that undercharging does, and this is the weirdest thing psychologically, is that undercharging actually makes people value you less. It's so bizarre. Now, I'm not talking, go out there and start charging $10,000 for a course and you just don't bring the value to back it up because people will undervalue you just for doing that. But when you really know your stuff, when you're really bringing a value to people and you're solving a problem for them with your product or your service, you need to charge adequately for that. Because if you don't, then you are actually missing out on customers who could be some of your best, biggest buying customers because they look at you and they go, She's charging too little. Her product or service is probably not that good, right? I want you to think about something. We all know Shan, right? I personally have never bought from Shan because I look at their stuff and I think this is so underpriced. It's probably junk. And I know a lot of people that have bought from there and they like their stuff. But the thing is, is it's only going to last a season. It's not something that is very flattering on your body because it's all polyester, it's all just plastic. And so it's confirmed. The pricing confirms the value that you're getting. And that's perfectly fine. It serves a purpose, but people know that the value isn't there when you underprice. Now, you could be bringing so much value, but people aren't going to know it if you underprice, if you undercharge, because they're going to look over you and think she's probably too green, she's probably too new, her products or services are probably not that great. She's probably cutting corners because nobody who doesn't cut corners brings value, brings quality. Nobody who does those things can actually financially afford to underprice or undercharge, or their business would go under. And people know that. And smart people and wealthy people and people who have money to buy things know that. They know that there's no way a business can operate by undercutting prices if they're actually bringing quality and value. So it's hurting you way more than it's helping you. The other thing that undercharging does is it diminishes your ability to serve on a greater scale. And the reason it does this is because you don't have the money to invest back into your business. You don't have the money to hire people to support you to scale your business. You don't have the money to invest in better research or better products or better educational and improvement and processes and systems. So by undercharging, your business can't grow as much. So you're actually holding your business back from growth and you will burn yourself out and you will go back to the corporate job that you had that you left because you want to pursue your passion. There's two types of pricing models. One, survival, survival mode. And survival mode sounds like, what can I charge? So nobody says no. I just need clients. I need to prove myself first, and then I can charge more later. I just don't want people to think that I'm too expensive. I totally hear what you're saying, Samantha, but I have to just do this for a little bit of time. Otherwise, no one will ever want to buy from me and they won't know who I am. That is survival pricing. Now, confident business boss babe, female energy says what's going to help me make the most impact in the world in my business, how do I price at that level? What covers my fixed costs and my variable costs and allows me to reinvest the profit into the business? That's confident boss babe. Thinking strategically, that's different than the survival. And I can tell you that in all of my years of running my own business and working with clients who run their own business, I have never, and I mean never, seen a case where budget clients were the best clients. Not once. Never has there been some amazing review that they have left. Never did they refer some brockster client that led to a huge surge in sales or business. Never, not once. In fact, quite the opposite. They've been the most demanding, the hardest to please, and when they come back, it's because they have equated you with a deal that no one else will give them. They have been emotionally and mentally conditioned to see dollar signs instead of value. And you cannot unteach that. Wealthy people look at value before they look at the dollar sign. You want people and clients to work with you because of the value that you bring. And if you're bargain betty, you will always feel frustrated that you experience customers and clients who disrespect you and undervalue you. Okay, now let's talk strategy because we've I think we've belabored the emotional piece. So let's talk about strategy. And this is really important. In your business, you have what we as accountants like to call fixed costs and variable costs. So your fixed costs are anything that exists, even if you have no sales. So fixed costs would be things like rent, office supplies, software, subscriptions, an assistant, keeping the lights on for the business. These are all your costs that are going to happen, even if nobody walks into the building and buys from you. Obviously, eventually, if you had no sales, you would have to let go of all of those things. But I think you get the picture. Then your variable costs are everything that goes into producing one unit of output for that sale. So if you have products, is all of the costs that go into one item. And depending on how many items you have, you'll have different variable costs that will go into those items. So examples of variable costs would be things like subcontractors, materials and supplies, shipping, time spent with clients, transaction fees that are part of your POS system. Those are all your variable costs. And the very simple formula. Now it obviously gets a lot more complex if you are in a product-based business because you may have several different products. But the the formula is your total costs equal your fixed costs plus your variable costs. So your fixed costs, that's pretty easy to calculate. Your variable costs are everything that it costs to produce the units that you are selling to your customers. And that's how you get how much you need to be selling in order to cover your fixed and your variable costs. Now that's an overly simplified way of looking at it, but that's how you can begin to determine what you should actually be charging. And you can take it a step further and you can say, I want to make a 50% margin. So that would go into your equation as well. Your total costs are going to equal your fixed cost plus your markup that you want to see plus your variable costs. And that will help you to determine how to price your products and your services. Now, another thing that you have to think about is that you also need to pay yourself a salary out of your business. Remember, your business needs to be seen as a separate entity. And you are another entity that needs to be paid out of that business. So your salary also needs to come into consideration. How much do you want to be earning? You can't just think about this as just the business surviving. You're also an employee. So that cost needs to be factored into your pricing as well. How much are you actually worth as an employee of this company? Now, years ago, when I started out in my business, I had a client that was a pretty big mess. They had been paying their suppliers and vendors 90 days, 180 days, way too far down the road. The shareholders of the company were never able to draw any sort of monthly salary for themselves. And they were five years into business. One of the things that I did was getting them cleaned up so that they can see their financial picture. And once they were able to see their financial picture, they were actually able to start paying their suppliers on time within 45 days, 30 to 45 days, their suppliers were able to be paid. The two shareholders of the business finally were able to start paying themselves a small amount every month. Now it wasn't anything huge, but it was consistent and it was reliable. And they had that every month put into their cash flow and put into the budget of their business. I have a general rule of thumb that your first year in business basically expect to have a loss. And if you break even or make a profit, that's amazing. Your second year of business, expect to break even. If you're still at a loss, then something probably needs some tweaky. Your third year of business, you should see some degree of profit. So, ladies, it's really, really important to pay yourself first. You have got to pay yourself. Even if it's just a small amount, you need to pay yourself. So you actually feel like you want to continue growing and building your business. And you also want to know your numbers. Now, when you are pricing and when you're thinking about how to price, you're pricing based on the value you're giving to people. And you think, well, what value? Like you might not think that it's very tangible because it's your passion, you're good at it. You, this is something that you could probably do in your sleep. And so when you are pricing, you're pricing based on the transformation that you are giving to people. So whether it's products, how are your products transforming people's lives? How are your products solving a problem that somebody has? And maybe it's not even a problem that they realize they have until you come along and you point out that you are solving a problem. It's the same with services. You're solving a problem. You're helping people transform their life. You're taking them from one thing to something better. And years and years and years ago, I heard a quote, I can't remember who it's by. It might be Zig Ziggler or Brian Tracy, or one of those men who said that your value is equated to the value that you bring to the marketplace. So your earning potential is dictated by the value you're bringing to the marketplace. So you need to charge based on that. People don't want something that isn't of value to them. People don't find value in little swag items. People pay for what makes their life better. And people will rave about your product or your service if you make their life better. So focus on making somebody's Life better and pricing based on how much of a change you're bringing to somebody's life, how much you're helping improve, make their life better, make their life easier, improve their health, improve their skin, improve their hair, improve their overall well-being and vitality and energy. Price based on that. Now, how do you find the right price for you? Well, I already kind of gave you guys that that really oversimplified formula for your total costs. You know, you got your fixed costs, your variable costs, and the profit that you want to make. And then you figure out how many widgets or items or coaching calls or coaching clients or whatever the service that you're in. You figure out how many of those you need to sell, and that is your price to cover those basic things. But how do you really find the right price for your industry, even taking into consideration some of those more tangible things? Well, one really, really good thing to do is always benchmark, meaning go around, look at other companies that are similar to you, and figure out what they are charging. Now, I remember years ago when I first started out in my business about 14 years ago, I remember quoting somebody for an hourly rate that I come up with that I knew was very competitive. I also knew that people were charging less than me, but they weren't bringing the same skills. The people that were in my industry didn't have the same education, the qualification. They probably easily took two to three times longer than I would take to do the exact same work. And yet they wouldn't be able to provide the same value. So I remember having a call with a client really early on who was referred to me, and he ended the call abruptly and said that it was too high when he heard my price. And that made me question myself. That made me question if I was charging too much for people, if I needed to lower my price to be more palpable. And what I ended up figuring out was that there were people that were charging far more than I was. There were firms that were charging far more than I was, and they were still getting the business. And I had to figure out a unique way to price and package things where I actually ended up earning more than hour, but the end user saw the value because they understood what they were getting and they understood the outcomes that would be there and they knew what the price would be. Because sometimes when you are out there in the world and you are looking at other companies that are doing things similar to you, you have to know where you stand in comparison to them. Now they might be charging less than you, but are they taking more time than you? Are they not as qualified as you? Are they not providing the same level of care and attention to detail, the same value, the same education, the same level of expertise, the same number of years and business, which brings its own expertise within it? I mean, once you've been in business for 10 years and something, you're now considered an expert. So when you're benchmarking, you're looking at what other companies are charging, take all those things into consideration. Look at some of the reviews, look at what are they providing. Are they going the extra mile? How are their products made? Where are they located? What is the ease? And you want to compare all of that because then that's going to give you an idea of, okay, if I'm in this kind of bracket, I know that I'm staying competitive. Or if I go up a little higher, yeah, maybe I'm charging more than the person that's middle of the road, but I know that I'm bringing value that the middle of the road person isn't. So when I market and advertise my product and my service, I'm going to focus on the value that people are getting. I'm going to make sure that I focus on how I'm different from the other people. And then that's going to sell itself. So then people see that the price that you're charging is worth it. A lot of times you also need to do a little bit of market testing. You can price things at a certain price point and you can figure out if you're getting a lot of customers and a lot of calls and you get a lot of repeat, that might mean you can move your price up a little bit. But if you have priced too high right off the get-go and you're not giving the value, you'll learn that really quick because you won't get the repeat customers. You won't get the people coming back for more. And that's going to tell you something. That's going to tell you that people aren't equating the value that they're getting with the price that they're paying. So there's a little bit of testing that can be involved in figuring out the right price for yourself. Getting feedback from your customers is also really important. Asking them and having those conversations. What did you think about that? How did this product change your life? How did it help you? What would you like better? What would be better? Have you ever tried anything that's similar? And how does this compare to that? And most of the time, people will be really honest. Some people might be afraid to hurt your feelings, but that's where if you get people who are impartial and maybe not super close to you, they'll probably be a bit more honest about what they viewed your product or service to do for them. When you do price, the price that you charge should feel a little bit like it's stretching you out of your comfort zone a bit, but not unjustifiable in your mind. You don't want to charge something that's so far out of your comfort zone that you can't get your own nervous system to feel at peace and at ease with the price because you won't come with the confidence when you are talking to people about your business when you're talking to people about your product or service. If you charge too much, you won't have that confidence. And you do need the confidence, which is why I said the very beginning of this episode is it really does kind of come down to having that confidence. Now, every business is going to, if they're in business long enough, they are going to have to raise their prices. And raising your prices can feel really sticky and weird, especially if you've been in business for a long time. You have some great and amazing clients that you've worked with maybe for years, and you don't want to lose those clients, and you're so afraid of how they're going to take it. What I found to be true 10 times out of 10 is that clients who really value you and who see the value that you provide and know the value that you provide, those clients will stick with you when you raise your prices. If they don't see the value in you, they will go find bargain Betty. And you're going to have to be okay with losing those clients. What I've also found when you lose clients, because you are stepping into more of your power and you are aligning yourself with what's going to continue to help you to grow and provide better products, provide better services. Because let's be honest, when you increase your prices, again, it opens up the buying power for you to invest more into your business so that your clients and your customers can continue to get great, amazing products and services. So when those clients do leave, if you raise your prices, it's always filled by somebody better, somebody who goes, Oh, this is exactly what I've been looking for. And they don't even flinch at your price. So you kind of have to have a little bit of faith when you increase your prices and also do the respectful thing. If you are in service, you want to make sure that you are informing your clients at least 30 days in advance of that price raise. You know, 60 days is always nicer, but at bare minimum, make sure you're giving them 30 days notice so that they can, if they want to, walk away. But hopefully they see the value. And just like there is inflation, just like people get raises at their corporate jobs, you need to make sure that you're also increasing your prices in your business to keep up with those things. Inflation, growing the business, increased and improved products and services. Those all need to be taken into consideration. And again, what are you doing to help people transform their life through what it is that you're selling? The other thing I want to say is don't apologize for increasing your prices. Don't like never, never, never apologize for increasing your prices. You have nothing to be sorry for. What you need to do is you need to state it matter-of-factly. You know, you can tell people like, I'm growing my business, my business has increased, or the needs of my business have increased. And to continue providing the level of service and care that we want to provide to our customers, we are increasing our prices, a fact of X date by X dollar. And you can continue to expect the same quality of product and service, if not more, when this transition happens. And feel free to reach out if you have any questions, but you don't apologize, you don't give people the room to negotiate. And if people want to negotiate, they can go to bargain betty. Your ability to price well isn't just a number, it says a lot about how you view yourself. And how you view yourself will be how others will view you. So if you don't think you're worth anything, if you think that you should be discount danny, if you think that you should be bargain betty, then you're going to see that reflected back to you by the customers that you end up aligning yourself with. But if you price in a way that you understand the value that you're bringing to the table, then you will see that reflected back to you in the customers that you have and that you receive. And it doesn't mean that you're never going to get a bad client or a bad customer, but those will be few and far in between. And you'll have more of the good ones who respect and value what you are giving and why you are charging what you're charging. So I think I've given you guys enough to choose.