My buddy called me the other day, and I knew by the tone in his voice, he wanted something!
He was desperate.
He wanted to borrow money. I asked why, and he said he incurred over $300 in overdraft bank fees for the month.
My first reaction was, “What?”
I asked him how he had gotten this way… and he slowly started telling me. The $300 bank fee wasn’t the first time. He had regularly overdrafted…infact, he was a serial overdrafter. To the tune of about $3000 per year.
Not only was the bank after him, but he was several months behind on his mortgage and I’m positive that was just the tip of the iceberg.
Nope, I couldn’t live like that!
For the last 2 years he’s been trying to get his own business off the ground… and it just dawned on him that maybe his prices were too low.
MAYBE? Dang tootin, they were!
Just pricing your services cheaper doesn’t guarantee you work, nor does it pay the bills.
He had no idea what his true cost of doing business was, and had I had the opportunity to run the numbers I would bet that he would need to double his prices just to make ends meet.
The problem for him was that his cheap prices were attracting cheap customers. Customers that his competitors rejected, he ended up getting. The more desperate for money, the cheaper he lowered his price to attract work.
