More recently, as my business has grown much beyond me, now with a team of nearly 20 people, some of whom I have yet to even meet, and client projects I don’t even know about, I laugh at was the struggle to get my business off the ground 4 years ago. However, looking back, I was REALLY struggling with getting my first few clients, and even when I did, I priced myself pretty horribly, doing the same website work that I would now sell for tens of thousands.
One of the places I was stuck was in my own head – the employee mindset.
When I started my business from my freshman dorm room, I had just come out of a $15 an hour job at an internet and networking company. The job wasn’t my favorite, but it helped put some money into my pocket and savings for college.
Then, I got to college, realized I was broke, couldn’t find a job, and decided to get into freelancing to try and make things work.
I had a few conversations with some businesses via cold email, and when it came to pricing and quotes, I had no idea what to do, so I did what I was used to doing. $15 x (amount of work hours) = final price. However, I quickly learned that there were two major problems with this approach.
First, I was underquoting. $15 per hour was vastly below market value, which looking back is probably why I lost so many deals in the beginning. Even if a project took me 80 hours, it was only $1200, taking over two weeks to develop without counting revisions.
Second, I was unable to scale. $15 an hour barely get’s you a developer from the most un-developed corners of the world, let alone get my bills paid at the end of the day. I obviously wanted to make money, but in my head, because of the “employee hourly mindset,” I was mentally incapable of setting higher prices.
Somehow, I scrapped for nearly 3 years like this, raising my prices slowly. As my prices went up, I realized that I could use sub-contractors more and focus on the sales and business side. It wasn’t until I decided to attack my sales with a more “value based” approach.
In 3 years of cold sales, it became apparent to me who would make a good client vs a bad client. The “value” buyers were always less picky, easier to work with, and let me have my freedom on projects, resulting in a better product at the end. Everyone wins. Pricy picky clients would micro-manage, challenge every thought that I had, and then be reluctant to pay at the end of the project.
Where Things Changed
I got a lead from LinkedIn at the end of 2019 with a company in Des Moines, my hometown, which was pretty shocking to me considering my LinkedIn marketing covered the entire country. I had a phone call with the clients and it became apparent that they were value buyers. I knew this was my chance to make more money than I normally did at the time. We discussed the website on the phone.
I got back to Des Moines and had my proposal ready for them. I went to their office, pitched all the details, website vision, etc. Then at the end they asked “Alright, so what are we looking at for pricing?”
To be honest, I sat there scared to say the number that I had in my head. This was going to be the simplest website I had done in years, but I was going to charge 10x more than I did with other projects of similar size. I said “How does about $5k sound?” I instantly regretted saying that number. It was too high. I’m going to lose this client opportunity, I thought.
Without even flinching, they said “Great! Let’s get started!”.
I was shocked in the moment. We built the website, they were happy with it, I got paid. In addition, they were the easiest clients I had ever worked with.
I had broken through the “employee mindset” after 3 years, something that should have happened in year one.
Breaking the Mindset
If I could go back and tell my younger-self anything about business and breaking the employee mindset, it would be these things.
- Focus on sales, but don’t sweat it – I had a scarcity mindset as well in the beginning. I only had a few leads every quarter and didn’t want to waste the opportunities. However, if I would have focused more on out reach, rather than the small lead batch I had, I would have had more opportunities to sell.
- Keep raising prices, even if it makes you uncomfortable – this is the only way to mentally break through the “glass ceiling” that you yourself have put into your head. In addition, if you lose out on one sale, number 1 should keep getting you more at bats.
- Raise your overhead – Once I started sub-contracting and creating more overhead for myself, it became much easier to justify the higher prices, which did lead to more profit, eventually. Make yourself uncomfortable here, again.
Breaking the employee mindset was very difficult to do and took years. It’s not something that you’ll fix overnight, but I truly believe that if I could do it, anyone can.