️Episode 051 – 4 Root Causes for Undercharging as a Consultant

Last week (in episode 050) we discussed the five methods you can use to determine if you’re undercharging your solo consulting business. Assuming that you are undercharging, which almost every consultant is in some way, this week we’re going to talk about the four reasons why you might be doing that.

We’ll discuss in detail what these root causes are and how to identify them for yourself. The time you spend as a business owner, doing this type of work has almost an infinite return on investment. So let’s get started with transforming you from a consultant into a consulting business owner.   

Listen in to learn more about the four root causes that could be leading to you undercharging in your independent consulting business.

And, stay tuned for episode 052 where I’ll share what to do now that you know where you’re undercharging and the root causes leading you to undercharge in your consulting business.

  • [03:28] Root Cause #1
  • [08:19] Root Cause #2
  • [13:40] Root Cause #3
  • [16:38] Root Cause #4



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**note: This is an automated transcript, so please ignore spelling errors and grammar mistakes*


Welcome to the Grow Your Independent Consulting Business podcast. I’m Melisa Liberman, a fellow IC and business coach. On this podcast I teach you to become a consistently booked independent consultant without becoming a pushy salesperson or working 24/7. If I can do it, you can too.


listen on to find out how. Welcome back to the podcast in Episode 51. I’m so happy you’re here, and today we’re going to talk about the four root causes for undercharging as a consultant. So, I’m working on a series with you about undercharging. And last week, we talked about the five ways the five tools the five methods that you can use to figure out if you are undercharging, and today Now, assuming that you are under charging, which almost every consultant is in some way, we’re going to talk about given that you are under charging in some way, the four reasons why you might be doing that. And then next week, we’re going to talk about what to do about this undercharging. So today, let’s focus on that root cause. And before I dive in, I just want to say thank you again, for listening, we got a huge milestone last week hitting episode 50. And I would love it if you might take a moment, if you’re loving this podcast to go leave a review on Apple, and a rating and a review so that more people can find these episodes as well. That would be amazing if you’re loving it. Okay, so with that, let’s dive into today’s topic. So, undercharging almost always comes up, when I start working with a new client, they either know that they’ve been undercharging, and they’re ready to change that. That’s one of the reasons that they come to me, or they know that they’ve been undercharging. And they’ve been more what I call logic getting their way to doing it later. That’s so common, right? I think I’ve been undercharging. But this and this reason, I think I’ll deal with that later. And so later becomes always later and eventually, you know, quarters, and even years go by without shifting the pricing structure. And then the third bucket that I find people falling into is that they just don’t realize that they’re undercharging, they feel really good about their rates, and they feel like they’re fair in whatever way they’re deciding that. And then it’s kind of that gut punch when they find out that they’re well below market. So as we talk through this, I would love to ask you which of those three categories do you fall into? Or have you been the one undercharging? And you’re ready to change it? Or do you know that you’re undercharging? And you’ve been delaying and postponing dealing with this? Or are you just not at a place yet where you’re realizing what those pockets are where you’re undercharging? Think about that for yourself as we go through this. And then let’s dive into the focus today, which is the four root causes of you undercharging. So we’re going to talk about and I’ll walk you through each of those four. And we’ll talk about what they are, and how to identify them for yourself. And then at the end, I’ll tell you how to pull it all together and put it into action with a really simple routine you can put into place. So let’s start off with number one. These aren’t the ranking an order. So I won’t say the number one. It’s just for root causes. Right? So the first that’s the right word. The first is that your undercharging, because of your thoughts about you, you

probably expected me to start off on some other completely different root cause. But this is where we’re headed today. And these are truly the root causes. So let’s dive into what I mean by this, your undercharging because of your thoughts about you? What do you really think about you as a consultant? Like, really? Because when we get into the covers, I almost always find things like, I don’t know enough. I haven’t been a consultant long enough, which by the way, most people who tell me that I’ve been in corporate for 10 or 20 years, right? But I haven’t been a consultant long enough. I haven’t done this thing before, or though thought about themselves as like when it comes right down to it. I hear this all the time. When it comes right down to it. I’m just fill in the blank. I’m just a project manager. I’m just a program manager. I’m just a communications specialist. I’m just a PR specialist. I’m just a marketing communications specialist. So like whatever it is for you. Just an engineer. I hear these things all the time. I’m just a as if we’re restarting our career all over again. I’m telling you I hear this every day. It’s going on in almost everyone’s head whether you are aware of it or not, but I hear it from Ph.D. I hear from people who have these types of things, from people who have the most specialized experience that you can imagine. I hear it from people who have had tremendous success in their corporate careers. I hear from people who have gone to Ivy League schools, when you look at these people on paper, and I’m sure when you look at your own paper, if you weren’t yourself, you would think that these people, there’s no way they’re, they’re not 110% Confident. When you look at these other people on paper, right? There’s no way look at where they went to school and their whole pedigree, there’s no way they’re, they’re not 110% Confident, I’m probably the only one who suffers from these self-doubts, you’re wrong, almost everyone’s second-guessing themselves. And if you are one of the few on the other side of the spectrum, and you do feel confident most of the time, I can assure you there is still work for you in this bucket in this first bucket that I’m sharing with you, it’s there, you just have to uncover those sneaky thoughts where you’re diminishing yourself. So this first root cause is the thoughts that you’re having about yourself that are diminishing, that are questioning your abilities, whether they’re the blatant ones I shared with you, or the sneakier ones, or both. Usually it’s both. Because when you have thoughts about yourself, that diminish your expertise, when you have thoughts about yourself that diminish your capability, you’re undercutting yourself, you’re undercutting your pricing, and you’re undercutting the way that you present your pricing, the way that you present your proposal, the way that you present your overall solution. And so what ends up happening when you have these, this kind of second stream running in your brain, that’s the self-doubt, it’s so common right to try to make up for what you perceive as lacking by charging a little bit less, sometimes it’s a lot less, sometimes a little a little bit less, but you’re essentially giving them a discount without even realizing it. And at the end of the day, it’s really hard to sell something to someone when you don’t really believe in it yourself fully. So for you, for this first bucket, this first root cause to put this into action, you can ask yourself this simple question, and then journal out the answer to it. What do I think about myself as a consultant? And what do I think about myself as a business owner? Two part question. That’s it, and just get that out on the paper. Honestly, I do this almost every day, some days, I have some really good things written down on the paper. And some days, it’s not very good at all. But finding those nooks and crannies in your brain about what you’re really thinking about yourself that’s causing you to show up with less presence to show up with a little bit of doubt. This is where the work is and is the needle mover for you as you start working through figuring out why it is that you might be undercharging. So just be honest with yourself and see those I like to say like the cockroaches in your brain, just shining a little bit of a light on them and seeing who they are, where they scattered to cite a great visual, we used to live in Hawaii, and that was my least favorite part, the cockroaches. Okay, so sometimes it can be really hard to see for ourselves. So get this down on paper, and if you want some help reach out. Okay, so let’s talk about the second bucket, the second root cause that could be leading to you under charging, it’s you under charging because of your thoughts about your clients. Let me repeat that. The second root cause for you undercharging as a consultant is because of your thoughts about your clients. So let me tell you what this means. Ask yourself, what do you think about your clients? Because when I dig into this with my private clients, we uncover things, and sometimes they’re shocking. Sometimes they’re not shocking to the person. But there’s usually a combination of both. We uncover things like my client can’t pay that much. My clients are on a tight budget. My clients have a budget that’s already set for the year, I’d rather get my foot in the door. My clients will only pay that money for one of the big consultancies, my clients won’t want to pay more. They’re already used to what I’ve been charging them in the case where you might be thinking about renegotiating you know, for the next contract. These all sound like facts. They’re your thoughts about your clients. And the reason why this distinction is important is because if there are facts who are there, you’re working with a fixed situation. And if you’re if they’re your thoughts, which means it’s your perception, it’s your interpretation, then we have room for you to start getting more creative. So we dive into this a little bit more because so many of us think the types of things I just shared with you are facts. But I hear this about every type of client all the way from the fortune 10 all the way to nonprofits and in between and it sounds logical and rational, right. But really, it’s a very logical sounding excuse that most consultants lean on because they’re uncomfortable presenting pricing and having to potentially negotiate. And so when your thoughts about your client aren’t what I call clean, then you end up with a situation. And again, we’re talking about looking at what you’re thinking and seeing that these are not facts, that they’re thoughts that you’re having about this client that you haven’t yet explored. When you do that, you’re you end up avoiding discussing pricing, you end up hoping they offer you some kind of pricing you can live with, you end up undercutting your pricing, before you’ve even had a conversation with them about what their ranges or you know, to co develop a an approach with them, you don’t find a way to create that code of finding that code development process with them. As you build out the entire engagement. You kind of build all of this engagement together with them, and except for the pricing, and that’s like a surprise at the end. And you delay delay until you feel like oh, no, I’ve painted myself into a corner. And ultimately, you’re not getting creative about how to define and articulate the return on investment, the value the benefits for the client. So can you see how the way you’re perceiving your clients, those thoughts about your clients, how that’s holding you back, as you’re building up your pricing as you’re building up your proposal, because it usually isn’t the client situation, that they literally have no budget, it’s that you’re using what you believe to be their situation as an excuse to avoid this topic, as an excuse to ask a lot of questions and truly get what’s going on with them in their business and what they see to be the return on investment of the work that you’re doing. So look, I’m not saying that clients don’t have budgets or real constraints. I’ve been there running the budget. I know they do. But what I’m saying is that most of the time, we don’t really dig in to find out what the constraints are, we make up these assumptions in our head, our thought, which are the thoughts about our clients, and then we use them as an excuse to not build up the value of what we’re doing to make that return on investment. And that expense for them a no brainer. So look at this for yourself, it’s really easy to dismiss it and say, but Melisa, here’s all their constraints. And you can do that. But without exploring it further. And really knowing what the difference is between your thoughts and your guesses and your estimations about the client versus the true hard facts, you end up shortchanging yourself as a result of it because you don’t dive into that type of thinking about your return on investment. You don’t dive into that type of CO development with the client for them to help you help you see the value and vice versa. really creating that together. So look at this for yourself. Ask yourself, what do I think about my client? And before we move on to number three? Another great question to ask yourself is, what do you think your clients think about you? Because that’s another way to really see what’s going on in your brain. An example would be like, my clients don’t see me at that level. And so that’s why they I don’t think they’ll pay that much. But at the end of the day, that’s just such a reflection of how you’re seeing yourself. So that’s like a secret ninja question there. Okay, that was root cause number two, the thoughts you have about your clients. Root Cause number three, the third root cause of why you’re undercharging is your thoughts about the services you offer. Now, I separate this out from number one. Number one was your thought the first one was your thoughts about you. And I’m separating it out because you are not your offer. Sometimes as consultants we think we are, I hear it all the time I have to sell myself, but you’re not the offer. They’re not hiring you. You’re not going to be an employee. They’re hiring an outcome that you’re the expert at achieving, that you’re the expert of driving them to. So that’s why I want to make this distinction for you today. You’re under charging, because of your thoughts about the services you offer. So what does that mean? So for example, ask yourself, what do you truly think about the value of what you do for your clients? Because I hear things from my private clients things like I’m a project manager, I’m a program manager, I run workshops for clients, it can be hard to articulate the value that I bring. I’m a analysts, I’m not sure exactly what my unique offer or niches I’m really just a whatever it is fill in the blank. As a result of this when you’re thinking about yourself as a label yourself as your offer, and your offer is some form of a job title, of course, you’re undercharging, because what you’re creating for yourself as a dynamic where you’re essentially an extension of an employee. So when you start thinking about your offer in a more strategic way, versus the tactical, like, This is who I am, this is what my offer is, then you’re able to start addressing this third root cause of undercharging. Because ultimately, if you’ve got these thoughts about your the services that you offer, that aren’t as strategic and they’re more tactical, then you’re not seeing the full value of the services in your mind. And so your client isn’t going to see them either. So this is an a shift in your thinking that’s important so that you can start elevating what you charge, and the results that you’re delivering for your clients simultaneously, or catch up to the results that you’re delivering. Because you actually understand and are clear about them in your mind. That’s usually what the dynamic that I find for people, they’re delivering amazing results. And you are to I’m sure, for your clients, but you’re not thinking of yourself in that way. You’re still thinking of yourself and the services that you offer in much more of a corporate contexts. And that’s not what we’re doing here as a consulting business owner. Okay, so that was the third root cause of you undercharging are your thoughts about your service offer your service offering, and keeping them more into that tactical realm, versus looking at them more strategically, and seeing them from the value perspective and decoupling them from you versus your service?


Okay, let’s dive into the fourth most common reason why you’re under charging. And that’s because of your thoughts about money. So let me ask you, what are your thoughts about money, what I usually find with my private clients is a combination of money is amazing money enables great experiences in life, money is great. And something along the lines of I shouldn’t have too much, I shouldn’t take more than I need, I’m making plenty, I shouldn’t be driven by money, it takes too much time to make more money. So this can be a really sneaky bucket, a sneaky set of root causes, because a lot of us have great thoughts about money. But lurking under the covers some more cockroaches, are thoughts that keep us making the same or similar amount over and over again, right? If you’re thinking I shouldn’t take more than I need, I’m not sure where we’re taking it from. But so many of us think this right shouldn’t take more than I need, or I’m making plenty, of course, you’re going to keep producing the same amount over and over again, you know, give or take. So for you, this is such an important area to dig into, to uncover what your thoughts are about money, that could be leading you to undercharge. Because you want to kind of stay in this route in this zone that you’re that you’re familiar with, or you’re judging yourself, I shouldn’t be driven by money, you’re running a business, how much does it benefit you and your clients, and potentially, you know, subcontractors that you might bring on, for you to be driven by money. Not saying it’s the only thing you should be driven by but as a business owner, you better be driven by money, right? But so many of us think that that’s bad. Under the cover, subconsciously, we’ve learned this through our life, right? For this root cause you’ve got to do the same thing. Really look under the covers and ask yourself, what are your thoughts about money? What are the quote unquote, positive thoughts, like money enables great experiences? And then what are those sneakier thoughts, the cockroaches that are lurking under the covers that you probably heard when you you know, when you were six, that are still driving your life and keeping you in the same place over and over again, sometimes people make a lot of money, and then they lose it for some reason, because of these types of thoughts. So really look at your thoughts about money so that you can address this root cause of you undercharging as well. Okay, so to wrap this up two things, number one, go out and uncover the root causes of why you’re under charging. So that then next week, as we start diving into what to do about undercharging, you’ve really understand at a deeper level, why you’re doing this? without judgment, no judgment here, we’re just looking at what’s going on in your brain that you’re probably not aware of. And it’s been happening over and over again, subconsciously. So go journal about those thoughts about you, about your clients, about your offer, and about money. I’m telling you, the time you spend as a business owner, doing this type of work has almost an infinite return on investment. I see it for myself and I see it over and over again for clients. When you’re able to put this type of thinking practice into your routine as a business owner. It’s an incredible needle mover. So go do that journaling on your thoughts about these four areas for your business. Notice and then next week tune in so that we can talk about what to do about this phenomenon of undercharging. And finally, I’ve had a lot of questions about how to work with me, if you would like to work with me or hear more, learn more about whether or not working with me is a good fit for you. The way that I work with my clients is in a 90-day Bootcamp for independent consultants, where we work together one on one to put in place the strategy and the tactics and the mindset so we can transform you from a consultant into a consulting business owner. And ultimately, so you can make more money and make more impact and have that freedom that you want in your life. So, if you’re interested in talking about whether that’s a good fit for you or not, you can find a time on my calendar at consult melisa.com And we’ll put that in the show notes. So, I will see you next week. Go do this work. Go figure out what your root causes of undercharging are and we will talk again next week about in the final step of this series on undercharging. All right, have a good one.


Thanks for joining me this week on the Grow Your Independent Consulting Business podcast. If you like today’s episode, I have three quick next steps for you. First, click Subscribe on Apple podcasts or wherever you listen to make sure you don’t miss future episodes. Next, leave me a review in your podcast app so other independent consultants can find it benefit to and finally to put the ideas from today’s episode into action. Head over to Melisaliberman.com for the show notes and more resources to help you grow your consulting practice from your first few projects into a full-fledged business. See you next week.

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