The Seller's Guilt: What is it and how can we manage it?
It’s time to talk about an issue that’s not so often discussed. You may have thought about it in the privacy of your own thoughts, but you didn’t know there are others who feel the same way. The bad news is - seller's guilt is real. The good news is there are many others who are on the same boat as you.
What is the seller's guilt?
Whether you’ve heard the term or not, you may be familiar with the feeling. The term refers to the guilt sellers feel about the prices they charge, even when the price is totally reasonable.
Take Wile, for example, a lifetime carpenter. While often empathizes with clients because he believes prices must seem very inflated to clients who have no idea of what goes on behind the scenes. In fact, he still gets shocked by the true costs of completing a job, a reality he was not aware of before running a business.
While working profit into your pricing is necessary for business continuity, it can often feel like you’re struggling to balance that with offering low and competitive pricing. A work-from-home mother also tells her story with the seller’s guilt when invoicing her clients. She has worked so hard that all her clients and partners are well aware that she is worth every penny, but she still can’t help it.
Like her, many sellers find themselves asking these questions on payday: Am I charging too much? Does the client think my prices are fair? Did I accurately record the hours I put in? Before you spiral into this loop of what-ifs, let’s break down ways of defeating the seller’s guilt before it defeats you!
Breaking the price down
Ambiguity about your prices may be hurting your business. The landscape of doing business is changing in modern times. Whereas businesses used to be these entities where the average customer did not have insider information, customers are becoming more conscious with who they engage in business. In fact, 86% of consumers say transparency is more important than ever to them.
Construction has long relied on the development of relationships with clients. There is a certain level of trust that characterizes this relationship, especially since the results are often irreversible and are long-term investments. Building and maintaining customer trust is essential to managing the seller’s guilt, as the trust bestowed by the customer is the best signal of a job well done.
Construction managers are realizing that transparency is key to getting paid on time. The lack of transparency in construction has been associated with an 18,000 hours loss in productivity annually. Contractors say they spend 70% of the day being idle when management is not transparent. If transparency is so important for internal success, could it have a role to play in external relationships as well?
A third of construction companies work with repeat clients 80% of the time. What role does transparency play in making sure that repeat clients keep coming back for more?
Pricing strategists suggest that price transparency puts a greater emphasis on value, rather than the actual price. As a business owner, you are held accountable for the prices you charge. When you base your decisions on data, rather than educated guesswork, it becomes easier to manage costs, maximize profits and minimize any guilt that would spring in the process. Only at that point will prices reflect the actual value that you offer to your customers. Additionally, you are able to concretely explain the price of services, facilitating the relationship between you and your clients, whether you are in B2B or B2C.
In addition to ensuring consumer loyalty and fostering long-term business relationships, having real data to justify pricing will go a long way for managing the seller’s guilt. Time tracking apps are an inexpensive and effective means of generating reliable and automated timesheets of hours worked per employee, project, or team.
See Related: Best time tracking apps for iPhone in 2020
Breaking psychological barriers
Guilt is a complex feeling, shaped by so many cultural and social factors. If you have implemented strategies to be transparent, but are still experiencing seller’s guilt, it may just be purely psychological.
We live in a society where consumers are constantly bombarded by ads, whether they’re on the phone, in the car, or watching TV. Naturally, people have developed a level of skepticism towards sales.
In his piece, Why Sales has become a negative word?, Mag points out at the typical attitude consumers have towards people who are trying to sell them something, in their own words, "Salespeople force things that we don't need and won't buy".
Brad, a handyman, was met with fury from his customers who thought that his 40/hr rate was “outrageous”. His confidence as a seller was damaged from this backlash, even though he knew that it’s the only rate that will keep his business flourishing. Then again, he thought of another handyman who offers “customer-friendly pricing”, but whose truck was held together with duct tape. So, he came to terms with the fact that he cannot educate every single person out there on what goes on behind the curtains, but can rather focus on the customers who are willing to pay the price of quality work.
If you are experiencing a bit of seller’s guilt, remember that it happens to the best of us. However, let the thought go as quick as it comes. Sometimes, it’s your own barriers keeping you from scaling your business. It is impossible to educate every single customer out there on why your prices make sense. As long as you have transparent pricing, wear your prices like a badge of honor!
It’s Bad for Business
We cannot stress this enough. Seller’s guilt is bad for business. If you’re shooting for low prices for fairness' sake, you may be single-handedly killing your business. If you base your prices on a cheap truck and old tools, you will never spare anything aside for a new truck and new tools. On top of that, how will you afford employees who are effective at what they do and save you money in the long run?
We spoke to a plumber from Daytona Beach who remarkably said: “If 10-20% of your customers aren't complaining about your rates, your rates are too low.” The seller-buyer relationship is often characterized by negotiation and bickering about prices. It’s just the rules of the game. When this happens, it’s not necessarily a roadblock. You don’t have to be paralyzed by the seller’s guilt, thinking that your customers are skeptical of your value. They are just being customers. The most effective response to such a situation is offering an informed and transparent explanation of your pricing. You might lose some customers in the short run, but you will scale your business in the long run!
As a passionate carpenter said, “mileage rate is what it is, materials are what they are, the disposal fee at the dump is beyond negotiation.” If he can’t crunch the numbers in those areas, he sees no justification in lowering his hourly billing rate either, as he’s confident in what he has to offer.
See Related: 5 reasons why you are underbidding your projects