what I used to believe about pricing

I don't write about recalibration often. When I do, it's because the belief I'm writing about held on longer than it should have, and I want to understand why.

This one is about pricing. Specifically, about the logic I used to justify pricing low, why that logic seemed solid at the time, and what it actually produced.

the logic that seemed right

For the first couple years running NDC, I believed pricing low was the right way to get in the door.

The reasoning had a shape to it. Charge less than the established players. Win clients you wouldn't otherwise win. Do excellent work, get referrals, build a reputation. Then, once you have a track record, raise the rates. It felt like the patient approach. You make a short-term sacrifice on margin and get paid back on the other side with clients who trust you because someone they trust vouched for you.

I believed this not because I heard someone say it, but because I reasoned my way to it. It felt like a logical early-stage strategy for a studio that had limited proof points and needed to close work. Take the discount now, earn the premium later.

That framing has one thing going for it: it's internally consistent. Everything else about it was wrong.

what actually happened

The clients I was attracting had $2,000 budgets and $10,000 expectations. Not because they were difficult people. Because the price I had set signaled that the work was in a certain range, and they had adjusted their expectations accordingly. When something didn't go the way they pictured it, they pushed. They asked for another round. They questioned decisions. The tension was present in almost every interaction, not because of bad faith on their side, but because the money was already a stretch and they felt that stretch the whole time.

I was also wrong about the referral flywheel. This is the part I regret not seeing sooner.

Clients who hire you at a low rate refer people in the same situation. People working with tight budgets know other people working with tight budgets. They are genuinely trying to help you when they send someone your way. The referral lands. You take the call. The number is roughly the same. The ceiling on that network is the price you set when you entered it. I was not building a referral network that would eventually get me to higher-rate work. I was building one that would keep me at the rate I started at.

The path I had imagined, start low, build reputation, raise later, required the referral network to somehow transform into a different kind of referral network. That is not what referral networks do. They compound on themselves.

the thing that actually changed my mind

I started losing engagements on price.

Early on, when that happened, I read it as evidence that I was too expensive and needed to come down. I thought the loss was the problem and the discount was the fix. A few times, I offered the discount and won the engagement back. I thought that confirmed the read.

Then I started paying attention to those engagements. The ones I had won back at a lower rate. The work was harder to deliver. The relationship required more management. The outcome was harder to point to in a portfolio or a case study. The client who couldn't afford the quoted price didn't become a great reference. They became a difficult project at a discounted rate.

When I held the price and lost the engagement, I started noticing what I had expected to feel bad about. Nothing bad happened. I moved on to the next conversation. In a few cases, the same prospect came back a couple months later. In most cases, I just moved on.

After enough of those, a pattern became clear. The engagements lost because the price was too high were usually the ones that would have been the hardest to deliver well. The hesitation about the price was often the first signal about how the engagement would go. Not always. Often enough to take seriously.

where I am now

I am still learning this. Two and a half years into running NDC and I still feel the pull when someone hesitates at a number. The instinct is to adjust. I notice it every time.

The pull is worth noticing. It is almost never worth acting on.

What I believe now is simpler than what I believed before. The right price for a piece of work is the price that makes the engagement worth delivering well. If that number doesn't work for the client, the engagement isn't the right fit. That's not a loss. That's the filter doing its job.

It took me longer than it should have to understand that. I'm writing it down so I don't have to relearn it.