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Freelancers and Home-Based Business Owners – Avoid Price War at All Cost

price war

Stiff price war

I received this comment to one of my article on my Connotati.com, and I thought the question bears great importance – so, I decided to share the question and my answer with you.

The article in question: 10 Home-Based Business Ideas for Work at Home Moms

The comment (or questions):

“This is an interesting article. However, like most similar articles, it makes it look all too easy. Anyone who’s started their own business working from home knows that getting regular clients and setting up shop at home is a challenge. It’s a great idea-for anyone, not just moms-but putting it into practice isn’t so simple. How do you find customers who can afford (in this economy) to pay you a fair wage? How do you compete with outsourced workers willing to work for less than $5 per hour? How do you convince new customers to hire you who are just starting out instead of the more experienced competition? – Meri”

My answer:

“Meri,

Thanks for your opinion and questions. Well, let’s just say that there is no such thing as easy money (except, of course, winning the lottery, receiving inheritance, marrying a filthy-rich person, etc.) – and to add to the problems, there are competitions in whichever niches you are entering or whatever you do to make money – home-based business is one of those.

If you are taking freelancing as your home-based business, you don’t want to get caught in price wars. The lowest fee doesn’t always be the winner in the eyes of clients. A colleague of mine is charging $50 for an article, whereas those freelancers in online forums write for $3 for an article. The number one difference: quality. So, if you are a superstar article writer, don’t aim for the low-end market – aim for the sky… and the sky has no limit!

But first, to convince new customers, be proactive. There will always be a place for newbies to prove their worth. You can start by offering cheap(ish) service and raise your hourly rate from there. Build credibility – you could, for instance, approach potential clients who are willing to trade your service with their testimonial/recommendation.

My 2 cents…”

Some more thoughts…

The questions by Meri represent the worries most of us might have (including me.) How can I compete with others? Do I have “the right stuff” to beat the competition? What if I invest a lot (in time and money) but failed? What if I price my services and/or products too high (or too low)? And many other questions we might have going on and on in our head.

While I agree that the competition is stiff – especially these days – I do believe that there will be opportunities within the competition. All you need to have is the willingness to learn, the right strategy and the right mindset. You must work smart, not hard in competing with others.

As I mentioned in my answer above, you should avoid getting caught in price wars. Price wars kill your business and drain your energy, in such a way that you will eventually give up and decide that entrepreneurship is not for you (and, unfortunately, some of you who failed will blame entrepreneurship as too-hyped profession.)

I am actively seeking outsourcing partners from online forums, and I do see the trends: Freelancers are ‘killing’ themselves by offering their services at dirt cheap price tags. The impact: compromised quality. I was about to enter the low-end freelancing market myself, but I decided to bail out simply because… there is no money targeting the low-end of the market.

The good news is, the market is somehow balancing itself. Many freelancers target the low-end freelancing market – this has created a gap in the market for ‘premium’ service. This niche is something that also served by freelancers who target the premium market – the market in which demands are coming from people who prefer quality and professionalism over cheap and unprofessional services.

So, if you are planning to enter the freelancing market, consider NOT to target your service to low-end market. You could do just that to test the water, but I don’t think it’s wise to stay in there.

Any thoughts? Please share by commenting on this article.

Ivan Widjaya
Price war sucks
Image by MPD01605.

About author

Ivan Widjaya
Ivan Widjaya 3105 posts

Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.

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