CEO's Regret #7: Charging Too Little for Too Long
Behind every successful CEO probably lurks at least one major regret. The best, or the luckiest, CEOs learn from their mistakes and get an opportunity to rectify them. But as we learned from the stories that company founders shared with us, even the ones who get a second chance can still feel the repercussions from their moves for years afterward. And the lessons they gleaned stay with them and influence their business decisions in sometimes surprising ways.
Regret 7: Charging too little for too long
Company: Synergy Investment (#219 on the 2000 Inc. 500), in Framingham, Mass.
Business: Designing and retrofitting energy-efficient lighting systems
CEO: Daniel Gould
Daniel Gould went into the lighting business on his own in 1994, when he was all of 25, and created a niche for himself with few, if any, real competitors. He was constantly hustling, offering his customers what he calls "the Wal-Mart attitude: give them rock-bottom prices all the time." But at the end of the day, he says, "I didn't have much to show for it. Basically, I was giving it away."
He also found that he would give his customers estimates up front, and even if he found the work more time-consuming or more expensive than he had expected, he didn't adjust his fees accordingly. "I had to figure out how to tell them I had to charge them more," says Gould. And that was something he was loath to do, because he both wanted to honor his commitments and feared losing customers.
As he gained more experience and more regular customers, he began to get a sense of the true market value of his work, which is a highly specialized combination of consulting and contracting. He realized, belatedly, that "I could've charged more, and people wouldn't have blinked."
Gould thinks he's been "continually behind the curve for pricing compared with the market," though he has gradually raised his prices over the past few years. He remains "the low-cost provider," he says. "When I started the business, I was happy just to draw a salary," he explains. "It's been a slow awakening to what I needed to charge to be slightly profitable by the end of the year."
Copyright © 2000 G+J USA Publishing
More regrets from this year's Inc. 500 CEOs:
CEO's Regret #1: Being Distracted by a Buyout Proposal
CEO's Regret #2: Not Seeking Financing Sooner
CEO's Regret #3: Not Trying to Go Public Sooner
CEO's Regret #4: Not Going to College
CEO's Regret #5: Hiring the Wrong Executive
CEO's Regret #6: Not Hiring an In-House Recruiter